Ohio plant still for sale; bank buys Gateway

By Bryan Sims | January 03, 2009
Web exclusive posted Jan. 2, 2009, at 12:48 p.m. CST

After two rounds of extension deadlines, lawyers and lenders for Greater Ohio Ethanol LLC have yet to find a buyer for the company's idled 54 MMgy corn-based ethanol plant in Lima, Ohio.

The plant's attorneys and creditors appeared before Judge Mary Ann Whipple in Northern Ohio District Bankrupt Court to request another extension on the sale, giving them until mid-January to find a buyer for the plant. Whipple gave temporary approval to the extension, contingent upon a Jan. 7 hearing during which attorneys will be expected to provide further details of the sale and funding structure. Attorneys for Greater Ohio Ethanol also requested that the court change the bid deadline to Jan. 14 and the auction date to Jan. 16; however, the new dates won't be official until after the Jan. 7 hearing.

Greater Ohio Ethanol filed for Chapter 11 bankruptcy protection in early November 2008; the plant started operations in July 2008. The company attributed design flaws that led to mechanical failures and increased water usage during operation as reasons for the shutdown.

Attorneys for Greater Ohio Ethanol estimated the sale price of the Lima plant would be approximately $18 million; well below the $90 million owed to major investors. According to Greater Ohio Ethanol's Chapter 11 bankruptcy filing, it lists more than 200 creditors, including local investors and contractors. The city of Lima's Utilities Department is listed as one of the plant's 20 largest creditors with claims of more than $190,000 in utility fees.

Meanwhile, U.S. Bankruptcy Judge Dale Somers in Kansas City, Kan., approved the sale of bankrupt Gateway Ethanol's idled 55 MMgy plant in Pratt, Kan., to Minneapolis-based investment bank Dougherty Funding in mid-December 2008. Prior to the approval of the sale, Dougherty Funding submitted a bid of $59.93 million. It bought the plant's assets for approximately $60 million. No competitive bids were made.

Dougherty Funding held approximately $63 million in loans on Gateway Ethanol's property in Pratt. Gateway Ethanol reported $95.7 million worth of assets and liabilities of $95.4 million.

Orion Ethanol, which owns a 62 percent majority stake in the Gateway Ethanol plant, filed for Chapter 11 bankruptcy protection in early October 2008. The plant produced nominal amounts of ethanol after starting up, but it shuttered operations shortly thereafter without reaching full production capacity.