Renew Energy files for Chapter 11 bankruptcy

By Bryan Sims | February 04, 2009
Web exclusive posted Feb. 5, 2009, at 2:29 p.m. CST

Wisconsin-based Ethanol producer Renew Energy LLC filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Western District of Wisconsin on Jan. 30.

Renew Energy, which is the state's largest ethanol producer, owns and operates a 130 MMgy corn-based ethanol plant in Jefferson and a 52 MMgy facility in Utica, Wis.

According to Renew Energy statement, the company "is targeting mid-year to emerge from bankruptcy through a balance sheet restructuring or a sale of the business. We expect to continue to operate the business at levels consistent with operations over the last several months in order to optimize attractiveness to potential investors or acquirers."

Renew Energy said its short-term strategy is to obtain $10 million in operating capital through a debtor-in-possession (DIP) financing facility, which would allow the company to operate its Jefferson facility through at least June 30. The company said the bankruptcy action doesn't affect the Utica Energy LLC plant in Utica.

Renew Energy hired William Blair & Co. LLC to assist in finding lenders for the DIP facility and in soliciting purchasers of the company's assets. In the interim, the company has obtained $2.5 million in temporary DIP funding from West Pointe Bank. Once the company is stabilized, it expects to complete a "going-concern sale."

Selling the plant as a going concern will maximize recovery for its creditors, according to Renew Energy. Its largest unsecured creditor is Wisconsin supplier Olsen's Mill Inc., with a $20 million claim.

"The harsh reality is that there aren't many, if any, Wisconsin ethanol producers making money right now," said Joshua Morby, executive director of the Wisconsin Bio Industry Alliance. "Our industry is still quite new. The first plant in Wisconsin was built in 2000 and we're going through a tough time in the business cycle."

Including Renew Energy's Jefferson and Utica plants, Wisconsin has nine operating ethanol facilities with a combined capacity of 534 MMgy.

Renew Energy's Jefferson plant is touted as one of the most technologically advanced facilities in the country, employing a novel fractionation system. The plant was built on the site of what once was the largest malting plant in the world, which the company purchased from Cargill Inc. in 2006.

In the January issue of Ethanol Producer Magazine, the feature titled "A Renewed Future," profiled Renew Energy's unique process technology.