Aventine reports $36.9 million quarterly loss

By Bryan Sims | March 05, 2009
Web exclusive posted March 19, 2009, at 3:31 p.m. CST

On March 16, Pekin, Ill.-based ethanol producer and marketer Aventine Renewable Energy Holdings Inc. posted a net loss of $36.9 million in its fourth quarter 2008 earnings, compared to a net income of $3.3 million it incurred the same quarter in 2007.

Aventine's depressed fourth quarter 2008 financial results reflect what many in the industry are experiencing: the lack of liquidity in order to maintain operations amid the unavailability of working capital seemingly drying up in the credit markets. In its earnings report, Aventine said it doesn't expect to have enough cash to satisfy a $15 million interest payment due on April 1 on an outstanding senior unsecured 10 percent fixed-rate note or to pay $24.4 million due to its engineering, procurement and construction (EPC) contractor, Kiewit Energy Co.

"Although we are actively pursuing a number of liquidity alternatives, including seeking additional debt and equity financing and a potential sale of all or part of the company, there can be no assurance we will be successful," Aventine said in its quarterly earnings report. "If we cannot obtain sufficient liquidity in the very near-term, we may need to seek to restructure under Chapter 11 of the U.S. Bankruptcy Code," Aventine said.

Aventine suspended construction on its 110 MMgy ethanol projects in Aurora, Neb., and Mt. Vernon, Ind., in the fall of 2008 due to the inability of honoring construction payment obligations to Kiewit. On March 9, Aventine received a notice from Kiewit cancelling the EPC contracts for both projects, referencing its failure to make a recent payment under certain change order agreements dated Dec. 31, 2008. However, the company said it remains "contractually obligated" to resume construction on both projects.