Idaho ethanol plant heading for auction block

By Holly Jessen | August 27, 2010
Posted Sept. 8, 2010

If a buyer for Renova Energy Idaho LLC isn't found before an auction set for Nov. 10, the 20 MMgy ethanol plant will be sold off in bits and pieces. Up for sale in Heyburn, Idaho, is the partially constructed ethanol plant, its equipment, a nearly complete anaerobic digestion system and land.

"We have a couple of serious buyers that are looking at it right now," said Ford Elsaesser, a bankrupt attorney serving as trustee for the creditor owners of the plant. "We're hopeful that we can sell it in its current condition, for someone that would be able to complete both the biogas and ethanol plant."

This is the third announced ethanol plant auction in three weeks. Gateway Ethanol, a 100 MMgy ethanol plant in Pratt, Kan., and Genesis Ethanol I, a 2 to 4 MMgy plant in Parker, S.D., have separate auctions set for Sept. 24.

The deadline to purchase the Renova Energy Idaho plant as a whole is two weeks before the Nov. 10 sale, said Allison Guyton, director of operations for Maas Companies Inc., which has been hired to auction the plant. Much of the equipment for the ethanol plant was never installed and remains crated and packaged. The anaerobic digester, on the other hand, is about 90 percent installed.

The bulk of the ethanol plant is on leased property owned by the city of Burley, Elsaesser said. The creditors own the land where the anaerobic digester is located. The plan was to use waste material from a nearby cheese plant for biogas production. Another possible source of waste is a potato processor that is currently constructing a new plant very near to the anaerobic digester.

Renova Energy Idaho suspended construction on the plant in late 2007. The project's price tag reportedly grew from $45 million to $60 million. That, plus other factors led to bankruptcy. "That was right in the heart of the financial crises," Elsaesser told EPM.

Renova Energy Inc., the ethanol plant's former parent company, filed for Chapter 11 bankruptcy in 2008 and is no longer associated with Renova Energy Idaho. The creditors of the Heyburn plant spent about $1.5 million to bring it out of bankruptcy and put it in a trust. The creditors have until Dec. 31 to sell or liquidate the assets and pay off the debts.

That money, along with about $500,000 owed in back taxes to Heyburn and the county plus outstanding land-lease payments, adds up to about $2 million. "That's a rough number, it could be off either way a little bit," he said. Any amount generated from the sale in excess of that $2 million will go to other creditors in the form of a dividend, he added.

Besides the Idaho plant, Maas Companies Inc. is also conducting the auction of the Parker, S.D., ethanol plant. Unlike the Idaho plant, the South Dakota auction will be conducted by a sealed bid, Guyton told EPM. The winning bid may be selected the day of the auction, Sept. 24, or the top five bidders could continue in a limited live auction Oct. 8.

Ascendant Partners is auctioning the third plant, located in Kansas. If a good offer comes in before the auction, the owners plan to accept it. The plant started producing in October 2007 and shut down once for repairs after storm damage and again after working capital ran short. The company filed for bankruptcy in October 2008 and was taken over by the new owners on June 30.