Potential buyer eyeing Gateway Ethanol

By Holly Jessen | September 23, 2010
Posted Sept. 30, 2010

Gateway ethanol plant in Pratt, Kan., has attracted the attention of a potential buyer that has expressed interest in restarting the plant. The identity of the buyer is not being released. "Until it's a done deal, their preference is to keep this confidential," said Kirk Martin, managing partner of Ascendant Partners, a business and financial advisory firm that is working with the owners to find buyers for the plant.

An auction was planned for Sept. 24, however, the seller had reserved the right to accept offers before the auction. Several offers were received and now Ascendant Partners is in exclusive negotiations with the buyer that was selected. The next step is for the potential buyer to complete its due diligence, which includes examining the contract, permits, current condition of the plant and more, Martin told EPM. The process is likely to take several months. "We would hope to be completed with the entire process by year end," he said.

Gateway Ethanol started up in fall 2007 and filed for bankruptcy one year later. The new owners are a bank group made up of the original lenders and other banks that aren't interested in operating the plant themselves. The group took possession of the plant and its related assets on June 30, which for legal purposes is now called Gateway Plant. Gateway Ethanol, on the other hand, is still working to resolve the bankruptcy issue.

The plant has been idle for more than two years but has been maintained, Martin said. In addition, the facility's permits, county taxes and water payments have been kept up to date.