Otter Tail Ag hires advisory group

By Holly Jessen | October 14, 2010
Posted Oct. 15, 2010

Although a plan to raise $12 million from investors is still on the table, Otter Tail Ag Enterprises LLC has hired Carl Marks Advisory Group LLC to also search for a buyer for the plant. "Their duty is to find the best outcome for the creditors and the company," CEO Anthony Hicks told EPM.

The 55 MMgy plant in Fergus Falls, Minn., filed for Chapter 11 bankruptcy protection in U.S. Federal Court one year ago. This summer, as part of its reorganization plan, the company attempted to raise $12 million through investors. However, it was unable to do so by the deadline, even after a series of extensions. The money that was raised has been returned and the courts gave Otter Tail Ag another extension until a court date of Dec. 2, Hicks said.

On Oct. 12 a U.S. bankruptcy judge in the District of Minnesota signed an order approving employment of Carl Marks as a financial advisor. The order outlines three possible things Carl Marks could do. The company could locate additional investors to raise money for the plant's proposed plan of reorganization or amend that plan. The final option would be locating a buyer to purchase the plant through a bankruptcy auction.

Otter Tail Ag has continued to operate as a debtor in possession under the jurisdiction of the bankruptcy court, according to U.S. Securities and Exchange Commission filings. It is limited from doing anything out of the ordinary course of business without approval from the court.

Hicks said the plant was fortunate in that it has been able to continue operating. He also gave plant employees credit for continuing to work despite an unknown future. "Everybody believes it's in the best interest for the creditors to keep the plant operating," he said.

The plant's troubles go back two years, Hicks said. Like all ethanol plants, Otter Tail Ag was hit hard by high-priced corn, declining gas prices and a difficult economic situation. Unlike other plants that were idled, however, the Fergus Falls plant has continued to operate every day and maintained nameplate capacity. "The objective has been through this process of financial distress has been to maintain operations and to keep the jobs in the community," he said.