February auction set for S.D. ethanol plant

By Holly Jessen | October 14, 2010
Posted Oct. 25, 2010

Bids are being solicited for a 25 MMgy ethanol plant in Rosholt, S.D. Thomas Stalnaker, Trustee of Tri State Financial LLC, doing business as North County Ethanol, announced Oct. 22 that sealed bids for plant are due by 5 p.m. Feb. 1.

Three other ethanol plant auctions were scheduled in September, with a fourth coming up on Nov. 10. However, this is the only auction of an operating ethanol plant. "We have operated this plant for the past year so the potential buyer knows the production of the plant," said Marty Pelster, attorney representing the senior bank group.

The ethanol plant was retrofitted by ICM Inc. in 2004 and in the spring of 2005 resumed operations after standing idle for two years. The plant filed for bankruptcy October 2008, said Jeff Kistner, president of Flag Leaf Financial Management Inc. A year later it had resumed operations with an agreement between Tri State Financial, the bank group, Tenaska Biofuels, Flag Leaf Financial and Innovated Concepts of Ethanol.

Interested bidders must prove they have the financial wherewithal to bid a minimum of $17.5 million, Kistner said. That doesn't mean that will be the final purchase price, however. "I think that's a fair starting price, but who knows, we don't know what the market will bring," he said.

The auction has been set for Feb. 1 to give buyers time to do their due diligence. Unlike idled plants, interested parties can tour a fully operating plant. The goal is to find a buyer that will keep the plant operating. "We plan to keep it running through the transfer of ownership," he said.

North County Ethanol is located on 35 acres about half a mile from a grain elevator and access to the Canadian Pacific Railroad. The location provides some of the lowest-cost corn in the country and a good local distillers grains market, Kistner said. About 30 people work at the plant.