Foreclosure sale set for Range Fuels site
Prior to 2011, Colorado-based Range Fuels Inc. was widely believed to become one of the first commercial-scale cellulosic biofuels producers in the U.S. The wood-to-ethanol/methanol company had constructed a large facility in Soperton, Ga., and planned to utilize locally sourced wood to produce cellulosic biofuels using a proprietary technology it had spent years developing. The company garnered the attention of deep-pocketed private investors, including Vinod Khosla, and the federal government, which provided a $50 million grant through the U.S. DOE in 2007 and a conditional commitment for an $80 million USDA loan guarantee in January 2009. The state of Georgia also provided grants to the project.
The DOE grant helped enable the company to break ground on its Soperton plant and in the spring of 2010, the USDA released $40 million to Range Fuels’ lender, AgSouth Farm Credit, which allowed it to advance to the start-up and commissioning phase at the plant. But technical difficulties were experienced during the commissioning phase and the company was forced to spend the rest of the year trying to overcome the problems.
In January 2011, Range Fuels announced a short-lived run of methanol production, but it ceased operations just days after its announcement and laid off employees at its office in Colorado and the plant in Georgia. At the same time, the company failed to make a scheduled payment on its USDA loan guarantee, triggering a default on its financing.
At the time of the plant’s closing, the company’s CEO said the setback was temporary and that Range Fuels was actively seeking additional financing and working to correct its technical issues. Those attempts were unsuccessful. It’s now been nearly a year since Range Fuels closed its doors and plans are in place to liquidate its assets, including a foreclosure sale for the Soperton plant, scheduled to take place on Jan. 3.
According to information released by the USDA, Range Fuels repaid only about $2 million of its $40 million federal loan. The agency worked with AgSouth throughout much of 2011 to revive operations at the plant through an acquisition, but finally approved AgSouth’s liquidation plan on Oct. 27 after it was determined to be the best way to reclaim taxpayers’ money. The USDA repurchased Range Fuels’ outstanding $38 million loan in November and will assist AgSouth with the liquidation plan, which is expected to be a slow process.
Earlier this year, the bankruptcy of another federally backed company, solar systems manufacturer Solyndra LLC, brought federal loan guarantee programs under intense scrutiny as Congressional members questioned whether taxpayers should foot the bill for risky technology projects. Leaders of the federal agencies responsible for providing those types of loans, including Energy Secretary Steven Chu, who approved Solyndra’s approximately $500 million loan guarantee, have consistently stated that they do not expect all of the new technologies to succeed, but that the rate of success will largely outweigh the failures.
The USDA’s Rural Development office manages a portfolio of nearly 1 million loans with an overall principal of about $160 billion in assets. The delinquency rate on those loans is less than 2 percent, according to the agency. An agency spokesperson expressed disappointment in the failure of the Range Fuels project, but indicated that the USDA will continue to provide support for innovative projects as it is allowed to do. “It’s important to remember that USDA has a long history of successful lending that supports rural homeowners, business owners, utilities and cooperatives, and over 90 percent of USDA’s loans are successfully repaid,” the spokesperson said in a statement. “Investments in rural America strengthen the entire country and some of our country’s greatest achievements were accomplished when government and the private sector partnered to develop innovative technologies.”