Abengoa Biofuels Selling Ethanol Refineries to Avoid Backruptcy
– by Erin Voegele, January 26, 2016, Biomass Magazine
On Jan. 25, Abengoa announced plans to sell its non-core assets, including its first-generation biofuel plants, as part of a new restructuring plan to avoid bankruptcy. It is currently unclear how the company’s cellulosic ethanol plant in Hugoton, Kansas, will be affected.
Abengoa announced plans to file for preliminary creditor protection in late 2015. In late November, Abengoa published a notice indicating its previously announced framework agreement with Gonvarri Corporación Financiera, a company belonging to Gonvarri Steel Industries, was terminated, citing a failure to meet certain conditions to which that agreement was subject. Under the agreement, announced Nov. 8, Gonvarri was expected to make a €250 million ($265.9 million) investment in Abengoa. Following news that the agreement was terminated, Abengoa said it “will continue negotiations with its creditors with the objective reaching an agreement that ensures the company’s financial viability, under the protection of article 5 bis of the Spanish Insolvency Law…, which the company intends to apply for as soon as possible.”
While Abengoa had said on Dec. 1 that it “currently intends to operate its ethanol plants in a normal course of business,” including the Hugoton plant, Ethanol Producer Magazine learned Dec. 3 that the company had laid off staff at the cellulosic plant and other facilities and offices worldwide. A former Abenoga employee said the company cited financial difficulties as the reason for its actions.
On Dec. 24, Abengoa announced it had signed with financial stakeholders, under Article 5 bis of the Spanish Insolvency Law, a loan for €106 million ($115.08 million). At that time, the company said it would receive protection under Spanish Insolvency Law for three months, extendable to four, allowing the company to protect and preserve its value while it developed a viability plan for its future.
The viability plan was submitted to Abengoa’s board of directors on Jan. 25. According to a statement issued by the company, the Abengoa’s board of directors has agreed to proceed with the negotiation of the negotiation of the restructuring of its debt and the resources. Moving forward, the company plans to focus on engineering and construction activities. According to the statement, the plan includes the sale of non-core assets, including all first generation biofuels.
Abengoa has not responded to requests made by Ethanol Producer Magazine for additional comment regarding the future of its U.S. ethanol plants.
According to information published by the company, Abengoa currently owns six first-generation ethanol plants in the U.S., along with the cellulosic facility located in Hugoton. The company also owns five ethanol plants, one biodiesel plant, and one cellulosic demonstration plant in Europe, along with three ethanol plants in Brazil.