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Ethanol Cup Overflows
By Mr Ethanol | October 30, 2007
Supply glut leads investors to step back from new plant construction.
Rocky Mountain News:
A Denver-based energy company has delayed plans to build more ethanol production facilities amid an industrywide supply glut.
BioFuel Energy Corp., which went public in June, is building two Midwestern ethanol plants. But it has decided to hold off for now on plans to construct others, including one in Alta, Iowa.
“Ultimately, I’m confident we’ll build those plants,” said David Kornder, chief financial officer. “It’s going to be a viable business.”
The public company announced this month that it would buy back shares of its stock, which Kornder described as undervalued. The company’s stock has dropped in recent months, and ethanol prices have declined 29 percent this year on the Chicago Board of Trade. BioFuel Energy stock closed at $5.27 a share, about half of its inital public offering price of $10.50 in mid-June.
The repurchase program involves shares worth about $7.5 million - money that had been earmarked for the additional ethanol plants. The company is progressing with its construction of facilities in Fairmont, Minn., and Wood River, Neb.
Investors eager to capitalize on ethanol, a fuel made from corn, have contributed to a frenzy of construction activity. But refining and blending capacity has yet to keep pace.
A proposed Panda Ethanol plant in Yuma has not been able to close financing. It is planned to be built adjacent to already-operating Yuma Ethanol Plant.
Dallas-based Panda Ethanol said it had plans to produce 105 million gallons a year at the $120 million plant.
Topics: Ethanol, Industry, Market, News |
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