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Ethanol Start-Up Gets Critical Cash Boost
By Mr Ethanol | September 1, 2008
Minneapolis Star Tribune:
Two months after opening an ethanol plant in Fairmont, Minn., Buffalo Lake Energy on Friday gained access to a $20 million line of credit from its parent firm to keep its furnaces burning.
The stock of the parent company, Denver-based BioFuel Energy Corp., soared 16 percent on the news. BioFuel shares on Friday closed at $1.44 a share, up 20 cents. The stock sold at $6.98 at the start of this year.
In a government filing Friday, BioFuel revealed it had lost $39 million on hedging and related financial agreements with Minnetonka-based Cargill, Inc.
“Cargill has not yet been paid for approximately $22 million of these amounts,” BioFuel said in a report to the Securities and Exchange Commission.
“The parent company currently does not have sufficient liquidity to retire these obligations,” said BioFuel, whose subsidiaries
operate the Fairmont ethanol plant and another in Wood River, Neb.
“The operating subsidiaries have received approximately $25 million of parent company corn inventory that it has not been reimbursed for,” the company disclosed.
BioFuel said talks with Cargill aim to find a solution to the problem. “However, there can be no assurances that these efforts will prove successful,” it said.
BioFuel is not the only company to face disappointment in making ethanol, once thought to be a golden product for investors. More.
Topics: Ethanol, Industry, News |
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