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More U. S. Ethanol Companies In Financial Trouble

Corn ethanol maker Aventine Renewable Energy Holdings Inc. said March 16 it was in default on some its debt payments and may need to seek Chapter 11 bankruptcy protection.

The company said it was seeking to raise capital, “including seeking additional debt and equity financing and a potential sale of all or part of the company,” but that it could seek bankruptcy protection soon if those efforts were unsuccessful.

Also on March 16, cellulosic ethanol maker Verenium Corp.’s auditors questioned its ability to continue as a going concern.

The news from both Aventine and Verenium comes 4-1/2 months after their larger peer, VeraSun Energy Corp., filed for bankruptcy protection.

The margins to produce ethanol have been squeezed by weaker gasoline prices, despite U. S. government mandates requiring gasoline blenders to buy the biofuel.

Aventine, which also reported a fourth quarter loss of $36.9 million, or 86 cents per share, compared to a profit of $3.3 million, or eight cents per share, a year earlier, said it did not have the cash to make a $15 million interest payment due April 1 or the $24.4 million it owes builder Kiewit Energy Co.

Meanwhile, Verenium’s outside auditor, Ernst & Young, said in a U. S. Securities and Exchange Commission filing that the company’s working capital deficit of $23.8 million and accumulated deficit of $622.6 million as of Dec. 31 “raise substantial doubt about its ability to continue as a going concern.”

Verenium produces ethanol from non-food feedstocks such as agricultural waste and wood products. It formed a joint venture with BP Plc to develop cellulosic ethanol last month.



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