Big Ethanol Player Files for Bankruptcy
A major player in the U.S. ethanol market is filing for bankruptcy, following pressure from Midwest corn suppliers who say they’re owed millions of dollars and financial troubles for the Spain-based parent company at home.
Abengoa produces grain ethanol here in the Midwest and it also built a cellulosic ethanol plant in Kansas to make fuel from grasses and other bio-products. So-called advanced biofuel hasn’t truly hit the market and Abengoa’sfinancial trouble further stalls cellulosic fuel’s potential.
The company was poised to produce about 25 percent of the projected market, says Iowa State University economist Dave Swenson. He says if Abengoa’s problems can be resolved through debt restructuring, it could return to business more or less as usual.
If, instead, the courts force Abengoa to liquidate assets, Swenson says the big question will be whether its cellulosic technology, which has not yet operated at a commercial scale, is sound.
“If this is a viable technology,” Swenson said, “then this is an opportunity for somebody to buy something at something on the dollar that’s much less than one.”
Perhaps even more appealing than actual ethanol plants to a prospective investor, Swenson says, is the cellulosic technology itself, which companies hope eventually to license to others.
For now, Abengoa’s troubles should not have too big an impact on communities where it has plants. Swenson says the company has fewer than 500 employees in the United States.
“You can be a major player in this industry, but you’re really not a great-big employer,” Swenson said. “You’re not having a great-big impact on the local economy as a consequence of maybe (the) restructuring or reorganizing this produces.”