Idled plant looks to restart, some aim to replace board members

By Holly Jessen | July 15, 2013

East Kansas Agri-Energy LLC, a 35 MMgy ethanol plant in Garnett, Kan., is preparing for restart this fall. The facility temporarily idled in October and the company said at the time that it was mainly due to the drought and rising feedstock prices and availability. “Our plan is [to restart] Sept. 15,” Bill Pracht, board chairman, told Ethanol Producer Magazine. “Corn harvest is going to be delayed here a couple weeks. We had planned Sept. 1 but now here today it’s Sept. the 15th.”

The board is confident it will restart the plant from a financial perspective. This summer’s weather conditions and the end result of the corn crop is still the unknown, however. “We’ve got to have the rainfall to grow it, so that’s the biggest concern today,” he said, adding that a total of 13 employees are still working on site.

Scott Brittenham, CEO of Clean Energy Capital LLC, East Kansas’s largest shareholder, announced July 5 that he and a group of concerned shareholders had developed a strategic plan to revive the company. The group has distributed a summary to all shareholders, detailing what they consider a series of financial and strategic missteps by the existing board of directors, most notably the failure to anticipate and adjust to changing market conditions, which led to the shutdown.

The group has asked shareholders to support a plan that would put a new, smaller board of directors in power, only two of which would be retained from the current board. The proposal will be voted on at an Aug. 7 meeting in Lawrence, Kan. “The current board may have been adequate for the start of East Kansas, but changing market conditions now demand different skill sets on the board,” Brittenham said in a prepared statement. “The plant shutdown could have been averted through clearer vision, sound business decisions and better policymaking by the board. The new directors we’re recommending have the risk management and ethanol industry experience necessary for tackling the challenges that have mounted.”

The Aug. 7 meeting is a special meeting, Pracht clarified, adding that the annual board meeting is set for Aug. 17, in Garnet, Kan. The current board views the move as an attempt to take over the company by Clean Energy Capital. “The present management is doing everything they can, in our power, to assure they don’t get the votes to do that,” he added. “… We’re confident we’re going to have the votes to prevail.”

East Kansas was among other ethanol plants that cut back on production in 2012 and eventually idled. At the time 35 people were employed at the plant. The company formed in 2001 with production beginning at the originally 42 MMgy plant in 2005.