A plant in cold idle since December 2010 is one step closer to being under new ownership. A judge approved the sale of Levelland Hockley County Ethanol LLC at a May 10 court hearing.
Two current ethanol producers bid on the 40 MMgy Levelland, Texas, ethanol plant, including a $9.21 million bid from Palmer Energy and an $8.9 million bid from Western Plains Energy LLC&cedil; according to I. Richard Levy, an attorney for Levelland Hockley County Ethanol. The judge approved both bids, in case Palmer Energy doesn&rsquo;t close the sale in a timely manner, he said, adding that closing with Palmer Energy is expected May 14.
The company was formed by Conestoga Energy Partners LLC, which operates Bonanza BioEnergy LLC, a 55 MMgy ethanol plant in Garden City, Kan., and Arkalon Energy LLC, a 110 MMgy ethanol plant in Liberal, Kan. The other bidder, Western Plains Energy, operates a 45 MMgy ethanol plant in Oakley, Kan., and started the bidding with a $7 million stalking horse bid.
The ethanol plant, which utilized corn and milo as feedstocks, filed for Chapter 11 bankruptcy protection on April 27, 2010. Ten employees have remained working on site while the plant has been in cold idle. The good news is that the $9.21 million bid is a higher per-gallon price than fetched for some other ethanol plants sold recently, Levy said. Indeed, <a href="http://www.ethanolproducer.com/articles/8740/bionol-plant-purchased-for-9-35-million-at-auction" target="_blank">Pennsylvania Grain Processing LLC paid $9.35 million for a 110 MMgy plant</a> in late April.&nbsp;
It&rsquo;s also good news for the local economy. For one thing, if the plant is restarted it will mean more jobs. Levy said&nbsp;either bidder should be able to &ldquo;make a go of&rdquo; running the Levelland ethanol plant. The facility is very new but has operated successfully in the past. Levelland Hockley County Ethanol was doing well until it had to shut down for a few weeks for a turbine repair. &ldquo;That was it,&rdquo; he said. &ldquo;Their working capital essentially evaporated.&rdquo; &nbsp;
It&rsquo;s far from a win, however. &ldquo;There are a lot of people who lost a lot in this arrangement,&rdquo; he said. The list starts with shareholders that paid in equity, which has now been wiped out. &ldquo;A lot of those people were mom and pops, and business people in the Levelland area, so that&rsquo;s a sad loss,&rdquo; he said.
Although there is a provision for a small amount of the sale money to remain in the estate, the creditors are also losing out. &ldquo;They are not going to get paid anything significant,&rdquo; Levy said. &ldquo;Even the secured lender took quite a haircut on this.&rdquo; GE Energy Financial Services, which is serving as an agent for themselves and a group of banks, was owed about $33 million and, after taxes, will receive only about $7 million.

Conestoga Energy Partners LLC operates two ethanol plants, including Bonanza BioEnergy LLC, a 55 MMgy ethanol plant in Garden City, Kan. 

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Conestoga Energy Partners LLC also operates Arkalon Energy LLC, a 110 MMgy ethanol plant in Liberal, Kan. 

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A plant in cold idle since December 2010 is one step closer to being under new ownership. A judge approved the sale of Levelland Hockley County Ethanol LLC at a May 10 court hearing.

Court approves sale of ethanol plant, closing expected Monday

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