Biofuel Energy hires financial adviser, may sell both plants

By Holly Jessen | March 29, 2013

Biofuel Energy Corp., a publically traded company that owns and operates two ethanol plants, has announced it has engaged Piper Jaffray & Co. to act as its financial adviser. The goal is to explore strategic alternatives, including potentially selling one or both of the ethanol plants.

The two 110 MMgy facilities include Pioneer Trail Energy in Wood River, Neb., and Buffalo Lake Energy in Fairmont, Minn. While the Pioneer Trail facility remains in operation, the Buffalo Lake plant idled at the end of September after it missed a $3.6 million debt payment. In late February the company said it had eliminated about 40 full-time positions at the plant.

Since receiving the initial default, the company’s subsidiaries have made no regularly-scheduled principal or interest payments, according to a March 26 press release. The total due through Dec. 31 was $8.3 million. “The lenders under the senior debt facility have indicated that they are willing to provide the company with a grace period until July 30, 2013, to allow the company to pursue one or more strategic alternatives,” the press release said. The grace period could be extended and would be subject to the company achieving specific milestones.

Further, if one or both of the ethanol plants is sold, the money will first go to pay off the outstanding debt under the senior debt facility. Any remaining funds would go to Biofuels Energy. However, there are no assurances that shareholders will gain any value if the plant or plants are sold. As of Dec. 31, the company had $9.3 million in cash and cash equivalents. Of that, the parent company held $8.6 million and the operating subsidiaries held $700,000, the press release said, noting that the $700,000 is subject to the security interest of the lenders under the senior debt facility. “Those balances have not changed materially since,” the press release said.