Heron Lake sale terminated, lender signs new agreement

By Holly Jessen | April 18, 2013

A 50 MMgy ethanol plant located in Heron Lake, Minn., won’t be sold after all. Instead, Heron Lake BioEnergy LLC has signed a new debt forbearance agreement with AgStar Financial Services, its main lender.

An asset acquisition agreement was signed in late January by Guardian Energy Heron Lake LLC, a wholly owned subsidiary of Guardian Energy Heron Lake holdings LLC, which is owned by four ethanol plants based in Minnesota and Nebraska.   However, the Heron Lake BioEnergy board voted to terminate the agreement. According to U.S. Securities and Exchange Commission documents, the sale agreement had been for $55 million in cash, plus other specifics on net working capital and debt obligations.

CEO Bob Ferguson told Ethanol Producer Magazine the facility is currently operating. On April 23 the company will hold an investor meeting to present a proposal for existing investors to recapitalize the company, possibly with convertible debentures. New management may also be brought in as Ferguson wants to retire. “I said that a year ago but I am still here,” he said.

Heron Lake BioEnergy utilizes 18 million bushels of corn annually, to produce ethanol and 160,000 tons of distillers grains, according to the company website. The company employs about 47 full-time workers.