Panda Ethanol shares crushed by US unit's bankruptcy

26 January 2009 22:34  [Source: ICIS news]

HOUSTON (ICIS news)--Shares in US biofuels company Panda Ethanol fell by 95% on Monday following news over the weekend that its Hereford subsidiary in Texas was filing for bankruptcy protection.

The subsidiary filed a voluntary petition for relief under Chapter 11 laws due to a funding refusal by one of the project’s leading banks.

Panda now plans to sell the 115m gal/year refinery, which was in the late stages of construction.

Panda’s shares had closed at 17 cents (€0.13) on Friday ahead of the bankruptcy announcement. The stock had plunged to 0.9 cents by late Monday in the over-the-counter market.

News of the bankruptcy - one of many instances of financial stress in the US biofuels sector - dealt a public relations blow to the Renewable Fuels Association (RFA), the main US ethanol trade group.

The RFA in September 2008 ran a television campaign that declared ethanol production in Hereford “epitomised the importance of ethanol to US energy and economic security”, referring to biofuels production in oil-rich Texas.

Panda Ethanol owned one of two biorefineries in Hereford; the other is owned by White Energy and has capacity for 100m gal/year, according to the RFA.

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By: William Lemos
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