04 June 2009 21:42 [Source: ICIS news]
HOUSTON (ICIS news)--US biodiesel producer GreenHunter Energy may be looking to sell its refinery, the largest in the country, amid the ongoing collapse of the domestic industry, sources close to the company said on Thursday.
The move would come almost exactly a year after the company opened its 105m gal/year (397m litre/year) refinery in Houston and during a turbulent era for most biofuels producers.
“They are trying to just sell the biodiesel unit of the company,” the source said. “The lawyers are involved and third-party people are trying to sell it for them.”
GreenHunter representatives did not respond to multiple calls for comment. The Grapevine, Texas-based company is also connected to wind-energy projects in California.
No indication was given as to whom potential buyers would be or a potential asking price. GreenHunter said the refinery cost it $70m (€50m) when it first opened.
Biodiesel industry insiders said GreenHunter has recently been trying to sell as much of their biodiesel inventory as they could - even at prices below production costs - in a quest for cash.
“They’re selling it for whatever they can,” one producer said. “They just want the cash.”
GreenHunter posted an $82m loss for 2008. In its first quarter 2009 earnings statement with the US Securities and Exchange Commission (SEC), it reported a working capital deficit of $53m, including $42.9m owed to bondholders. Net revenues for the period were $3.2m, compared with $178,000 the same period last year.
Amid such dire straits, it laid off 40 employees - the majority of its workforce - and idled the refinery.
GreenHunter also said in regulatory filing that its stock was selling at such low levels that it was in danger of being removed from the American Stock Exchange (AMEX). Its stock was selling at or below $1.00/share in mid-day trading, down from a 52-week high of $23.85/share.
The company opened the refinery in July 2008 amid much optimism in the industry. Crude oil prices reached a record high of $147/bbl that month, leading fuel blenders to consider renewable diesel as a less expensive additive.
US biodiesel companies were also selling most of their output at that time to the EU, which was busy trying to fill mandated biofuels requirements.
GreenHunter’s prospects darkened after Hurricane Ike scored a direct hit on its refinery last September, forcing it to close for two months.
Then came the collapse of world credit markets, EU tariffs on imported US biodiesel and the drop in fuel demand in the US. The US government is still debating renewable fuel mandates, the only thing many biodiesel producers think could boost domestic demand and save their industry.
The scenario has already claimed the operations of other biodiesel giants in the US.
Imperium Renewables idled its 100m gal/year plant in Grays Harbor, Washington, in January. Nova Biosource Fuels, which had three plants in the midwest with combined production capacity of 70m gal/year, filed for bankruptcy in March.
In a May radio interview, GreenHunter President and CEO Gary Evans recounted meeting a group of US senators in Washington DC, and explaining that policy makers’ focus on aid for more advanced biofuels was leaving older renewable fuels companies in the dust.
“We told them, look, you keep talking about second-generation biofuels,” he said in the interview. “But what about the first generation? We’re dying on the vine.”
($1 = €0.71)
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections