09 September 2009 20:45 [Source: ICIS news]
HOUSTON (ICIS news)--US biodiesel major GreenHunter Energy plans to apply for $100m (€69m) in government guaranteed loans and seek a joint venture (jv) for its refinery in a bid to stay alive in the market, the company chief executive said on Wednesday.
GreenHunter Energy CEO Gary Evans told the audience at an investors conference in New York City that lawyers for the beleaguered refinery were putting the finishing touches on loan applications to be filed with the US Department of Energy (DOE) on Friday.
GreenHunter idled its 105m gal/year (397m litres/year) biodiesel refinery near the port of Houston in April after a year of hurricanes, volatile commodity prices and demand destruction took their toll on Greenhunter's business and the US biodiesel industry in general. Its Houston refinery is the largest in the US.
“Part of our business model is to have tenacity and hang on until things turn around,” Evans said. “If the first generation of the biofuels industry destroys all the capital, you can forget the second generation.”
At the same time, GreenHunter is using Imperial Capital investment bank to find investors interested in forming a joint venture with the refinery. Evans did not name any potential partners.
“We have a lot of international parties interested in making a joint venture with us due to our location right on the water,” he said.
GreenHunter reported $4.5m in net profit for the second quarter, compared with a net loss of $7.3m during the same period the year before. But about $9m of its income came from settlements on insurance claims the company filed after suffering a direct hit from Hurricane Ike in 2008.
After a year of his business suffering economic body blows, Evans said he was starting to see some signs of hope.
Lawmakers in Washington DC were more receptive to extending a critical $1/bbl biodiesel blending credit for multiple years at a time, and not just annually, he said.
The steady rise of crude oil prices was also helping biodiesel makers to get their profit margins into shape, Evans said.
“As we’ve approached $65-70/bbl, we’re breaking even,” he said. “We need oil at $80-85/bbl to get business done.”
($1 = €0.69)
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