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9/23/2020 3:47:02 PM
Posted: 12/21/2009 12:08:47 PM EDT
By DAN PILLER


December 21, 2009





Hawkeye Energy on Monday put its ethanol plants at Iowa Falls and
Fairbank into bankruptcy in U.S. Bankruptcy Court in Wilmington, Del.,
essentially turning over the operations to a group of banks led by
Credit Suisse.





The Iowa Falls and Fairbank plants, each of which employs about 45
workers, will continue to operate under the current management, Hawkeye
president Bruce Rastetter said. They also will continue to buy corn and
will honor forward contracts for purchases of corn from farmers.





Hawkeye's plants at Menlo and Shell Rock are not affected by the filing, Rastetter said.





Hawkeye said it owes bank debt between $500 million and $1 billion to
the consortium of lenders that took out the loans in 2006 after Hawkeye
withdrew a planned initial public stock offering.





Against that debt, Hawkeye has about $250 in assets, Rastetter said.





Hawkeye's creditors already have approved the plan, Rastetter said, and
it is anticipated that the Iowa Falls and Fairbank plants will emerge
from bankruptcy within 60 to 90 days.





"On a valuation basis, the debt taken out in 2006 was based on a value
of about $4.50 per gallon of ethanol," he said. "Today the valuation is
about $1-$1.10 per gallon."





"It's a different world today than in 2006," Rastetter said.





In a letter to employees, Rastetter said the Iowa Falls and Fairbank plants will operate as "business as usual."





"You will continue to receive your usual pay and benefits without
interruption," Rastetter said in the letter. "All corn suppliers will
be paid in as usual and sales of ethanol and distiller's grains will
continue normally."





Rastetter said in the letter there would be no cutbacks or layoffs as a
result of the bankruptcy filing. Management will remain in place.





The ethanol industry suffered a sharp reversal in the second half of
2008 as plants were hit first by record-high prices for corn, then a
drop in the price of oil and demand for gasoline.





Other producers such as VeraSun Energy, Aventine and Pacific Ethanol
were forced into bankruptcy. VeraSun's Iowa plants at Fort Dodge,
Albert City, Hartley and Charles City were sold to Texas refiner Valero
Energy.





Ethanol producers generally have seen more favorable margins in the
last half of this year as demand for ethanol blending recovered and the
price of corn has stayed below $4 per bushel.





"But we have been working with our lenders since last winter because we
knew that the debt load was going to be too much," Rastetter said.





After it withdrew its IPO in mid-2006, Hawkeye sold 80 percent of
itself to the Thomas H. Lee group investment banking partnership.
Rastetter and other private investors retained control of the other 20
percent equity.





http://www.desmoinesregister.com/article/20091221/BUSINESS/91221011/-1/watchdog/Hawkeye-puts-two-of-four-ethanol-plants-into-bankruptcy

Link Posted: 12/21/2009 12:10:41 PM EDT
It didnt make any sense.

You need oil products to make the alcohol.

The only thing it did was raise the price of food.

And that I was the real reason for the whole push to ethanol.

To increase the price to help American farmers not offer an alternative fuel.
Link Posted: 12/21/2009 12:15:14 PM EDT
Originally Posted By m23shooter:
It didnt make any sense.

You need oil products to make the alcohol.

The only thing it did was raise the price of food.

And that I was the real reason for the whole push to ethanol.

To increase the price to help American farmers not offer an alternative fuel.


It made a lot of ADM stockholders rich.
It also decreased the MPG of the fuel you used.  
Just another bad idea foisted on the American People by an out of control government.
Link Posted: 12/21/2009 12:17:42 PM EDT
In Saint Paul they had a subsidized ethanol plant that resorted to using expired soda for sugar and it still went under.
Link Posted: 12/21/2009 12:20:26 PM EDT


Maybe they should just start selling corn based vodka?
Link Posted: 12/21/2009 12:22:58 PM EDT
There is absolutely no way for one of those Ethanol plants to run at a profit. If you see one operating, it is because they are receiveing government money (Tax dollars).
Link Posted: 12/21/2009 12:22:59 PM EDT




Originally Posted By m23shooter:

It didnt make any sense.



You need oil products to make the alcohol.



The only thing it did was raise the price of food.



And that I was the real reason for the whole push to ethanol.



To increase the price to help American farmers not offer an alternative fuel.


Your post doesn't make any sense.  Neither does the article posted.  $4.50 a gallon for ethanol?  Who was smoking crack when they came up with evaluation of prices!



Despite what you believe there is no mass conspiracy to raise food prices to help the American farmers.  There is no national "farmers union" nor can they somehow magically control congress.



Here is how things played out.  The government wanted "alternative fuels" so they could claim they "reduced our dependency on foreign oil". Both parties try to push this idea and take credit for it.  The government then creates huge tax incentives for companies to produce alternative fuels.  With the government incentives the alternate source of energy now becomes affordable so being a free capitalistic country that we are people form business entities to get the government cash.  That's about all the planning they put into things.  This is exactly what is going on with Wind Energy right now.  The government is picking up half the tab to build all these new windmills and then giving them a tax break on the income.  All these windfarms are going up to get that government money.  Once the government money, subsidies, and tax breaks run out these huge wind farms are no longer profitable.



The farmers had a new buyer for their crop and happily sold to the highest bidder, given that we are a free capitalist society.  Ethanol was supposed to have a price of under $1.00 a gallon and be a cheap renewable alternative to gasoline.  Instead Ethanol has always been priced about 10% cheaper than gasoline no matter what gasonline prices have gone up to.  Since gas peaked at just over $4.00 a gallon, whoever created a business entity based on ethanol being priced at $4.50 a gallon should go to jail for fraud, pure and simple.  Someone swindled all those investors out of their money and probably pocketed the governments subsidies to boot.





Link Posted: 12/21/2009 12:24:28 PM EDT
Maybe they could use ethanol to fire the power plants after obama shuts down all the coal mines.
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