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Who Will Buy Bankrupt Ethanol Maker Aventine?

Bankrupt ethanol producer Aventine Renewable Energy is no longer tying up all its effort and hopes into recapitalization. Company leaders obviously aware of the massive hurdles it faces, has put its business up on the public selling block.

Will another oil refiner, like Valero Energy, jump into the biz and buy up Aventine or will one of the remaining ethanol producers add to their growing repertoire?

I suppose a reorganization could happen. It's far more likely the ethanol producer and marketer will be sold, and probably in pieces by the June 17 deadline.

Aventine's announcement indicates a number of other companies are interested in buying the business. I'm not going to place any bets, but it's worth watching Green Plains Renewable Energy.

The ethanol producer became the fourth-largest in the U.S. after it bought two plants in Nebraska last week for $123.5 million. The plants were purchased from AgStar Financial Services, a lending group that bought them from bankrupt VeraSun.

Green Fields has said it is interested in growing its business, which already includes an agronomy, ethanol production, marketing and grain storage operations. The company's business model is about maintaining a balance with all of its operations. For example, it wants grain storage units surrounding its ethanol plants.

Aventine has three operating ethanol plants. Two are located on its Pekin, Ill. campus and together produces 157 million gallons a year. The third plant, in Aurora, Neb., produces 50 million gallons a year. That leaves two additional 113 million gallon-per-year plant projects -- in Aurora and Mount Vernon, Ind. -- sitting in construction limbo. The Aurora, known as Aurora West, and the Mount Vernon plants are more than 80 percent complete, according to an Aventine spokesman.

Green Plains -- not counting the two Nebraska plants -- has four ethanol plants in Iowa, Indiana and Tennessee. Aventine's Pekin campus looks like a good fit for Green Plains.

If Green Plains purchased the Pekin campus, the company would expand its capacity and its geographic footprint, without spreading itself too thin. The Pekin campus also operates a wet and dry mill and is located close to major interstates and railways.

Ten ethanol production companies including Aventine have filed for bankruptcy in 2009, which means the glut will ensure low purchase prices. Just last week, BNET noted how ridiculous cheap ethanol plants are these days, by highlighting Sunoco's and Green Plains' deals.

In the next few weeks, we'll see if Aventine's assets are simply too good for Green Plains to pass up.

See BNET's previous coverage of the biofuels industry:

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