|
New Energy ethanol plant in South Bend (South Bend Tribune file photo) (February 24, 2013) |
SOUTH BEND (AP) — The president of a company that saw Indiana's oldest ethanol plant sold as part of bankruptcy proceedings say he hopes the liquidators who purchased the facility might reopen it.
But a Purdue University professor who follows the ethanol industry says the $2.5 million sales price for the New Energy Corp. plant signals the facility is more likely to be scrapped, a victim of the flat demand for gasoline and high corn prices that have challenged ethanol producers across the nation this year.
Wallace Tyner, a professor of agricultural economics at Purdue University, said the price surprised him.
"This is the first one I've seen that clearly looked like a scrap deal. I have no knowledge of this happening anywhere else," Tyner, a professor of agricultural economics, told the South Bend Tribune (http://bit.ly/Y2Hgz3 ).
"I can't imagine at that price that they're planning on restarting," he said. "It says to me that it's not worth anything as an ethanol plant."
New Energy President Russ Abarr, who had hoped the auction price would cover the company's $54 million in debt, acknowledged that the auction sale looked like a scrap deal. But he said the two liquidators that bought the plant are talking with operators who could reopen it.
"I still believe there is a good chance the plant will return to operation," Abarr said.
The plant, which cost more than $180 million to build, opened in 1984 and could produce 100 million gallons of ethanol a year, but it shut down when the company filed for Chapter 11 bankruptcy in November. A federal bankruptcy judge approved the sale three months after that filing.
Representatives for the buyers — Detroit-area Maynards Industries and Los Angeles-based Biditup Auctions Worldwide — declined to comment.
New Energy employed 126 people before cutting its staff to 90 in June 2011, according to bankruptcy documents. A small staff remained throughout the bankruptcy to maintain the property.
Eric Horvath, the city's public works director, said city officials are working with the new owners in hopes of resuming operations at the plant. The company was a major customer for South Bend's wastewater system and would have generated about $2.2 million in revenue for the utility this year.
"We are hopeful that we will be able to get a new owner to put the plant back in operation," Horvath said. "At the same time, we are adjusting our operations to the degree possible at our wastewater plant to help reduce our overall expenses."
