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Ethanol company will file for bankruptcy

Wednesday, March 26, 2008

Ethanol, a hot commodity a year ago as dozens of producers announced plans for new plants, has cooled as an investment proposition in recent months.

Ethanex Energy Inc., a two-year-old ethanol company that was at one time pursuing plans for a production facility at the SEMO Port Authority, said it is planning to file for bankruptcy after being unable to gain interim financing. Bootheel Agri-Energy LLC in Sikeston, Mo., was recently forced to return cash invested in its proposed plant in Sikeston.

In a Securities and Exchange Commission filing Monday, Ethanex Energy said it had ceased operations, dismissed all but three of its employees and expected to file for bankruptcy protection "in the immediate future."

Ethanex at one time formed a partnership with SEMO Milling, a corn milling plant at the port, to produce ethanol. That partnership dissolved last year, but Ethanex forged ahead, winning a Missouri Department of Natural Resources construction permit for the proposed facility.

SEMO Milling has kept some ties to Ethanex but no formal partnership, said Bob Smallwood, president and chief executive officer of SEMO Milling.

The profit margin on ethanol has shrunk to about one-third the amount of a year ago, Smallwood said. High corn prices and falling ethanol prices are to blame, he said.

"We are focusing our efforts on building a world-class food-grade corn mill in Cape Girardeau," Smallwood said. "We have a technology division that is working on fuel, but our focus has come back to running a dry corn mill for Gilster-Mary Lee and Newly Weds Foods. It really has to do with the price of ethanol."

Among the issues cited by Ethanex in its SEC filing, it ended an agreement to buy a Nebraska ethanol plant owned by Midwest Renewable Energy LLC for $50 million. It said it had been unable to raise the $1.5 million in interim financing it needed while it tried to fund the entire deal, which also included two expansions at the existing plant. The deal was valued at $220 million in cash and stock.

Ethanex first mentioned bankruptcy as a possibility when it detailed its financial problems in a March 12 filing.

The company had originally planned to build three ethanol plants, each capable of producing 110 million gallons of the fuel additive annually. Company organizers raised $20 million in capital in 2006, then registered the company's shares for public trading. At their height in October 2006, the company's shares traded at an adjusted value of more than $48.

But the declining price for ethanol forced the company to change its build-first strategy last fall. In November, it agreed to buy the Nebraska plant, which could make 26 million gallons a year. Company officials hoped to use the plant as a proving ground for Ethanex's corn fractionation process, which they said made the fuel additive more efficiently.

In January, the company held a reverse stock split, reducing stockholders to one share for every 10 they owned. Shares were down 8 cents to 9 cents in over-the-counter trading Tuesday.

Staff writer Rudi Keller contributed top this report.

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Good. This is what happens to companies founded by people lying to the public about what ethanol can do.

The ethanol lie continues.

-- Posted by thegreatmosely on Tue, Mar 25, 2008, at 6:17 PM

I don't know about this ethanol gig, I beleive it is turning in to a complete "flop".

-- Posted by swampeastmissouri on Tue, Mar 25, 2008, at 9:42 PM

Ethanol is a sham.

-- Posted by CeilingCatKnowsBest on Tue, Mar 25, 2008, at 11:14 PM

meow ! here kitty ....

-- Posted by ..Rick on Wed, Mar 26, 2008, at 8:17 AM



-- Posted by Save_The_Queen on Wed, Mar 26, 2008, at 8:20 AM

You mean, adding 10% ethanol and getting 20% less MPG's and horsepower doesn't take the load off of the oil market?

You don't have to be smarter than a 5th grader to figure this one out.

-- Posted by malan on Wed, Mar 26, 2008, at 9:02 AM

I don't understand how an industry that is helping reduce our supply on foreign oil and saving consumers at the pump can receive so many harsh words. Unlike the previous post states, E10 does not cause a 20% redcution in mpg. It has around a 2% loss of BTU (heat energy) compared to gasoline which is is recaptured by the vehicle’s engine due to the higher octane of ethanol and its ability to burn more completely than gasoline. Drivers see little to no decrease in mpg. Ethanol is keeping prices down at the pump as well. At $0.07 per gallon savings(and savings are estimated at $0.05 - $0.10), Missourians save $219 million annually. Plants also bring dollars to local communities in the form of jobs, taxes and higher prices for corn producers. Why all the animosity towards an industry thats helping Missourians? We should be embracing this industry, not celebrating over a plant being unsuccessful.

-- Posted by Kasey on Wed, Mar 26, 2008, at 10:21 AM

Let me see now -15mpg before ethanol, 12mpg now. What math do you use that makes this the same? Mine tells me it's a 20% loss. Probably due to the fact that the performance has gone in the crapper and I have to really flog it to get up to and maintain speed. I haven't checked the mileage in the car but the performance is also way down and I would expect the mileage to be likewise.

Ethanol is a renewable resource and has great potential. The blended fuel is a great starting place for alternative fuel but, don't try to blow smoke and tell me I'm not spending more time & money at the pump because I know better.

-- Posted by malan on Wed, Mar 26, 2008, at 11:00 AM

Response to HHoleman:

But, you also have to look at the corn supply. What happens if you don't have enough corn to use for the ethanol? Like last year when we got that early freeze and hot summer. A lot of crops didn't do so well. What would they use in place of corn? How you can run an ethanol plant and keep employees employed without the supplies to run the business in the first place?

-- Posted by Wildnsyko on Wed, Mar 26, 2008, at 11:05 AM

In response to the previous posts:

I do not doubt that you have calculated mileage; however I do question whether it is fair to blame ethanol. Many factors (i.e. lower tire pressure, colder temperatures, poor road conditions) can decrease mileage. Unless it is known for sure that calculations were made before using E10 and after, (which is hard to determine as pumps are not required to label E10) it is unfair to blame ethanol for the reduction.

Corn shortage has not been an issue thus far. Last year nearly 1/3 of the corn in state was exported for lack of in state use. Farmers are making advances everyday to eliminate the fears of a possible 'Mother Nature' induced shortage. They are also becoming more efficient in production in order to maintain an abundance of corn.

-- Posted by Kasey on Wed, Mar 26, 2008, at 12:49 PM

I make a living with my vehicle and I keep it in top condition, it has only 56,000 miles. New tires didn't help. I have had two different dealerships try to find out what is wrong. They have checked everything they know to check including rolling weight and sticking brakes and have found nothing. Ethanol is the only thing I know that has changed. I have also talked to several other people that have seen the same kind of drop in efficiency.

Don't get me wrong, I think ethanol is a great first step away from oil but it should be viewed as such - just a first step. I don't think it is going to prove out to be the oil saving, money saving, greatest thing since sliced bread product it is touted to be.

With the price of oil skyrocketing, the development of alternative fuels become more viable. Ethanol isn't the solution by any means but is an important part of the evolution away from oil. I don't blame the owners of ethanol plants for trying to make a fast fortune, but I also don't have a lot of sympathy for them when they go belly up.

-- Posted by malan on Wed, Mar 26, 2008, at 9:52 PM

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