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.