BioFuel Energy rises on 4Q profit, but debt looms

Shares of ethanol producer BioFuel Energy Corp. jumped on Tuesday after it reported its first quarterly profit, even though its auditor said there is "substantial doubt" about its ability to stay in business because of debt coming due in September.

The company's shares rose 48 cents, or 15.6 percent, to $3.56 in midday trading.

BioFuel Energy, which is based in Denver, said late Monday that it earned $6.8 million, or 21 cents per share, during the quarter that ended Dec. 31. During the same period in 2008, it lost $6.9 million, or 43 cents per share.

Its quarterly revenue rose 35.3 percent to $120.4 million, from $89 million a year earlier.

The company's annual report filed on Tuesday said that $16.5 million in working capital loans come due in September.

"If current operating conditions do not improve, the company is unlikely to have sufficient liquidity to both repay these loans when they become due and maintain its operations," it wrote in the filing.

The company said it would try to extend the debt's maturity or, if that fails, raise money from other sources. As of the end of the year it had $6.1 million in cash and equivalents.

Referring to the debt maturity, auditors Grant Thornton LLP wrote in the annual report that, "These factors, among others ..., raise substantial doubt about the company's ability to continue as a going concern."

President and CEO Scott H. Pearce also said the spread has narrowed between what it pays for corn and what customers pay for the ethanol it makes, which will make the first quarter tougher.

For the full year, BioFuel Energy said it lost $13.6 million, or 57 cents per share. That compared with a 2008 loss of $40.9 million, or $2.65 per share. Full-year revenue more than doubled to $415.5 million, from $179.9 million in 2008.

source: businessweek