Ethanol Plant Saga Continues; Sides Disagree on What's True

Just when you thought it may finally be over, the drama continues to unfold concerning the fate of Wisconsin's largest ethanol plant.

The Iowa-based ALL Fuels & Energy issued a press release this week that claims its subsidiary, ALL Fuels - Jefferson, LLC, had made arrangements to purchase the bankrupt Renew Energy plant from Valero Renewable Energy for a price of $100 million; but the deal then fell apart after Valero changed its mind. As Wisconsin Ag Connection had been reporting, All Fuels was the firm that lost out in an auction to purchase the plant, then unsuccessfully contested a ruling by the sale's coordinators (in a federal bankruptcy court) that Valero submitted the highest bid.

In its latest claim, ALL Fuels said they had made an arrangement with Valero in late January to buy the plant for $28 million more than the $72 million winning bid made by Valero for the factory and its assets. But when the parties were set to finalize the terms, a top company official with Valero denied that the deal was ever official.

"On Tuesday, January 19, 2010, ALL Fuels offered Valero $82 million cash for Renew. Valero countered the ALL Fuels $82 million bid at $100 million. On Friday, January 29, ALL Fuels accepted Valero's $100 million counteroffer. Valero's closing with Bankers Bank is now set for Thursday, February 4, 2010," the press statement read. "On Friday, January 29, after ALL Fuels agreed to Valero's $100 million price for Renew, Valero's V.P. of Alternative Energy and Project Development, George Stutzmann, notified ALL Fuels at 5:53 PM, 'We do not have a deal. While we casually discussed the $100 million number as something that might be of interest awhile back, it no longer is and we are now committed to close.'"

As he said in previous statements, ALL Fuels President Dean Sukowatey proclaimed the original auction, which was held in Madison on December 11, 'was not followed in good faith.'

"Our bid (at that sale) exceeded the successful Valero bid by $5 million, but Bankers Bank, Valero and William Blair (the sale coordinator) unilaterally discounted our offer, in order to terminate the auction and accept Valero's bid," Sukowatey said. "We negotiated in good faith, and were ready to go much higher, but the auction was prematurely terminated. To purchase Renew Energy, we had no choice but to deal directly with Valero, and bid up the price even before the closing has taken place."

So what is Valero's take on the issue? Company Spokesman Bill Day told the Milwaukee Journal-Sentinel that his firm did not have a deal with All Fuels and 'never did.'

"We took their calls and had some courtesy discussions, but it was not what I would consider serious negotiations," he told the newspaper.

In a press announcement of their own on Thursday, Valero said it has now closed on its purchase of the ethanol plant--bringing the total number of such facilities in their portfolio up to 10, with a combined production capacity of 1.1 billion gallons per year.

Meanwhile, Sukowatey said he has not ruled out the possibility of taking the issue to court.

It was just one year ago last week when Wisconsin Ag Connection broke the news that Renew was filing for Chapter 11 bankruptcy after its bank refused to extend an operation loan. At that time, Board Chairman Paul Olsen said the company planned to continue producing ethanol fuel. But less than a week later, Olsen's other company, Olsen's Mill Inc., was forced into receivership because that firm had helped finance the ethanol plant and both were struggling from the downturn in the farm economy. Olsen's Mill had been handling all the corn purchasing agreements for Renew Energy.

source: wisconsinagconnection