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Panda sells ethanol plant for a song

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A U.S. bankruptcy court in Texas last Friday approved the sale of Panda Ethanolhereford-biofuels’s main plant in Hereford, Texas – Hereford Biofuels – for $25 million in credit to senior lenders led by Societe Generale.

That amounts to about 12 percent of the original construction and outfitting cost.

Hereford Biofuels is one of four subsidiaries of Panda Ethanol that filed for Chapter 11 bankruptcy in January. It was the lead entity constructing the $200 million, 100-mgy plant that was close to completion.

Societe Generale has not disclosed its plans for the plant. It is resolving disputes with Lurgi, the general contractor, and two lenders, Banco Bilboa and Greenstone regarding construction and funding issues.

The sale of the Hereford subsidiary under Section 363 of the U.S. Bankruptcy Code and the outstanding funding and construction issues, which are in arbitration, make the future of Panda uncertain. It was not a part of the Chapter 11 bankruptcy filing. But in March Panda decided to deregister as a public company with the Securities and Exchange Commission, suspending its obligations to file various financial reports with the SEC.

Darol Lindloff, Panda’s CEO, said at that time the company’s board determined that “going dark is in the best interest of the company and its stockholders.”

Panda announced financing to build the plant in August 2006. The plan called for the plant to go up on 380 acres north of Hereford. The operation envisioned turning more than 1 billion pounds of cattle manure from feedlots and dairies each year into fuel for the boilers supplying steam to the plant.

The next best bid for the plant was $15 million in cash from Ethanol Europe.

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Written by William DiBenedetto

27 April, 2009 at 12:15 pm

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