A Nebraska company will buy a bankrupt ethanol plant located near Fergus Falls in northwest Minnesota.
Under a purchase agreement approved today by a bankruptcy judge in St. Paul, Green Plains Renewable Energy will buy the Otter Tail Ag Enterprises ethanol facility for $55 million. The plant, plagued by financial problems from the time it started operation in early 2008, filed for bankruptcy in October 2009.
Based in Omaha, Green Plains operates eight plants producing 660 million gallons of ethanol a year. The addition of the Fergus Falls plant will add another 55 million gallons to the company’s production.
In a news release, Green Plains CEO Todd Becker said the Minnesota purchase fits the company’s future plans.
“We are continually looking for opportunities to expand production at reasonable valuations and adding this plant to our business is a solid fit for us,” Becker said.
Otter Tail Ag defaulted on a $31 million loan with AgStar Financial Services in early 2009. At the time, the company blamed its problems on high corn prices, the main ingredient for making ethanol. The company posted a $21.5 million loss that year.
As part of its effort to reorganize under bankruptcy protection, the company attempted to raise $12 million in equity from investors last summer, but the effort failed.