Ethanol plant receives temporary reprieve
MPR File Photo/Mark Steil
A financially troubled ethanol plant in southwest Minnesota has been given a two-month extension on its line of credit.
In a Securities and Exchange Commission filing posted Monday, Heron Lake BioEnergy disclosed that AgStar Financial Services has agreed to "extend the maturity date for the Revolving Line of Credit Loan and the Forbearance Agreement" for up to 60 days.
In exchange for the agreement, Heron Lake BioEnergy, which lost $17 million over the last five years, paid 50 percent of its deferred interest bill, company officials said.
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A dollar amount was not published in the filing.
AgStar officials say they will not declare Heron Lake BioEnergy in default if the company can meet the terms of the latest agreement. Heron Lake owes AgStar about $54 million.
The Heron Lake plant produces nearly 50 million gallons of ethanol a year.
Many ethanol companies are struggling now with very low, or even negative, profit margins. Ethanol prices have moved up recently, but the industry must pay very high costs for the corn it turns into ethanol. Corn prices are over $7 a bushel now on the futures market.
Heron Lake BioEnergy's financial difficulties came to light in a January SEC filing, when the ethanol company acknowledged that it needed additional capital to remain in business. Heron Lake BioEnergy officials also said the company needed to raise $4.5 million by March first to repay a line of credit.
The latest filing doesn't say whether the company was able to raise that money. So far neither Heron Lake BioEnergy or Agstar have responded to requests for comment.