Fergus ethanol plant files for bankruptcy
FERGUS FALLS, Minn. - Otter Tail Ag Enterprises, which operates an ethanol plant here, has filed for Chapter 11 bankruptcy, the company announced.
The move - to which the plant's lenders agreed - will give Otter Tail Ag Enterprises more time to work out its financial problems.
The plant, which has 30 employees and can produce 55 million gallons of ethanol annually, remains open. It continues to buy corn, make ethanol and sell distiller's grain, a byproduct of ethanol.
"We believe that by filing for the protection afforded us under Chapter 11 of the U.S. Bankruptcy Code, we will be able to move forward with our senior lenders and members to restructure our debt and raise the necessary capital to move forward in today's economy," Anthony Hicks, Otter Tail's chief executive officer, said in a statement.
The company hopes to raise about $12 million in new capital, he said.
Otter Tail Ag Enterprises suffered significant losses in fiscal year 2009 and can't repay its $81 million in long-term debt under present terms and conditions, he said.
Like most ethanol plants nationwide, the Fergus Falls plant, which opened in 2008, was hurt by rising corn prices, falling gasoline prices and the national recession, Hicks said.
But economic conditions in the ethanol industry are improving, he said.