Renew Energy files bankruptcy, plans going-concern sale

By Caroline Salls

Pittsburgh, Feb. 2 - Renew Energy LLC filed Chapter 11 bankruptcy Friday in the U.S. Bankruptcy Court for the Western District of Wisconsin.

The company said its exit strategy includes a going-concern sale, followed by a liquidating plan that will maximize the return to Renew's creditors.

According to court documents, the company's problems stem from a "margin squeeze" caused by increasing prices for raw corn and decreasing retail prices for ethanol.

As a result, Renew said its gross margins have declined to a level at which it is unable to service its debts and operate its business.

In connection with the bankruptcy filing, Renew is seeking court approval of $2.5 million in debtor-in-possession financing from West Pointe Bank that is crucial to the continued operation of the company's ethanol manufacturing plant in Aztalan, Wis.

Interest will be 6%, and the facility will mature on the earlier of March 1 or upon the availability of post-bankruptcy take out financing from other lenders.

Right now, the company said it only has enough cash to operate for one to three days. If the plant were forced to cease operations even for as little as 48 hours, Renew said the going-concern value of the business would be lost and the plant would freeze, which would hurt its liquidation value.

The company said it expects the $2.5 million DIP loan to take it through the end of February, but Renew said it plans to hire William Blair & Co. LLC to seek a longer-term $10 million DIP facility that would enable the company to continue operations during the sale process.

The company listed $100 million to $500 million in both assets and debt.

Renew's largest unsecured creditors include Olsen's Mill Inc., Auroraville, Wis., with a $20.02 million corn claim and Utica Energy, Oshkosh, Wis., with a $3.93 million trade claim.

Renew Energy is a Jefferson, Wis., ethanol producer. Its Chapter 11 case number is 09-19491.

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