Richardton ethanol plant struggles financiallyBISMARCK (AP) — A financial report filed with the Securities and Exchange Commission shows the Red Trail Energy ethanol plant in Richardton lost $5.4 million last year.
BISMARCK (AP) — A financial report filed with the Securities and Exchange Commission shows the Red Trail Energy ethanol plant in Richardton lost $5.4 million last year.
The report cites lower demand nationwide, saying about 20 percent of domestic ethanol production has been shut down since March.
Red Trail Board Chairman Mike Appert said the Richardton plant’s primary lender, the First National Bank of Omaha, will allow the plant to forgo two payments on its principle in exchange for a higher interest rate on its debt.
Red Trail is not planning at this point to file for Chapter 11 bankruptcy, Appert said.
“We are evaluating, on an ongoing basis, the capacity at which to operate our plant, including possibly shutting down until margins improve,” Red Trail said in its financial report. “At this time, we believe that operating our plant, even at a reduced rate, is a more favorable option than shutting down.”
The plant opened in 2007. It produced nearly 55 million gallons of ethanol last year.
“It’s been ugly,” Appert said of the financial situation. The board met Thursday in Bismarck to discuss the company’s finances.
The first half of 2008 saw a $7.8 million gain for Red Trail as prices increased for corn and for ethanol, the financial report said. But corn prices fell during the last half of the year and Red Trail’s contracts with corn suppliers, which are based on fixed prices, suddenly were valued more than the price of corn, Appert said. It led to a $13.2 million loss.
“We anticipate that, unless market conditions improve, more plants will shut down or slow down which we believe should eventually lead to higher ethanol prices,” the company said in its report to the SEC.
Mick Miller, the president of Red Trail Energy, plans to resign from that job June 15. Appert said Miller’s decision to step down was a personal choice, unrelated to the financial status of the company. He said Miller plans to go into the ethanol business with his brother.
Miller will be succeeded by Gerald Bachmeier, the ethanol plant’s largest shareholder as well as the current manager of Red Trail’s management company, Minnesota-based Greenway Consulting.
Matt Hartwig, a spokesman for the Washington, D.C., based Renewable Fuel Association, said 24 of the 196 ethanol plants in the United States have stopped production due to the economic slump, after record ethanol industry growth over the past decade.
“We will produce more ethanol in 2009 than we did in 2008,” Hartwig said. “But the kind of growth we saw — that’s not necessarily sustainable in any industry in the long term.”