By Jennifer Calhoun
RAEFORD – Hoke County’s first ethanol plant, Clean Burn Fuels, brought in an opening bid of $34.5 million last week during a foreclosure sale.
The first, highest and only bidder was the plant’s primary lender, Cape Fear Farm Credit.
“No third party bidders revealed themselves,” said Lonnie Player Jr., the Fayetteville lawyer who acted as trustee for the foreclosure sale.
Cape Fear Farm Credit ordered the foreclosure sale earlier this month, Player said.
The $100 million plant had been in the works since 2005, when Clean Burn approached the Hoke County Board of Commissioners with the project.
Two years later, the plant had received $35 million in loan guarantees from the U.S. Department of Agriculture as an incentive to develop renewable energy sources. Millions more came from a bank loan and private investors.
Player said the auction drew plenty of interest, but no additional bids.
“A number of people were there,” he said.
Interested third-party bidders have until 5 p.m. on Sept. 6 to bid on the plant. That bid should be a minimum of 5 percent more than the opening bid, or $36,225,000, Player said.
After that, other bidders would have 10 working days to place another upset bid. The bid would need to be at least 5 percent higher than the previous bid, Player said.
“Theoretically, that could go on indefinitely,” he said. “I’ve seen bids be upset for nine months.”
He added: “Obviously, the lender and debtor hope that happens.”
When the final bid is placed, he said, the highest bidder would have 30 days to close the deal.
The plant was expected to employ about 100 people and produce about 60 million gallons of ethanol a year, beginning in summer 2008.
But delays plagued the plant, and production began slowly in late spring 2010.
The plant had been producing ethanol for less than a year, when owners announced in March they would shut down production temporarily because of the rising cost of corn.
Production was expected to resume a few months later, when the cost of corn went down, owners said at the time.
Within a month of suspending production, however, the company filed for Chapter 11 bankruptcy.
In a statement, company officials said the bankruptcy filing was a way to protect their investments while figuring out a plan to resume production.
“Despite good faith discussions with its secured lenders and key vendors, the company has been unable to reach a consensual agreement on a proposal to return the plant to profitability,” the statement said.
Staff writer Jennifer Calhoun can be reached at firstname.lastname@example.org or 486-3595.