Renova plant set for auction Nov. 10

HEYBURN — Creditors of the bankrupt Heyburn ethanol plant Renova Energy Idaho LLC have brought in an auction company for a Nov. 10 sale of the property.

The auction is a backup plan in case no buyer makes an offer by then on the 20-million-gallon-per-year plant.

Bill Drinkwine, a consultant for Idaho Creditors’ Trust Group, said Friday that Maas Companies Inc., based in Rochester, Minn., will conduct the auction. The company specializes in marketing industrial plants and equipment. The sale will be held at 10 a.m. at 951 J St.

“Right now we have three potential buyers looking at it,” Drinkwine said about the possibility of receiving an offer on the entire plant before the sale. “Two of those are doing strenuous due diligence, but they are still negotiating and none have made an offer.”

Drinkwine said the creditors remain cautiously optimistic.

“They have had that anticipation before in 2008 and 2009 and (the buyers) ended up walking away from the uncertainties,” Drinkwine said.

Construction work was suspended at the partially constructed plant in 2007 after the project went over budget. Renova Energy Inc., the parent company of Renova Energy Idaho LLC, and a Wyoming subsidiary filed Chapter 11 bankruptcy in 2008. The parent company and the Wyoming plant received a court order to restructure, while creditors of the Heyburn plant opted to pull the partially constructed plant out of bankruptcy and put it into a trust while they tried to sell it. The court gave the creditors until Dec. 31, 2010, to sell or liquidate the assets and pay off the debts.

Drinkwine said the agreement with the auction company has been signed, but the creditors could still sell the plant as a whole up to the day of the Maas sale.

The plant consists of improvements placed on leased ground owned by the Burley-Heyburn Industrial Park and another parcel located east of the site that includes real property as well as other assets.

The parcel of land will sell as one tract and the bulk assets, many which have never been installed and remain in a prepackaged form, will be sold piecemeal.

Drinkwine said ethanol production is in a better position than it was two years ago and there is more of a market for used and secondhand equipment.

No reserve prices have been set on any of the assets to allow the creditors more flexibility and creativity to offer a deal, Drinkwine said.

“The trust members recognize a bulk buyer would be the best solution for everyone,” Drinkwine said.

The proceeds from any sale will go first to pay off a tax bill from Minidoka County and the city of Heyburn, along with outstanding land-lease payments to the city of Burley. The creditors, who put up $1.5 million of their own money on top of what they are owed to pull the plant out of bankruptcy court, will be reimbursed on a pro-rata basis, Drinkwine said.

Laurie Welch may be reached at lwelch@magicvalley.com or 677-5025.