Wave of US biodiesel closings, mergers imminent, says financial experts

In New York, attendees at the Biodiesel Finance & Investment Summit said that they expect numerous biodiesel plant closings, consolidations and mergers in the next 18 months as the industry copes with increased feedstock prices and tight capital supply. Experts predicted that companies such as Renewable Energy Group, which holds 27 percent of US biodiesel market share, will target biodiesel plants producing 20 – 30 Mgy that are too big for local markets but too small to achieve economies of scale.

Earth Biofuels was one of the first biodiesel companies to run into trouble. The company said recently  that it has executed a settlement agreement with a group of creditors that would dismiss the group’s petition for involuntary bankruptcy.

In the agreement, Earth Biofuels will issue securities to the creditors and execute a restructuring plan by March 2008.

Earth BioFuels will repay interest and fees plus more than $100 million in principal, and the company’s CEO will issue a limited personal guarantee. The company recorded a loss of $21 million on revenue of $4.8 million in the first half of 2007.

In November, the Willie Nelson-backed company, in an SEC filing, expressed doubt over its ability to survive.

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