CAMILLA, Ga. — Southwest Georgia Ethanol LLC, a 100 million-gallon-per-year ethanol facility, successfully emerged from its Chapter 11 restructuring at midnight on New Year’s Eve.
“SWGE will have the benefit of a strong balance sheet, allowing SWGE to continue to be an economic engine for Southwest Georgia, contributing to local tax coffers, and generating revenue for area businesses,” Murray Campbell, president of the plant and one of the founders of the company, said.
Citing financial difficulties arising from the high price of corn, SWGE filed for Chapter 11 bankruptcy early last year.
In its bankruptcy petition, the company listed assets of $164.7 million and liabilities of $134.1 million. SWGE had revenues of $168.9 million for the fiscal year that ended in September 2010. The net loss for the year was $2.2 million. For the three months that ended in December 2010, the company’s net loss was $2 million.
The Mitchell County Development Authority financed $8.6 million in revenue bonds to help get the plant off the ground in 2008. The bonds are the largest outstanding liability on the property outside of $92 million in bank financing.
“We are very happy that the plant will be staying here and will remain in business,” authority Vice Chairman Joe Bostick said Tuesday. “I hope they can get their business model stabilized. But right now we feel pretty good about them staying in business.”
Campbell was appreciative of the local support as the company wove its way through the bankruptcy process.
“SWGE will continue to offer competitive prices to our local corn farmers and provide quality distillers grains for local livestock,” Campbell said. “We appreciate our corn farmers, distillers, grains customers and our vendors working with us. We are also very proud of our employees’ dedication as we worked toward this day.”
The company, however, was thrown a curve at the end of last week when Congress declined to renew a 30-year-old federal ethanol subsidy.
Ethanol blenders had received a 45 cents-per-gallon tax credit, which equals 4.5 cents for the amount blended into each gallon of the E-10 fuel.
“I don’t think it will be beneficial initially, and it could have an impact on ethanol,” Bostick said of the subsidy’s non-renewal.”We’re just going to have to wait and see how this plays out.”
Campbell said he thinks the loss of the subsidy will have minimal effect since the market has already adjusted.
“The elimination of the VEETC (Volumetric Ethanol Excise Tax Credit) has been known and priced into the market for quite some time. Given the volume requirements under the Renewable Fuel Standard, the market has adjusted,” Campbell said. “We will continue to monitor the political climate but expect that our legislators will continue to encourage the use of our nation’s home-grown fuel, which would help our farmers and consumers at the pump, especially in light of what is going on in the Persian Gulf today.”
Ethanol, dentured grain alcohol, is used as a smog-reducing ingredient and makes up 10 percent of gasoline used in the United States.