Bioenergy Energy Corp. looks to sell ethanol plants

In Colorado, Biofuel Energy Corp. announced that it has engaged Piper Jaffray & Co to act as its financial adviser to assist it in exploring certain strategic alternatives, including a potential sale of one or both of its plants. As previously disclosed, it’s operating subsidiaries did not make the regularly-scheduled payments of principal and interest that were due on September 28, 2012 on the term loans outstanding under their senior debt facility. This resulted in it receiving a notice of default from First National Bank of Omaha, as Administrative Agent for the lenders under the senior debt facility. Since the initial default, the operating subsidiaries have not made any of the regularly-scheduled principal and interest payments, which through December 31, 2012 totaled $8.2 million.

The lenders under the senior debt facility have indicated that they are willing to provide it with a grace period until July 30, 2013 to allow it to pursue one or more strategic alternatives. This grace period would be subject to the achievement of certain milestones, and could be extended at the sole discretion of the Administrative Agent under the senior debt facility. It expects to enter into a formal agreement to reflect the foregoing as soon as reasonably practicable.  It noted that, in the event of a sale of one or both of its ethanol plants, the proceeds of such sale would first be applied to repay all or a portion of the outstanding indebtedness under the senior debt facility. Residual proceeds after satisfying the senior indebtedness, if any, would accrue to it.