Biofuel Energy faces bankruptcy, restructuring in face of hedge losses

Biofuel Energy is facing restructuring or bankruptcy after experiencing $46 million in corn, ethanol and natural gas hedges in the past six weeks, the company disclosed, revealing that it did not have sufficient liquidity to handle the losses. Earlier this week, Pacific Ethanol reported that it had swung to a loss in the second quarter due to high feedstock prices; in this case, Biofuel Energy has been whip-sawed by the decline in feedstocks that it had hedged against. Corn and natural gas prices have fallen more than 30 percent in the past six weeks, trapping the 230 Mgy corn ethanol producer into massive hedging losses.

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