News

Embattled ethanol plant's general manager resigns

Posted December 10, 2007 10:00 pm

Brenda Rothert

The man behind the conception and fundraising for an ethanol plant a few miles southeast of here has resigned at the request of its board of directors, and now the future of the plant, which recently was hit with liens for millions of dollars in unpaid construction costs, remains even more uncertain.

Central Illinois Energy General Manager Mike Smith resigned Saturday at the request of the board for the ethanol plant, a source close to the project said.

Officials from the ethanol plant have hired Moglia Advisors, a Chicago firm that assists with corporate restructuring, interim management and bankruptcy services, said the source, who asked not to be named.

Workers who came to the plant Monday morning were met by Brent King, who told them he is the reorganization officer hired by CIE's board of directors. Employees of the plant were sent home, the source said.

CIE plant manager Joe Werth, who was reportedly dismissed along with other employees, declined to comment Monday and said King is the plant's spokesman now. King did not return a call Monday seeking comment.

Smith also didn't return calls seeking comment, along with the company's attorney, Nancy Schell.

Last month the plant's main contractor, Memphis-based Lurgi PSI, left the job site and canceled contracts with subcontractors because the company wasn't getting paid. Lurgi and four other companies filed liens with the Fulton County Clerk's Office last month for more than $26 million in unpaid invoices.

Lurgi PSI did not return a call for comment Monday.

Central Illinois Energy Cooperative was proposed in 2001 as a $40 million project.

Rising costs, additions and delays in securing financing stalled the project until October 2006, when the price had risen to $94 million. Plans called for the plant to use about 13.1 million bushels of corn to create 37 million gallons of ethanol and 111,000 tons of livestock feed each year, powered by a coal generation plant on site.

When construction on the plant was started, 365 of more than 400 investors were local farmers, who committed money and corn to the ethanol cooperative, according to the Fulton County Farm Bureau.

Farm Bureau Manager Elaine Stone said she and other farm bureau members met with State Rep. Mike Smith, D-Canton, on Friday to discuss the bushels of corn farmers have stored at the unfinished ethanol plant.

When contacted Monday night, Rep. Smith said his biggest concerns are for the farmer investors and the "sizeable" state investment in the plant.

Central Illinois Energy received a $4.5 million grant through the Renewable Fuels Development Program from the Illinois Department of Commerce and Economic Opportunity, a $750,000 grant from DCEO's Illinois Coal Competitiveness Program and $1.1 million in infrastructure assistance from the Illinois Department of Transportation's Rail Freight program.

Smith said he's received numerous calls from farmer investors who are in the dark about what's going on at the plant.

"Communication would be very helpful at this point," he said. "The not knowing, the rumors and the secrecy have not helped."

Smith said Central Illinois Energy was the first major ethanol plant in the state to receive a renewable fuels grant.

"In a lot of ways, it was a poster child for that program," Smith said.

He hopes something positive can happen with the situation.

"Bottom line is, there's a state-of-the-art ethanol plant just a couple weeks away from completion," he said. "It's a very unfortunate situation."

Like most, Farm Bureau's Stone was distressed with the recent news.

"Our main concern right now is that the farmers who delivered grain this fall are not going to lose that grain," Stone said.

Illinois Department of Agriculture spokesman Jeff Squibb said the Illinois Grain Insurance program will protect those farmers. Central Illinois Grain, an offshoot of Central Illinois Energy, is licensed by the department.

Squibb said in the event of a business failure, the department would take control of the grain assets at the site - 1.5 million bushels.

The department would either sell the grain and pay the farmers or find a buyer for the facility, Squibb said.

Farmers who are concerned about the corn they have at Central Illinois Grain can get more information by calling the Illinois Department of Agriculture Bureau of Warehouses at (800) 654-0882.

Sandy Bonney and her husband, George, are Lewistown farmers who have an investment in the plant. Sandy Bonney said Monday she's "concerned."

"I'd like to see some alcohol made ... I keep hoping."

Other investors reached said they also are concerned and unsure of what's going happening at the plant. Some said the only information they have on the project is what they've read in newspaper stories.

The source close to the project said board members still are hoping to find a way to finish the project, but added the prospect "doesn't sound too good."

"This looks like it's headed into full-fledged bankruptcy," the source said.

Reach Journal Star reporter Brenda Rothert at (309) 686-3041 or state@pjstar.com.

Article Categories
News