The Bloomingburg ethanol plant has suspended operations until further notice, according to VeraSun Energy Corp. officials.
"Production has idled while we work to secure interim financing and other contracted agreements," said Mike Lockrem, spokesman for VeraSun, the company that owns the Bloomingburg plant.
Lockrem said there are no plans for layoffs and "the full staff remains employed." He did not specify the employees' current roles at the plant.
The bankrupt corporation will be allowed get financing to keep most of its plants operational and its employees paid, however, there is no word as to when the Bloomingburg plant will become operational again.
Production idled in December, said Lockrem.
Recently, the U.S. Bankruptcy Court in Delaware ruled that the nation's second-largest ethanol producer can get $196.6 million in debtor-possession financing after it filed bankruptcy in October.
"The DIP financing will allow us to focus on running the business while undergoing the restructuring process as part of addressing VeraSun's long-term future," said VeraSun chief executive officer Don Endres in a statement.
South Dakota-based VeraSun has 16 plants in eight states that produce approximately 1.64 billion gallons of ethanol per year. The company markets E85, a blend of 85 percent ethanol and 15 percent gasoline used by flexible-fuel vehicles.
"The economics of ethanol versus oil unfortunately drives everything back to oil," said Fayette County Commissioner Tony Anderson. "Right now, it's just a struggle. Ethanol across the board is being challenged."
Anderson said county officials are hopeful that the plant will be back in business soon, although it may be under new ownership.
"It's our understanding that the VeraSun group is hosting tours for potential buyers," he said. "We have one of the most efficient and one of the newest ethanol plants out there and we are still very happy that it's here."
Fayette County farmers have contracts with Cargill, a multinational corporation that serves as an international provider of food, agricultural and risk management products and services. Cargill has an office in Bloomingburg and it provides the product to VeraSun.
"We are under contractual oligations with VeraSun," said Bill Brady, a spokesperson for Cargill. "Cargill continues to get the corn from local farmers."
"Corn farmers have hit some rough waters but there are still options out there," said Anderson. "We are hopeful that those involved with the ethanol plant can work things out and then we'll move forward from there."
The Bloomingburg plant, one of the largest in the state, has been operational since early April, with a potential production rate of 110 million gallons per year.
On Tuesday, officials from a northeast Nebraska ethanol plant announced that they had suspended operations, according to the Associated Press. Directors of the Husker Ag ethanol plant near Plainview said in a news release that the plant's margins have dropped sharply in the past few months because of marked volatility in the corn, oil and ethanol markets.
The news release put the company's net losses at $6 million for the first 10 months of 2008.
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