Biofuel Energy may have to restructure
Rocky staff and wire reports
Published August 12, 2008 at 7:31 p.m.
Denver-based Biofuel Energy saw its shares plunge 63 percent, to 93 cents apiece, after it revealed it's been wracked by wrong-way bets on the price of commodities and may have to restructure.
Biofuel Energy said it has $46 million in combined corn, ethanol and natural-gas losses. The ethanol producer lacks the liquidity to satisfy all of the losses, Biofuel Energy said in a statement.
Cargill, its partner in its ethanol plants, holds the contracts and exercised its right to liquidate some of the agreements, the company said.
Biofuel Energy locked contracts in place to protect against price spikes. It said it has 10.4 million bushels of hedged corn contracts still open, a total of $21.3 million the company characterized as an unrealized loss extending into the third and fourth quarter of this year and the first quarter of next year.
Biofuel said it locked in corn contracts for the third quarter at $7.01 a bushel, but the average price during the quarter will be $4.75. The company negotiated contracts for the grain in the fourth quarter at $6.90 a bushel, while the price will be $5.17.
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