GreenHunter divests in biodiesel asset

By Bryan Sims | November 17, 2010
Posted Dec. 1, 2010

In a move intended to avoid delisting by the New York Stock Exchange, GreenHunter Energy Inc. relinquished ownership of its 105 MMgy multifeedstock biodiesel production plant on the Houston Ship Channel in Texas, formerly operated under its subsidiary GreenHunter Biofuels LLC.

According to Jonathan Hoopes, GreenHunter Energy president and chief operating officer, the company transferred all of its ownership shares to a trust for holders of its 10 percent debentures due in 2012.

Prior to officially relinquishing ownership of the plant, the company was notified by the NYSE about a year ago that it wasn't in compliance with listing requirements when GreenHunter's shareholder equity fell below the exchange's minimum $6 million threshold to remain listed. As a result, the stock exchange threatened to delist the diversified energy company from its NYSE Amex Equities listing if the company didn't improve its net liquidity. Rather than issue more shares, Hoopes said, the company decided it was best to restructure its balance sheet through a maneuver of divesting in its subsidiary, which raised shareholder equity above $8 million.

"We waited until the deadline because we wanted to explore all our options," Hoopes said. "As a publicly traded company we're proud to say that we are still listed and have done so without any dilution of equity to our shareholders. We're here to fight another day."

Located on 22 acres near Houston, GreenHunter biodiesel facility is located on the site of a previous waste oil and chemical treatment plant. The company purchased the $12 million site in 2007. The facility is capable of utilizing a variety of feedstocks. Since the plant was commissioned in 2008, Hoopes said the plant was operational for a few months until it was hit by Hurricane Ike, which severely damaged it. Faced with costly repairs, a stiff European import tariff and a lapsed biodiesel tax credit, the company lacked the capital necessary to repair the facility, the company essentially mothballed the plant. All the factors, Hoopes said, led to the decision to withdraw its ownership of the biodiesel asset.

"We sat there effectively with the ability to provide up to one-fifth of the U.S. DOE's projected biodiesel production last year," Hoopes said. Prior to its restructuring, Hoopes added GreenHunter entertained potential acquisition and/or partnership bids to get the plant operating again, but all of them fell through. "We received inquiries about once a month during the past year," he said.

Now that GreenHunter has relinquished ownership of the biodiesel asset near Houston, GreenHunter will shift its focus on the biomass industry-specifically woody biomass for baseload power and electricity generation, according to Hoopes. The company currently owns a biomass plant in Southern California and is considering purchasing others across the country.

"We found that the biomass sector is the least dependent on subsidy," Hoopes said. "We're looking at buying existing biomass assets and put them in our portfolio."
 
 
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