Panda Sells Hereford Ethanol Plant for $25 Million

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Researched by Industrial Info Resources (Sugar Land, Texas)--Panda Ethanol Incorporated (OTC:PDAE) (Hereford, Texas) a subsidiary of The Panda Group (Dallas, Texas), has sold its unfinished fuel-ethanol plant subsidiary Hereford Biofuels (Hereford) to its creditors for $25 million. Panda put the plant up for sale and filed for voluntary Chapter 11 bankruptcy. For more information, see related January 27, 2009, news article - Panda Ethanol Puts Hereford Plant Up For Sale and Files for Chapter 11 Bankruptcy. The sale price represents roughly 12% of the cost to construct the plant.

The struggling project has been under construction since September 2006, and the company fired its contractor, Lurgi Incorporated (Memphis, Tennessee), in September 2008, stating that it had "lost confidence in Lurgi's ability to finish the facility due to continued construction delays."

The company had planned to finish construction itself by February 28, 2009, and put the Hereford facility, the company's largest asset, up for sale.

Panda had plans to be a large player in the fuel-ethanol market until the difficult capital markets surfaced and ethanol prices dropped. The company, which utilizes cow manure fuel feedstock to run its plants, planned to build more than 535 million gallons of annual capacity. Along with the 100 million-gallon-per-year plant in Hereford, the company planned to build in Muleshoe (105 MM gal/yr) and Sherman (115 MM gal/yr), Texas; Yuma, Colorado (100 MM gal/yr); and Haskell, Kansas (115 MM gal/yr). Plans to move forward on the additional facilities are on hold until more favorable market conditions return to the ethanol industry.

Industrial Info's Ethanol Database provides a comprehensive outline of all current development activities in the emerging alternative fuels market. This database covers 177 ethanol plants in operation and 530 plants under development. It also covers 145 operational biodiesel plants and 245 biodiesel plants under development.

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