DOE asks money back



Publication June 2017

DOE wants a share of the sale proceeds from a project that was paid for partly with US government money.

Abengoa set out to build an US$850 facility for making cellulosic ethanol and an adjacent power plant in Hugoton, Kansas. The US Department of Energy entered into an “assistance agreement” in 2007 with the project and awarded it US$95 million to be used toward construction. The department also made a US$132.4 million loan guarantee in September 2011 of which US$45 million was drawn and ultimately repaid.

Abengoa never finished construction of the project. Its project subsidiary, Abengoa Bioenergy Biomass of Kansas LLC, is in bankruptcy and filed a liquidation plan with the US bankruptcy court in Kansas in April. The project was sold last December to Synata Bio Inc. for US$48.5 million. The government filed a claim as a creditor for a share of the sales proceeds. It says its money represented 27.4 percent of the US$350.4 million that was spent on the project. Abengoa argues that the government was an equity investor rather than a creditor and says the assistance agreement lacks terms typical of a loan agreement, such as repayment terms, an outside maturity date, payment enforcement rights and an obligation to pay interest. 

A hearing is scheduled in the case for July 12.

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