Well first of all, Hawkeye Holdings' (HWY) recent withdrawal from its IPO is one indicator which shows apprehension in entering the current ethanol market. Other indicators are the lack of differentiation in US BioEnergy’s business plan from other ethanol companies, and the continual decline of oil prices. All of these reasons are bound to damper US BioEnergy’s IPO. But remember it still is not too late to withdraw as Hawkeye did only days before theirs. Either way US BioEnergy is attempting to raise about $150 million with an offering of 9.4 million shares at a price of $15-$17 per share. The company intends to use this money to finance construction costs and for general corporate purposes.
Other Ethanol IPO’s in the news:
BioFuel Energy Corporation just filed its IPO Friday; it intends to use the net proceeds to repay debt and fund future construction of its ethanol plants. It is estimated that the offering could be worth up to $300 million in common stock. “Biofuel Energy Corp. has plants under construction in Wood River, Neb., and Fairmont, Minn., in hopes of opening them in the first quarter of 2008. The company picked out sites in Alta, Iowa, Gilman, Ill., and Atchison, Kan., for its third, fourth and fifth plants. A sixth site in Litchfield, Ill., will serve as either a backup site or location No. 6.” Unless BioFuel Energy Corporation will be able to IPO during an uptrend in the ethanol market and oil prices, they will suffer the same consequences as Aventine.