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You all can now take a survey now about AENS.
No one messaged me any questions that they wanted included in the survey, so I made them all up myself.
I'm going to make a survey later today to see what every one's opinions are on this stock. If you have any questions that you want me to include in the survey then message them to me.
I sent an e-mail to John Hollander of AENS last night....
Sent: Friday, January 25, 2008 12:38 AM
To: John Holland
Subject: RE: AENS
If the potential acquirer decided not to acqure AENS, would you then still construct the Ogden plant?
His response...
It would be unlikely as we have not been able to raise the capital given the present state of the capital markets.
Seems to me that the only chance AENS shareholders have is for the buyout.
I believe they are out of time and money, but only time will tell.
Let me answer you with a short question:
Why haven´t they sold in November 2007?
Weren´t they stupid not to sell at November share prices when they already knew that share price are going to fall after the December news? I think everyone can only speculate about their reasons for not buying and not selling.
Perhaps they just are not allowed to do anything now because it simple would not be fair. Imagine they would already know about the price every shareholder will get for every share and they would buy now at lower share prices. I can´t imagine that that is possible or allowed.
No insider buying, so assume company is worthless?
If this company's plans and permits to build an ethanol plant(s) had any value, the insiders would be buying at these low prices, right?
http://www.insidercow.com/history/company.jsp?company=AENS
Since they aren't buying, the logical conclusion is that the company is worthless. The only excuse I can think of them for not buying is that they don't want to be accused of "front running" in the face of a big deal, but that seems highly unlikely to me. These guys haven't acquired any stock since last summer.....
My previous post was uncalled for. I just figured out some jerk stole my grill cover and I'm not happy. You got my venting on it. My apologies.
Bruce
Pray tell, if you do not own or are not buying, what difference does it make to you ?
I do not own any of this stock and don't plan on owning any in the near future. I find it interesting they are trying to sell a company that has nothing other than plans and permits. It seems to me if they owned the Ogden land then along with the plans and permits another company might have some interest. When does the option on the Ogden land expire? Once this date is announced I believe this may give us an idea of where this is headed.
They let their option to purchase land in Kankakee, Illinois expire so I assume they no longer plan on purchasing land there. Their main two sites to build plants were in Kankakee and Ogden. I don't know what their plans are now with the Ogden site.
I see you just recently made your alias on Investorshub, have you been a shareholder for a long time?
I actually do not own any shares currently. I have been watching this stock for over a year now and thought it was a great buy back then when yahoo had their one year target estimate at $36.80 per share. I was never planning on buying back then, but was instead waiting until their plants were almost finished, now I don't know if anything will ever come of those plants. I am really glad that I did not buy back then because I would have lost about 90% of my investment.
Because I still don't see how AENS could be valued at approximately 20.5 million dollars or 50 cents per share, I don't think that this is a buy until it drops considerably more. I have a feeling that a buyout agreement won't be consumated until sometime over the summer, which may or may not be less than 50 cents per share. Once it drops to around 1 or 2 cents per share (my guess is that it will be close to that in April) then it will probably be a buy based on what news happens between now and then.
Does anybody know if they are even trying to purchase any land to build a plant?
The buyout is the only hope that shareholders have of not losing their investment interely.
They have not started construction on any of their plants and were not able to secure enough financing.
Has anyone ever come up with an answer to this question...
What assets does AENS have that would make their stock worth 50 cents a share?
To answer your question, yes they are finished, unless they get bought out.
I bet we wait at least another six or seven months. Take TMY for example, they announced a buyout back in March of last year, and they are still not bought out yet. The price they are getting bought out for is $3.00 per share, but we still wait more. What is even more deviant is the fact that TMY is getting bought out by a company that the CEO formed himself.
The only way to make money with this stock is if they do the buyout for 50 cents a share. I don't really see how they are worth that much though, so this probably isn't a buy until it is subpenny.
Not going to happen. they are done.
Hopefully there is a chance that AENS builds their Ogden plant on their own if finance market conditions might get better in a few months.
That´s what I would prefer: building an own plant (one as originally planned two plants) instead of selling the whole company and making some money first. Then (in a few years) expand through building more plants.
I hope that AENS might still get the needed money for their Ogden plant. Perhaps the new energy bill or support of the state of Iowa can save AENS from selling their company.
One plant would still have a capacity of more than 100 mgy ethanol for AENS. So AENS would have nearly the same capacity as GPRE for example if they would build the Ogden plant. And I think a lot of people think that GPRE has a bright future.
So why should AENS don´t reach it. I am still hoping ...
Confirmation of plans to discard Kankakee plant option
bizjournals.com
Alternative Energy Sources won't buy land for Illinois plant
Tuesday January 8, 6:07 pm ET
Alternative Energy Sources Inc. let expire its option to buy land in Kankakee, Ill., to build an ethanol plant.
Mark Beemer, CEO of the Kansas City-based company (OTCBB: AENS.OB - News), said Tuesday that its pending acquisition by an undisclosed company, announced in November, prompted Alternative Energy Sources to let the option expire in favor of other possible available sites or existing plants that could be bought.
The company's only location being considered as the site for a plant is about 625 acres in Ogden, Iowa, Beemer said.
The company said in a filing Monday with the Securities and Exchange Commission that it will take an estimated asset-impairment charge of about $1.7 million for the action in fiscal 2007. The impaired assets include capitalized costs paid to maintain the option, prepaid engineering and construction costs, and permitting-related costs. The company said it expects no future cash expenditures for the estimated impairment charges.
The company also said in Monday's SEC filing that James Spigarelli has resigned from its board because of time demands as CEO of Kansas City-based Midwest Research Institute.
Published January 8, 2008 by the Kansas City Business Journal
http://biz.yahoo.com/bizj/080108/1573314.html?.v=1
......................................................
So what do you guys think? This article has a different slant on the situation than the previous article I posted. It makes it sound like the company still has some value with those plans to build the Ogden plant. But, as I stated earlier, the only value to the Ogden plant may be for the local competitor to keep it from ever being built. (How much could that be worth?)
I still believe AENS is near death. Nobody wants to build another ethanol plant, and that's all this company has to offer. Can somebody out there come up with a reasonable scenario in which the plans & permits to build the Ogden plant are actually worth something? OK optimists, here is your chance to express your opinions........
Finally some news, but it doesn't sound good.....
....................................................
Posted on Tue, Jan. 08, 2008 02:57 PM
Alternative Energy drops option on land for ethanol plant; Spigarelli leaves board
By MARK DAVIS The Kansas City Star
Alternative Energy Sources Inc. has dropped its option to buy land near Kankakee, Ill., where it had planned to build one of three 110 million gallon ethanol plants.
The decision requires the Kansas City-based company to write down the value of other assets on its books by $1.7 million. These include pre-paid engineering and construction costs and costs from seeking permits for the Kankakee site.
Chief Executive Officer Mark Beemer said the move conserves cash, which would have been needed to extend the option further.
He also said the company continues to talk with a potential acquirer and that the undisclosed bidder would prefer to buy existing ethanol capacity than build new plants. The company announced the talks in November.
Depressed ethanol prices and high corn and natural gas costs have blunted interest in building new ethanol facilities. Bashor, Kan.-based Ethanex Energy Inc., for example, similarly switched its strategy from building plants to buying an existing plant in Nebraska.
Beemer said Alternative Energy, however, continues to pursue equity financing.
In its November filing of financial statements, the company had said it needed $730 million to build the Kankakee plant and an Iowa plant. The filing said the company did not expect to raise enough funds to build a third plant, planned for Greenville, Ill.
Separately, the company said director James L. Spigarelli resigned from its board last week. Spigarelli cited the demands his job as president and chief executive officer of Midwest Research Institute for stepping down, the announcement said.
Alternative Energy shares were unchanged at 14 cents in late trading on the OTC Bulletin Board.
To reach Mark Davis, call 816-234-4372 or send e-mail to mdavis@kcstar.com.
http://www.kansascity.com/382/story/435869.html
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If I'm reading this correctly, it sounds like the deal to sell the company for 50 cents/share is almost dead:
"...the company continues to talk with a potential acquirer and that the undisclosed bidder would prefer to buy existing ethanol capacity than build new plants."
On the other hand, the article makes it clear that Beemer hasn't given up on the idea of selling the company, even though they have nothing more than plans on paper. He has a strong willpower, that Beemer guy. I'm sure he doesn't want to go down in history as failing at his own company, but on the other hand I wonder if he doesn't know when it's time to "throw in the towel".
Maybe Beemer is just trying to conserve cash as long as possible, hoping the ethanol business will turn around. I think this was a great bunch of guys, they just arrived at the big ethanol party a year or so too late. To me, I don't see much value in this stock anymore. I suppose there is a chance they could turn this thing around, but I wouldn't bet my money on it.
I was looking at July corn futures the other day, I think they were north of $5/bushel? Ouch! On the other hand ethanol futures were up around $2.05 You're going to need a much better spread than that before anybody is going to buy plans from AENS to build another ethanol plant.
Maybe the best way to play the ethanol market is to buy the railroads, fertilizer companies, farm equipment makers, etc., - the businesses which support ethanol production and distribution.
it's darkest before dawn!
uhhhhh THE EYE OF THE STORM!!
not doing it for u?
buy when quiet, sell when noisy!!?
haha.....who knows
It's been roughly two months since this company tried to sell itself to the "secret purchaser". Considering they had the basic terms already negotiated back in early November, can we now assume the deal failed to materialize, and that nobody else wants to buy this company?
With no news for investors, we are left to guess. It seems reasonable to assume that the longer we go without news, the less likely investors are to see any of the 50 cents/share they have previously teased us with.
Unless AE is willing to sell itself at a ridiculusly
low price, I doubt PE is going to be interested.
Perhaps Poet Energy wants to grow capacity immediately?
Who knows? I think if Poet would have such thoughts to get more capacity in short time (maybe to be still the largest producer regarding the merger between Verasun and US Biofuels) AENS would be an excellent candidate:
They only would have to spend the money and then they could start immediately because it seems that AENS has already all needed permissions. If they would plan a new plant by their own it would cost them a lot of time (finding a plant site, planing the plant, getting all permissions).
And I think it´s better to have own plants near to other own plants because of logistical reasons.
So why not Poet? I think it could be possible.
Why would anybody in their right mind build a huge 110 million gallon plant just seven miles down the road from the new Dreyfus plant? The Kankakee plant also has some competition for the local feedstock.
If you're going to be successful in the corn ethanol business, it seems to me that you need to keep your distance from your competitors.
Poet Energy has many things going for them.
Why would they want to bail out Alternative
Energy? Answer: Perhaps if the plant permits
AE have are transferrable. Are there any other
incentives that Poet Energy could consider? Well,
it seems they have no trouble getting plants approved,
constructed, and in full production. Why should
they care?
Again, why would Poet save the day?
They, after all, have a company.
Let us speculate about the possible potential acquiror:
What about Poet Energy? They are a private-held company and one of or possibly the biggest producer(s) of ethanol in the USA. They have already 7 ethanol plants in Iowa and the planned AENS plants would geographically fit in to Poet Energy.
http://www.poetenergy.com/about/plants.asp
What´s your opinion? Could Poet Energy be the possible acquiror?
A penny, I agree. Been lurking since early April.
Senate Approves..More Ethanol Use 14-Dec-07 11:34 am Senate Approves Trimmed-Back Energy Bill Friday December 14, 6:11 am ET By H. Josef Hebert, Associated Press Writer Senate Approves Energy Bill Containing Auto Fuel Economy Increase, More Ethanol Use
might get some play from this...i'm buying XNL though, they actually have a plant in operation and revenue, stock really beat up.
i think dog days of ethanol sector are over with this new bill
I have seen no press release saying that there has been a change in management, so I believe that the all the members are still there.
I believe that AENS has a plan, but just doesn't have enough money to pull it off. That is why someone else is interested in them. They want their plans, sites, and management to work for them.
I could be wrong though.
You've got a good point there, but do you have any evidence that the majority of the management team is still in place? Last I heard, their bank account was down to around a million dollars. I just assumed the majority of the management team is long gone, though I don't have any evidence of that.
I also believe they were going to have a very efficient operation. The 110 M gallon capacity meant that they could use large unit sized trains. I think the efficiency stops there. They gave up on the idea of burning low cost coal, and moved to some kind of ambiguous "biomasss" fuel strategy. I don't know how much that cost to implement, but the plant costs they were quoting us was far beyond normal plant construction costs, though that could have been due to temporary high stainless steel prices. (That Kankakee construction permit I posted earlier lists the fuel source as "gas", no mention of biomass or coal.)
US Bioenergy recently started to claim that they had figured out a way to greatly increase plant efficiency, but that was only after they had some significant plant operations experience. AENS wanted to build brand new plants, and had no experience operating them.
Ethanex is also bragging about some kind of corn fractionation process that separates the non-useful parts of the corn, so they don't require extra heat or water to process. I think the bottom line is that the longer these AENS guys are on the sideline, the further behind they're going to get.
I'm going to stick with my opinion that the only thing these guys have of any value is the 'threat' of building a plant near one of their competitors, and right now that doesn't seem like a credible threat.
All the value that I can see that AENS still has is in their plans and management. AENS has stated before that these plans for the plants will make them VERY efficient, so maybe other companies are wanting to take advantage of this.
Also, part of the deal may be to have some of the members of management to work for the buyer, as they all have extensive backgrounds in this field.
But, it is just too early to know right now, and all of this is speculation that could be far off from the real deal.
What happened to the Kankakee plant?
Here is a link that should interest you:
http://www.epa.state.il.us/air/permits/ethanol-plants.html
It looks like the AENS plant got the permit, as AENS claimed months ago. I did however notice that the permit says "gas", not "biomass", as AENS claimed. I don't know if that's significant, but it is interesting.
For a while now I have been trying to figure out if AENS plans for the Kankakee plant have any value. This link clearly indicates that Kankakee Renewable Energy is building a comparable sized plant in the same county. I don't know what the current state of the KRE plant is, but if they're serious about building a plant in the same county that AENS wanted to build a plant, it can't possibly be good news for AENS.
Folks, I'm running out of ideas for how to place any value on the remnants of AENS. Keeping them off the market is the only reason I can come up with for anybody to give AENS any money for their existing plans to build in Boone County and Kankakee County.
Here is another article I noticed this morning:
http://www.pjstar.com/php/index.php?/news/canton_bankruptcy_filing_possible_for_ethanol_plant_according_to_advisors/
This is the story of another ethanol plant in Illinois that looks like it won't even been completed. It's a small plant, but they planned to burn low cost coal, so you can't ignore it. If new plants are getting mothballed during the construction phase, It doesn't look like a very favorable environment for starting construction on new plants.
If anybody else can find any significant value in the remnants of AENS' ethanol plant plans, please let the rest of us know.
Again all viable points Mr. Coin and I agree with you, I will not buy until at the earliest summer of 2008 and for not more than 1, 2, or 3 cents per share.
All I can say about the proposed buyout for 50 cents per share is that one man's garbage is another man's treasure. That may be the case here, so we may greatly profit from this, but it is just too early to tell right now.
Here is an old but interesting article which should interest anybody trying to place a value on the remnants of AENS:
http://www.zwire.com/site/news.cfm?BRD=1842&dept_id=335645&newsid=17279016&P
First, notice that they didn't actually own the land, they only had options on it. That was the smart thing to do, since they didn't have any construction money yet. On the other hand without the money to buy the land, the options are worthless.
You can also see they were most anxious to burn low cost coal. Of course that never happened, presumably because they couldn't get the air permits in a reasonable time frame and/or the extra cost exceeded the amount of money they were likely to raise. They later switched to some kind of ambiguous "biomass" fuel plan. They were dead set against using natural gas, that's for sure.
Throughout the article these guys seemed to emphasize the term "survival", as if this was a tough business to get into, even way back then. They knew this wasn't going to be easy, even with favorable economic conditions.
One passage from the article I found to be especially interesting:
.................................
They were also asked about other possible plants being built within the area and how that might affect Ogden's.
The officers explained that two or three plants within 30 miles of each other probably could not be supported.
Beemer commented, "It will be rationalized and sorted out." Following the meeting, Beemer told The Ogden Reporter that the Ogden plant would be built even if one near Grand Junction is constructed.
"We expect that our grain supply will come from the east and the south," he said.
....................................................
To me, that sounds like the AENS plan was already in serious trouble when Dreyfus broke ground on that new ethanol plant just a few miles west of the planned AENS Ogden plant. (OK, you guys can use the grain supply from the west and north, and we'll take the grain from the east and south". Do you see how silly that sounds?) That's also why I believe that it is Dreyfus that is teasing AENS with the 50 cent/share buyout offer. You simply can't afford two big ethanol plants in the same neighborhood. If you want more ethanol capability, it is much less expensive to expand your existing facility, not build another one 7 miles down the road.
If it is Dreyfus that is courting AENS, and I don't know that for a fact, they really have no reason to do anything more than tease AENS with a buyout offer. Keeping AENS off the market for an indefinite period of time is in their best interest. I think the only way the AENS construction plans would ever be seriously revisited is if corn yields went up considerably, as well as ethanol prices. Even Beemer said that corn yields won't reach 200 bushels per acre for 3 to 5 years. (I've heard some optimists predict that new technology will yield 300 bushels/acre, but that's much further out.)
After you read that article you can't help but to be amazed at all the time and money that went into planning a major ethanol plant. A lot of good thought went into this whole project. It's obvious now that they were in the wrong business at the wrong time, and they picked a bad location. When the ethanol business starts to look healthy again, maybe a year from now, these are the first guys I would look to do the work. The problems they ran into taught them some hard lessons. I'm sure they also had a lot of their own personal money in this thing.
I'm going to stick with my opinion that the only value this company has to anybody else is to prevent increased competition. Considering the economics of ethanol these days, that seems like an almost worthless proposition. Consider how silly it sounds to tell one of your competitors: "Give me $20M, and that will prevent you from having a nearby competitor". That threat may hold water when times are good, but not at the present time.
As a side note it's only fair to mention that Ogden was not the only plant that AENS had plans to build. They were also planning another plant about 65 miles south of Chicago, in Kankakee. Perhaps the Kankakee plans have more value than the Ogden plans. I don't really know for sure, it seems like the Ogden plant is the one that always captured the headlines.
So now I'm still stuck trying to put a realistic value on AENS stock. Any value is going to depend upon the ethanol business turning around quickly in the next year or so, and right now the analysts are telling us that that ethanol buyers are going to be doing good just to soak up all the new supply coming on line over the next year. Still, it could happen, maybe a one in twenty chance? Mutltiply that by the 50 cent payoff, and you get a stock worth about 2.5 cents. Even a one in ten chance would make this stock worth no more than a nickel. I don't think it's fair to add the cash in the bank, because they signed a long term office space agreement, and that will probably cost money to get out of (if they haven't burned through all the cash yet).
I also noticed that VSE recently announced plans to merge with USBE, to take on ADM. Consolidation within the industry will increase competition, making it harder for little players like AENS to compete in the market. On the other hand the Iran situation seems to be cooling off, so anybody hoping that oil would hit $150 and make ethanol more valuable is probably out of luck. I do however like to hear about those new plans to use more ethanol that are brewing in congress under the new energy bill. Even though that piece of legislation hasn't been finalized yet, it sounds like our lawmakers are dead serious about reducing our dependence on foreign oil, and that can only help the ethanol business. But then again there is a LOT of new ethanol capacity already coming on line. In other words, I don't see any big events on the horizon that could significantly increase the value of AENS' plans to build a couple new ethanol plants.
So if the AENS stock price gets down to a nickel, then it starts to look interesting to me, but I probably wouldn't bite unless it came down to about half that. At that point it might also become an attractive target for Dryfus, just as an insurance policy against having any local competition. (Unless somebody out there can come up with some value in this company that I'm missing? Really, I'm open to all outside opinions.)
I expect to see this below a nickel by February. I have been watching this stock for about a year now, but I have never gotten in. What originally attracted me was the management, but with the plants being so expensive to construct and AENS resorting to borrowing the money, it would take many years for this company to become profitable.
I've been reading other posts here on your guys' insight on the matter and I agree, I just don't see anyway that this company is worth 20 million dollars. All they own are some land and plans. Perhaps if this land is very strategically awesome, then it could be worth 20 million to somebody, but it is a stretch. I won't buy above a nickel, but I am actually leaning more around 1 or 2 cents per share.
I suppose that they have at least one interested buyer, so they will not resort to bankruptcy, but once they see how poorly AENS is doing then that prospective buyer may drop their price substantially.
One of the best posts I've ever read, hands down. I agree with you, dead money until at least next July or so. Then it may be worth looking into based on what happens between now and then.
More thoughts on a possible deal
I think the odds are that the potential acquiring company is Dreyfus, for these reasons:
1. Beemer used to work there
2. Dreyfus is building another ethanol plant about 7 miles down the road.
3. The AENS press release said the potential acquiring company was private, and Dreyfus is private
Dreyfus can't possibly be happy about another ethanol plant just down the road. That's going to raise their corn prices, and reduce the price of their DDGs. On the other hand, a year from now, having some extra capacity in the neighborhood could be quite nice to have. It all depends on where ethanol and corn prices go.
A provision in that take-over memo of understanding (or whatever it is) clearly states that AENS owes the private company $500K if they decide within one year to sell the company to somebody else. That would suit Dreyfus very well, keeping AENS hostage "on ice" for a year, at no cost. Dreyfus could go ahead and make all the 50 cent/share statements that they want, with no obligation whatsoever to go ahead with the deal. At the very least, nobody is going to be building that AENS plant for the next year unless they first pay Dreyfus $500K.
What a deal for Dreyfus, eh? It helps lock out any competition in the neighborhood for a year, and give them flexibility to expand production if they need it at a future date. And right now it doesn't cost Dreyfus anything more than some basic legal fees to explore the possible deal.
I think the bottom line is that Dreyfus is going to wait until the last minute to make any decision, and that probably means AENS shareholders are going to be flying a holding pattern for another year. I think the only way AENS shareholders are going to get their 50 cents is if the ethanol business picks up substantially in the next year. I also believe that the longer we go without news, the more AENS shareholders are going to bail out. To me, any money invested in AENS now looks like dead money for the next year.
If I had known about this new Dreyfus plant being build down the road from the Ogden plant, I would have thought twice before investing in this company. Maybe this other plant is one of the reasons that AENS was unable to secure financing for their own plant? Or perhaps when they broke ground on the Dreyfus plant it was simply the final straw that broke the back of AENS? Hard to say, but I wouldn't hold your breath waiting for a check.
What incentive does Dreyfus, or anybody else, have to move on an ethanol plant deal now? Ethanol prices are low, corn prices are high, and the situation isn't expected to change for another year. Over the course of a year a lot could happen the ethanol industry. Today we witnessed Verasun merging with USBE, making it increasingly harder for the little guys to compete with the big guys. There could also be some breakthroughs in ethanol pipeline technology, and anybody who isn't located next to the main pipeline out of the corn belt could suffer a competitive disadvantage. The whole cellulose situation is also a wild card, a breakthrough in that area could eventually render corn-based technology obsolete. I also hear about Ethanix developing some kind of corn fractionation technology that reduces ethanol production energy requirements. Who knows what we're going to be facing a year from now. The AENS plans could be completely worthless a year from now. Or, if we get into some kind of serious confrontation with Iran, heaven forbid, any viable ethanol plant plans could be come quite valuable.
By the way, I looked it up, and AENS does have some assets that somebody may find valuable:
- $10M in tax credits from the Iowas Department of Economic Development
- $7.5M tax abatement from Boone County
- Letter of inducement to issue $23M in tax exempt bonds
- A grand ot $144K and loan of $95K to extend the railroad from the Iowa Department of transportation
Don't forget to add in the storm water discharge permit, affidavit for land disturbing activities, air quality permit, environmental site review, wetland determination, biological review for federal and state listed species, cultural resources review, geotechnical survey, and soil percolation study.
Imagine how valuable all that stuff would be if you were serious about building a plant. Unfortunately I don't think anybody is going to be taking advantage of all these wonderful goodies anytime soon, and I don't think the odds are very good that AENS shareholders will ever get that 50 cents/share they are now dreaming of. It's probably just a last-ditch effort by the AENS executives to see if anything can be salvaged. (In their position I probably would be doing the same thing.)
Good luck to all.
http://www.grainnet.com/articles/Louis_Dreyfus_Commodities_to_Build_a_110_MGY_Ethanol_Plant_in_Grand_Junction__IA-45865.html
http://www.zwire.com/site/news.cfm?newsid=18574792&BRD=1842&PAG=461&dept_id=335645&rfi=8
Long Delay = less chance of deal?
We're getting close to 3 weeks from the time the news came out of the possible 50 cent buyout. It still seems kind of early to expect a deal so soon, considering how many lawyers need to get involved. On the other hand the longer we wait, the less likely a deal seems to me. Does anybody disagree with that? I think the longer that we don't get any news of a deal, the lower this stock will fall. If we don't get a deal by the end of the year, it may be hopeless..... What concerns me is that it sounds like they had most of the major buyout terms ironed out, and were just waiting to finalize the details.
one thing is for certain, they can all legally pay themselves a salary for as long as the money lasts
The "for sale" committee is comprised of 2 board members.
The writing has been on the wall for a while for AENS. They obviously could not let us know that this thing was sinking unless they wanted to end up in jail. A local ethanol facility close to me recently eliminated shifts as a result of the market. Its industry wide. Ethanol is not the answer, but like i said, 18 months ago would = $$$$$$ for beemer and crew.
Of the 7 employees, 1 lives in Ireland (ward) and who knows what happens to him. CFO doesnt need a job, he rides off into the sunset. Beemer & Blank, Voss and the other guy, along with the 1 clerical staff go and work for the new buyer. If they are lucky.
None of these guys threw in a huge amount of cash into this thing. 50k at most for beemer and blank, but I doubt that much. They did a hell of a job of raising 12million thru the private placement, many of which came from 1 investor and his cronies. But dont let them fool you, neither are/were in the position to throw in a bunch of cash to get this thing going. And I would guess any stock bought after trading began was via compensation from the 12 million in working capital. According to an adm friend of mine, Beemer was let go by adm and went to work for a company which isnt very far from me called penford. Blank had hit the proverbial ceiling at adm. neither is certainly not rich, but obviously sharp, as they raised 12mil to get this thing going.
I think they tell us .50 to keep us in it. realistically, .03 if that.
I think they already went into hibernation mode, at least partially. That last SEC report clearly indicates they couldn't find the money to go ahead with their plans. Since they have essentially "given up", what else is there left for them to do? I bet most of them have already left, or taken an extended sabbatical. Those two guys that are left on the "for sale" committee are probably the only ones that have anything to do, and I bet there is a lot of dead time associated with that job. Maybe they go in for negotiations once or twice a week, while both sides further ponder the situation.
Keep in mind they only had 7 full time employees. Look at the huge amount of cash some of those guys have put into this company. Altogether I think they own about a third of the float. That indicates to me that the key guys are either rich or very well off, and that the extended hibernation mode is a genuine option for at least some of them. The only problem with the hibernation idea is, "what would they do in the meantime?" These are not the kind of guys who would enjoy sitting around watching television for the next year. They just experienced a major business failure, and they want to get back on the horse to prove themselves, and preserve their dignity.
I do wish they would come out and talk about the aspects of the company which they feel would be worth money to an outside firm. That would give AENS investors a better idea of what this stock is currently worth. Right now it is VERY hard to place a value on it. It is however clear that somebody wants it, but we can only guess as to their exact motivation.
One other thing to think about is that there probably aren't too many willing buyers out there at this point in time. If they blow this deal, the hibernation mode idea may be the only remaining option. Just wait it out, cut expenses to the bone, and keep your fingers crossed that the ethanol business picks back up. Of course that's a crap shoot, not a real investment.
They last reported about a million dollars in the bank. But they still have about a million dollars worth of office lease commitments through 2011. I don't know how much it would cost them to get out of that, but it is really questionable if anything would be left for shareholders if they liquidated. Maybe the proposed acquiring company could use AENS' carryforward loss on their own balance sheet? Trying to put a value on this company is VERY difficult, all I can do is shoot into the dark. I would really like to better understand the reasoning behind that 50 cents/share offer they teased us with. There must be some basis to it, I just don't have enough visibility into this whole situation to place anywhere near that value on it.
If any of you AENS guys are reading this, PLEASE tell us what you think this company would be worth to somebody else, and exactly why. You don't have to compromise your negotiations to give us a better idea what aspects of the company other potential buyers would like to have. Right now you have some investors believing this company is completely worthless, and there really is no solid information to prove or disprove that. You're teasing us with that 50 cents/share buyout offer, but there also is no solid information to prove or disprove that the company is worth that much. Please help us place a value on this company!
In no way am i questioning the honesty, ethics of these guys, but .50 seems like a significant stretch to me. Honestly, I would bail (and have) on this thing at the first opportunity. As you mentioned, there is nothing here at this point, and as I said before, no company in their right mind is going to pay .50 a share for nothing. I expect an announcement soon letting sholders know they are going to recieve .03 per share, if that.
I dont think "hibernation" is an option for these guys. All of these guys need the paycheck (i think your interpretations of these guys are a little off base), with the exception of the CFO. So, sitting on the sidelines until the market changes is not an option.
Its unfortunate for these guys, because this is not the result of lack of effort, its simply the market. If they would have rolled the dice 18 months earlier, they would have come out multimillionaires, despite theses current market conditions.
Get out now.
I don't think they're liable to anybody. They made the risks very clear, and mentioned the possibility that this company could completely fail.
I have every reason to believe these are honest guys, trying to get every last penny for the shareholders. They just tried to get into the ethanol business at the worst possible time. You could argue that it was bad judgment, but based on the previous stock prices of other ethanol businesses, few investors saw the ethanol glut coming. My own opinion is that AENS (and most everybody else) underestimated how fast Big Oil would be willing to change their old habits. AENS was too focused on the pure economics of ethanol, and not the new infrastructure necessary to get it to the gas pumps.
Maybe I should clarify my earlier thoughts on what this company is worth. Right now, those ethanol plans & permits are worth very little, almost nothing. However, a year or two from now those plans could be quite valuable. It all depends on how long the ethanol supply/demand imbalance problems persist. If ethanol demand really picks up, such as due to more problems in the middle east, this company could be worth many times what the stock is currently selling for. So buying this stock is not really an investment, it's really more of a crap shoot.
One of the things AENS could still elect to do is simply go into hibernation until the ethanol market picks back up. I suspect none of these guys really need a paycheck, so all you have to do is pay the secretary, light bill, rent, etc. They have a million bucks in the bank, that should keep them safely in hibernation for a year or two.
I do however think they are serious about this new takeover deal with the mysterious unnamed company. That letter of intent was very specific, and I suspect the AENS guys would go work for the new company. That would keep them busy until the ethanol business got back on its feet, and they could revisit the AENS plans.
The fact that AENS does have enough money to go into hibernation for a year or two does give them a little leverage with the prospective acquiring company. AENS doesn't have to sell themselves to anybody, and the potential acquiring company knows it. That's probably why they baked in that $500K "bailout" fee, to keep AENS from shopping themselves to anybody else. But, if the ethanol business did suddenly turn around, that $500K bailout fee could be a small price to pay.
Another thing I was thinking is that those ethanol plant plans could be worth more than they cost, given all the low cost labor that was involved. (For example, Beemer was only paying himself $102K/yr, most likely a fraction of what he could get elsewhere.) For that reason the $6M they spent since inception could be deceptively low.
So again I am stuck trying to figure out how much this company is worth! Maybe it really is worth as much money as they actually spent.(contrary to the thinking in my previous post) If you assumed AENS spent $6M total, plus the$1M in the bank, and divided it all by 40.5M shares, you get 17 cents (compared to the calculation in my previous post of 10 cents.) Even with this new, more optimistic appraisal, I still can't imagine this stock being worth the 22 cents it is currently selling for.
Looking at possible future value seems to be the only hope for serious appreciation. But, if I were looking that far out, I think I would prefer to invest in established ethanol companies, especially the few big ones that are still making money. They're going to be very hard to compete with, because they are being forced to optimize their plants, and some are still expanding production. Also, if they get a patent on some kind of optimized production method, that could discourage a lot of future competition.
I'm still trying to figure out why AENS thought it would require $730M to build just two 110 M gallon plants. That works out to $3.32/gallon, roughly 50 - 150% more than what some competitors paid. Maybe that new biomass fuel strategy was costing them a whole lot more in initial construction costs, I can only guess. Really, if you think about it, $3.32/gallon is completely nuts, maybe that suggests those plans are completely worthless???? AENS seemed dead-set about using natural gas as a fuel source, but that would have significantly lowered their construction costs, and may have made it easier to finance??? We'll probably never know if that was a critical mistake in execution, but I still have some serious concerns over what those existing plans are worth on the open market. (It certainly would have been interesting if they were the first to produce large quantities of ethanol using chicken poop.)
Is it possible that somebody would be willing to offer 50 cents for this company just to prevent them from building, and competing with their own ethanol business in the same county? Then, if the ethanol business picked up, the acquiring company
would have the skids already greased to expand production. I wonder if that would be worth $20M to some nearby ethanol producer. Also consider that AENS was quite proud of their site selection, claiming that they picked a place with deep, drought resistant soil. One of the comments the ethanol analysts have stated recently is that the best ethanol sites have already been cherry-picked, and maybe AENS has a couple of those. Hard to say for sure, but it's also something to consider.
I did notice that AENS stock was floating around the 50 cent area when the proverbial "For Sale" sign was finally posted on the front lawn. Maybe the 50 cent proposed price is a function of nothing more than the current stock price at the time; Beemer was just trying to prevent any further losses to shareholders? (I still think all these AENS executives are good honest men.) If however that is the primary reason for the 50 cent offer, then it probably doesn't hold much water.
My own opinion is the stock would go back up if AENS announced a plan to hibernate for a year on their existing cash. A year from now this business could look a lot more attractive, and if so, those ethanol plans/permits might be worth some good money. But then you have the problem of what to do with the executives for the next year. Hey guys, you want to take an extended sabbatical guys???? Just keep your cell phone handy in case oil jumps to $150/barrel.
One thing for sure, I wouldn't want to be in the ethanol plant construction business right now. I see a lot of people finishing up the plants they already started, but it is rare to hear of any new groundbreaking. Maybe that's why the price of stainless steel has started to come back down.
Cellulose is also a wild card not to be ignored. If somebody can invent the right enzymes and other necessary concoctions, this corn ethanol business could be virtually worthless. But that's probably between 2 and 20 years off, so I'm not too worried about it right now. I think I'll let somebody else invest in the bleeding edge of that technology.
Another thought: These AENS guys really bring nothing unique to the ethanol business. They wanted to burn low cost coal, but the permits take too long, so they quietly switched to a vague biomass fuel, to which they still haven't publicly quantified the benefits. AENS also wanted to produce enough ethanol to use efficient unit sized trains, but many of the new plants going up seem comparable in size. AENS proudly said they were experts in commodities trading and hedging, but that experience is worthless without a working plant. If they do plan to compete effectively in the future, I think they're going to need some other kind of competitive advantage. Perhaps some way to squeeze more ethanol out of each bushel of corn, or something like that. Maybe they could apply for some coal burning permits NOW, and hedge their bets by planing to use a clean refined coal to appease the environmentalists. Evergreen Energy produces refined coal, and it is rumored that some ethanol producers are interested in using it, if they aren't already. (ticker is EEE). Any way you look at it, AENS is going to have to have some new and unique competitive advantage in order to attempt another market re-entry. The competition isn't going to be standing still, that's for sure. I think it's highly likely that if AENS does re-enter the ethanol market some day, its plans are going to have to be significantly modified. I guess that degrades the value of their existing plans, doesn't it?
To gauge the real value of this stock you really have to sit down and figure out what it would be worth to a specific buyer. That is going to be a very unique situation, making it extremely difficult for outside investors to gauge the true value of AENS. It would be very helpful if AENS management could come out and tell us exactly what features of AENS are being viewed as valuable by the proposed buyer. From my viewpoint I can only take a wild guess as to what this stock is worth, somewhere between 10 and 20 cents, but I could be way off base if there is some aspect of this company which I am greatly undervaluing. Or, if that ethanol glut persists for more than a year and cellulose starts to become attractive, AENS could be completely worthless. I certainly welcome all opinions!
Absent any more info from the company, here is my advice:
- Sell above 20 cents
- Hold between 10 and 20 cents
- Buy at 10 cents or below
maybe mention of .50 cents keeps this from going to .05 cents as fast as otherwise might have happened???
some of these guys left stable careers to start this
never hurts to dream!
Totally agree with everything you said.
Could not have said it better myself. The fact that they even mentioned .50 in my opinion opens up a huge liability for these guys...like you said, no way somebody is going to pay that.
I was looking at this possible takeover deal, and I've never seen anything like it before. Why would another company pay shareholders 50 cents, plus some share of future proceeds, if they can buy it on the open market now for 22 cents? You often see premiums of 10 or 20% when a company is taken over, but more than twice the market value? That sounds nuts to me.
Here is a fact that should interest you from the latest SEC report:
"The Company expended $6,179,856 since inception through September 30, 2007 consisting mostly of payroll, stock based compensation, investor relations, advertising, professional services and travel."
Considering that the main thing this company has of any potential value is those ethanol plant plans, and given that nobody wants to loan them $730M to build the new plants, it seems to me that those plans are worth considerably less than the $6M the company spent putting them together. Just for fun, let's say those plans are worth half of what they cost. Add the million dollars they still have in the bank, divide by the 40.4M shares, and you get a net value of 10 cents a share.
So why are traders paying more than twice that? I'm sure a lot of it has to do with the 50 cents/share target the company is hoping for. That would be quite a return from today's prices, if it actually happened. But like I said before, I really wonder if this stock is worth more than a dime.
I am open to any other opinions!
but but Bush say it is!!
so take that!
The market conditions doomed management and this company.
Corn based ethanol simply is not economically feasible.
management will go home and cry
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