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Merrill business seeks bankruptcy protection

Thursday, August 16, 2012

It's business as usual at a Merrill corn oil production plant while management prepares a plan to reorganize using a bankruptcy process.

Plymouth Oil Board Chairman Dave Hoffman Wednesday said all employees are on the job at the business which processes corn germ for oil.

The plant employs 24 workers, he said.

"We filed for reorganization under Chapter 11 rules of bankruptcy, but it is a reorganization; it's not a sell out," Hoffman said.

According to federal law, the bankruptcy plan outlines a way to keep the business viable and pay creditors over time.

The plan is submitted to a federal bankruptcy judge who may reject, accept or modify the plan, based on federal law.

Plymouth Oil began producing corn oil for use in food and animal feed in the plant at 22058 K-42, Merrill, in February 2010, according to Hoffman.

The manufacturer is directly across from Plymouth Energy which produces ethanol from corn.

"Originally Plymouth Oil was set up to get the corn germ from our neighboring company Plymouth Energy but that never happened," Hoffman said.

Instead, Plymouth Oil is buying corn germ for its production process from a business 280 miles away in Jefferson, Wis.

Beyond the cost of bringing the raw ingredient to Merrill, Hoffman said the high price of corn has resulted in very tight operating margins.

"The cost of the corn germ supply has at least doubled since we've started production," he explained.

Financial issues for Plymouth Oil are also loan-related.

Hoffman said a person who was expected to be an investor in Plymouth Oil filed for bankruptcy in November 2010.

"Without the investor's support, Plymouth Oil lost our bank loan commitment and we borrowed short-term money from a group of lenders," he said.

The corn oil producer has not been able to pay that debt.

"We've been paying them, but the interest is getting higher as a percentage so it came to the point where the best course of action for the company, we believe, is to go through this Chapter 11 bankruptcy to come up with a reorganization plan," Hoffman said.

He said Plymouth Oil's goal is to completely pay the lenders back.

A business plan is part of the reorganization, Hoffman said.

"I think it will be done within the next 30-60 days," he added.

To make that happen, efforts are being made to get the corn germ locally.

"We're just getting into this and we do have a couple of other ethanol plants that are very local to Plymouth Oil that are working on proposals to build fractionation," he said.

Fractionation is a process that separates the corn germ from other parts of the kernel.

He estimates an ethanol plant producing 50-million gallons a year could add $9 million in profits by adding fractionation.

"Plants that have fractionation need an outlet for corn germ and right now Plymouth Oil is the only plant in the United States that processes dry fractionated corn germ, so in my view we're not dead in the water by any means," Hoffman said.

A bushel of corn yields about 4.7 pounds of corn germ.

"When we take the raw, dry defractionated corn germ, we remove the oil, and the germ comes in at 17-21 percent oil," he explained. "Then we remove the food grade oil, and the meal that's left only contains about .9 percent oil and that makes it a stable product and that's what we sell as feed and food ingredients."

The corn germ processed at Plymouth Oil is sold to companies for uses such as corn oil consumers buy in the grocery store.

Most of the corn meal produced by Plymouth Oil is sold locally and some ends up on the West Coast, Hoffman said.

"A lot of it ends up on dairy farms, some on hog farms, some to cattle," he said.

Plymouth Oil is also close to getting its new product, Golden Essence flour, to market, he added.

"It is a very nutritious food ingredient," Hoffman said.

He said the goal is definitely to keep the plant running and keep the employees on the job.

"We're still making plans to go forward and hopefully we're going to accomplish that, Hoffman said.


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This article is simply not true. Plymouth oil was forclosed on. Iowa courts online show the bridge lenders foreclosed on Plymouth Oil, thus making them file for chapter 11. They were not paying off the loan and still are not. To all employees of Plymouth Oil-go get another job, Dave Hoffman is not telling the truth-go to iowa courts online and read for yourself. Even Plendl feed service(a Plymouth Oil investor) sued Plymouth Oil. This train is already off the track!!!

-- Posted by hawkchad on Thu, Aug 16, 2012, at 1:54 PM


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