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Ethanol

Posted by on in Ethanol

Find the Levers That Create Value in Your Ethanol Business

 

Like investors in any business, investors in ethanol plants seek a return on their investment. Whether returns take the form of short term dividends or long term capital gains, the ability to deliver returns to shareholders is based on the ability of the business to drive cash flows to shareholders over time. Since the value of your business is based on your ability to drive cash flow, it is important to understand the levers that generate cash flow in your business as well as how you might improve that potential going forward.

Many independent ethanol plants are at a crossroads regarding how to continue to maximize value for their shareholders while staying relevant in the marketplace.  Several options exist and all have significant implications regarding liquidity, distributions & shareholder alignment.

Ø  Reinvest & Retain Capital

Ø  Merge or Some Offshoot of a Merger

Ø  Sell

 

 

Posted by on in Ethanol

The fundamental problem is a combination of ethanol production being up at the same time motor gasoline demand is down and ethanol production hitting the blend wall of 10%.  Average annual gasoline demand is down over 10% from the peak in July of 2007. The Energy Information Administration projects gasoline demand to be down another 0.34% in 2012 and down slightly in 2013.

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