Abengoa reportedly lays off staff at Hugoton, other US locations

By Erin Voegele | December 03, 2015

Abengoa has reportedly laid off staff at its Hugoton, Kansas, cellulosic ethanol plant and other facilities and offices worldwide. A former Abengoa employee told Biomass Magazin that the company cited financial difficulties as the reason for its actions.

In late November, Spain-based Abengoa announced that it is filing for preliminary creditor protection. At that time, the company indicated its intent to “continue to operate its ethanol plants in a normal course of business.” However, a former Abengoa employee has indicated layoffs were implemented Dec. 2.

Last month, Abengoa published a notice indicating its previously announced framework agreement with Gonvarri Corporación Financiera, a company belonging to Gonvarri Steel Industries, was terminated, citing a failure to meet certain conditions to which that agreement was subject. Under the agreement, announced Nov. 8, Gonvarri was expected to make a €250 million ($265.9 million) investment in Abengoa. Following news that the agreement was terminated, Abengoa said it “will continue negotiations with its creditors with the objective reaching an agreement that ensures the company’s financial viability, under the protection of article 5 bis of the Spanish Insolvency Law…, which the company intends to apply for as soon as possible.”

According to the employee, an Abengoa executive cited financial difficulties as the reason for the layoffs, noting the company does not have sufficient funds to continue paying wages. The employee indicated Abengoa’s Arizona offices have been closed, with the entire staff of the Hugoton facility laid off, with the possible exception of a few upper management positions. “We were told layoffs were worldwide and only about 30 people remain at the corporate office in St. Louis,” the employee said.

The employee noted that the news of such extensive layoffs came as a surprise to Abengoa staff.

Regarding operations at the Hugoton plant, the employee noted the facility was idled in November, adding that the facility could possibly be reopened in the spring. Talks with bond holders were extended until Friday, the employee added.

On Dec. 1, Abengoa told Biomass Magazine, that “the Hugoton, Kansas, plant has also been temporarily idled in order to implement various modifications and improvements.” The employee alleges the operational problems at the Hugoton facility do not stem from the technology itself, rather from the application of the technology. The employee cited issues with management, and vendors and suppliers as some of the problems associated with the facility’s operations.

According to the employee, the Hugoton facility produced enough cellulosic ethanol to sell a rail car of product before the facility was idled.

A search of recent court records shows CHS Inc. filed a lawsuit against Abengoa Bioenergy New Technologies and affiliated companies on Nov. 23 related to Abengoa’s failure to pay under contracts for the shipment of corn. The complaint alleges Abengoa owes CHS nearly $4.91 million for corn delivered to Abengoa plants located in Colwich, Kansas; York, Nebraska; and Ravenna, Nebraska during September and October.

Repeated calls to Abengoa offices and officials by Biomass Magazine were not returned. 

CORRECTION: A previous version of this article incorrectly stated the Hugoton facility sold a rail car of cellulosic ethanol to Chevron. The article has been updated based on information supplied by Chevron.