The Andersons, Inc. Announces ELEMENT, LLC has been Placed into Receivership

Rhea-AI Summary

The Andersons, Inc. (NASDAQ: ANDE) announced on April 21, 2023, that ELEMENT, LLC, a joint venture where The Andersons holds a 51% stake, was placed into receivership as of April 18, 2023. The ELEMENT ethanol plant in Colwich, Kansas, is currently in an extended maintenance shutdown, and all future operating decisions will be overseen by a court-appointed receiver.

The challenges faced by the plant include operational difficulties and adverse market conditions, particularly regarding the California Low Carbon Fuel Standard credit markets. ELEMENT failed to make a required debt payment in February 2023, but the debt is non-recourse to The Andersons. The company anticipates a non-cash pretax impairment charge of approximately $85-$95 million, with 51% attributed to its ownership in ELEMENT. Despite these developments, The Andersons does not expect any impact on its long-term EBITDA targets.

Positive

• Non-recourse debt for ELEMENT protects The Andersons from financial liability.
• Expectations for long-term EBITDA targets remain unaffected.

Negative

• ELEMENT placed into receivership, indicating severe operational issues.
• Expected non-cash pretax impairment charge of $85-$95 million related to ELEMENT.

MAUMEE, Ohio, April 21, 2023 /PRNewswire/ -- The Andersons, Inc. (Nasdaq: ANDE) announces that on April 18, 2023, ELEMENT, LLC (ELEMENT), a joint venture with ICM, Inc. in which The Andersons, Inc. is a 51% owner, was placed into receivership pursuant to the Agreed Order Granting Application for Appointment of Receiver. The ELEMENT ethanol plant, located in Colwich, Kansas, is currently in an extended maintenance shutdown and future operating decisions will be made by the court-appointed receiver.

The plant, which opened in 2019, has faced operational and market-based challenges. These have been exacerbated by a shift in the California Low Carbon Fuel Standard credit markets and high western corn basis. As previously disclosed, these challenging conditions led to the failure by ELEMENT to make a required debt payment and receipt of a default notice in February 2023. This debt of ELEMENT is non-recourse to the company. The company expects to record a non-cash pretax impairment charge on long-lived assets related to ELEMENT of approximately $85 - $95 million, 51% of which will be attributable to the company. This range is preliminary and will be finalized as part of the company's ongoing normal quarterly close process.

These events are not expected to impact the company's previously communicated long-term EBITDA target.

About The Andersons, Inc.
The Andersons, Inc. is a diversified company rooted in agriculture that conducts business in the commodity merchandising, renewables, and plant nutrient sectors. For more information, please visit www.andersonsinc.com.

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SOURCE The Andersons, Inc.

FAQ

What does the receivership of ELEMENT, LLC mean for The Andersons, Inc. (ANDE)?

The receivership of ELEMENT, LLC means that the company has lost control over its joint venture, and a court-appointed receiver will make all future operational decisions.

How much impairment charge is The Andersons expecting due to ELEMENT's receivership?

The Andersons expects a non-cash pretax impairment charge of approximately $85-$95 million related to ELEMENT.

Will the receivership of ELEMENT impact The Andersons' long-term EBITDA targets?

No, The Andersons does not expect the receivership of ELEMENT to impact its previously communicated long-term EBITDA targets.

When was ELEMENT, LLC placed into receivership?

ELEMENT, LLC was placed into receivership on April 18, 2023.

What challenges has ELEMENT, LLC faced leading to its receivership?

ELEMENT has faced operational challenges and adverse market conditions, particularly related to the California Low Carbon Fuel Standard credit markets.