Refinancing, Tax Credit Ease Imperium Woes

The remarkable rise and fall of Imperium Renewables — from a rising star in the alternative fuel universe to a green basket case — may finally be coming to an end.

On Monday, Imperium became one of the many beneficiaries of the Emergency Economic Stabilization Act of 2008 when it was signed into law by President Bush. The bill received Congress’ disdainful approval Friday after wrapping the original version in layers of pork rinds. Some of that pork meant extending tax credits for green energies, namely a $1-a-gallon tax credit for biodiesel production.

That followed news that investors had come up with a scheme to recapitalize Imperium. The plan will allow the company to keep running its 100-million-gallon-per-year facility in Grays Harbor County, Wash., while offering proceeds to lien holders and creditors.

That’s not much good news. But at least it’s good. A year ago, Imperium stood in line for an initial public offering, among a number of companies that, while bleeding cash and amassing net losses, was seeing revenue surge and investing heavily towards a good chunk of what seemed like a hot market.

Then came the fall: The resignation of the CEO who had driven the company’s expansion, the shuttering outlying operations in Hawaii and elsewhere, layoffs, the withdrawl of its IPO, and the loss of two key contracts – one with the city of Seattle and another with Royal Caribbean Cruise Lines.

But Imperium is far from out of the woods. For one, the terms of the recapitalization weren’t clear. Often when a company is recapitalized, the debtholders are given an equity stake instead. It can be a step away from bankruptcy or an attempt to prevent the sale of the company, and it can often presage further cutbacks.

In a statement, Imperium noted that the restructuring isn’t quite finished:

As the next step in its restructuring, Imperium has retained an independent third party business debt restructuring firm to assist in negotiating with its creditors to settle its remaining creditor obligations to leave the company with sufficient capital to resume operations.

“We hope,” CEO John Plaza added, “to resume operations as soon as possible.”

Resuming operations? Yes, that would be a crucial step in turning the company around.