Apparent design flaws at its new $200 million ethanol processing plant and other technical problems has forced Cascade Grain Products LLC to temporarily halt production at its facility near Clatskanie and file for Chapter 11 bankruptcy protection.

The company, which filed for voluntary bankruptcy reorganization in U.S. Bankruptcy Court in Portland on Jan. 28, has operated the 113.2 million gallon per year ethanol plant only sporadically since starting up operations at the Port Westward Industrial Park in June.

The temporary shutdown, which began in early January, resulted in the layoff of at least 15 of the plant's 60 workers.

In announcing the bankruptcy filing, company president and CEO Charles Carlson, said the action would give the company time to implement design modifications to return to full operations. Carlson's statement did not identify the specific problems besetting the plant nor a timeline for restarting operations. He could not be reached for further comment since his initial statement.

But in discussions with local government officials shortly after his announcement, Carlson said the plant was taken off-line after discovery of high levels of sulfate contamination in a shipment of ethanol, said Columbia County Commissioner Tony Hyde, one of the public officials who attended the meeting.

"(Carlson) also said the plant had boiler issues and problems with piping that was causing a lot of vortex," Hyde told Coast River Business Journal.

Even with the plant's operational setbacks and the financial problems facing the company, Hyde said he remained optimistic about Cascade Grain's future.

"I walked out (of the meeting with Carlson) feeling a lot better than when I walked in," Hyde said. "It was very encouraging. It doesn't look like they'll be going away."

The county has a large financial stake in the success of Cascade Grain. The county already has pumped some $28 million in long-term loans for road, water and dock improvements at Port Westward, some of which directly serve the ethanol plant.

There is also some $4.5 million in loans set aside for offsite road improvements that would directly serve Cascade Grain. "I'm not going to sign" off on that loan until the company has an opportunity to resolve its operational problems, he told CRBJ.

Hyde said he was uncertain what impact the bankruptcy reorganization filing might have on the outstanding loans.

The company also pays $15,000 per month to the Port of St. Helens to lease property at Port Westward. The company was current on its lease payments through January, said Gerald P. Meyer. However, it was one month past-due on a $20,000 water bill.

Meyer told CRBJ that officials were in the process of "figuring out" if there was any other outstanding debt.

"We're still trying to get our arms around all the agreements we have" with the company, he said.

Cascade Grain's problems are exacerbated by a significant decline in oil prices and a steep increase in prices farmers charge for the corn used to manufacture ethanol, something Carlson alluded to in his initial statement.

Berggruen Holdings, owned by global investor Nicolas Berggruen, is the principal parent of Cascade Grain LLC.

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