DES MOINES, Iowa (AP) -- Hawkeye Energy on Monday put its ethanol plants at Iowa Falls and Fairbank into bankruptcy in U.S. Bankruptcy Court in Wilmington, Del., essentially turning over the operations to a group of banks led by Credit Suisse.

The Iowa Falls and Fairbank plants, each of which employs about 45 workers, will continue to operate under the current management, Hawkeye president Bruce Rastetter said. They also will continue to buy corn and will honor forward contracts for purchases of corn from farmers.

Hawkeye's plants at Menlo and Shell Rock are not affected by the filing, Rastetter said.

Hawkeye said it owes bank debt between $500 million and $1 billion to the consortium of lenders that took out the loans in 2006 after Hawkeye withdrew a planned initial public stock offering.

Against that debt, Hawkeye has about $250 in assets, Rastetter said.

Hawkeye's creditors already have approved the plan, Rastetter said, and it is anticipated that the Iowa Falls and Fairbank plants will emerge from bankruptcy within 60 to 90 days.

"On a valuation basis, the debt taken out in 2006 was based on a value of about $4.50 per gallon of ethanol," he said. "Today the valuation is about $1-$1.10 per gallon."

"It's a different world today than in 2006," Rastetter said.

In a letter to employees, Rastetter said the Iowa Falls and Fairbank plants will operate as "business as usual."

"You will continue to receive your usual pay and benefits without interruption," Rastetter said in the letter. "All corn suppliers will be paid in as usual and sales of ethanol and distiller's grains will continue normally."

Rastetter said in the letter there would be no cutbacks or layoffs as a result of the bankruptcy filing. Management will remain in place.

The ethanol industry suffered a sharp reversal in the second half of 2008 as plants were hit first by record-high prices for corn, then a drop in the price of oil and demand for gasoline.

Other producers such as VeraSun Energy, Aventine and Pacific Ethanol were forced into bankruptcy. VeraSun's Iowa plants at Fort Dodge, Albert City, Hartley and Charles City were sold to Texas refiner Valero Energy.

Ethanol producers generally have seen more favorable margins in the last half of this year as demand for ethanol blending recovered and the price of corn has stayed below $4 per bushel.

"But we have been working with our lenders since last winter because we knew that the debt load was going to be too much," Rastetter said.

After it withdrew its IPO in mid-2006, Hawkeye sold 80 percent of itself to the Thomas H. Lee group investment banking partnership. Rastetter and other private investors retained control of the other 20 percent equity.

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