A deal to sell a struggling ethanol plant in Heron Lake, Minn., to financially stronger producers has collapsed.

Instead, Heron Lake Bioenergy, which is burdened by $37.5 million in debt and reported a $33 million loss last year, will try to raise more capital from its existing 1,100 investors, which include local farmers and others, CEO Bob Ferguson said in an interview Tuesday.

The plant, 20 miles northeast of Worthington in southwestern Minnesota, continues to operate, he said.

In January, the company’s board of directors agreed to be acquired by Guardian Energy Heron Lake LLC, a company formed by four ethanol producers that also were part of a group that purchased the Janesville, Minn., ethanol plant in 2009.

The $55 million sale won overwhelming support from investors in March, according to an SEC filing.

Guardian and Heron Lake officials declined to offer details about why the deal fell apart. Ferguson said it involved an impasse over control of a separately owned natural gas pipeline built in 2011 to serve the plant.

Heron Lake’s board voted earlier this month to drop out of the deal, and the company has signed a new debt forbearance agreement with its main lender, AgStar Financial Services, according to regulatory filings.

Ferguson said a proposal for existing investors to recapitalize the company, possibly with convertible debentures, will be presented at an investor meeting Tuesday. He said it’s possible the company also will bring in new management as he has been considering retirement.

“The plant would continue to operate with present employees,” he added. “We haven’t been shut down.”

Don Gales, CEO of Guardian’s management company, said Tuesday he could not comment other than to say the purchase agreement had been terminated. The Guardian buyer group was to include Al-Corn Clean Fuel cooperative, Claremont, Minn.; Chippewa Valley Ethanol Co., Benson, Minn.; Heartland Corn Products, Winthrop, Minn.; and KAAPA Ethanol LLC, Minden, Neb.