VeraSun Energy files for Chapter 11 bankruptcy
November 03, 2008
by Ron Sterk
SIOUX FALLS, S.D. — VeraSun Energy Corp., one of the nation’s largest ethanol producers, said late Friday it and 24 of its subsidiaries had voluntarily filed Chapter 11 bankruptcy "to facilitate access to additional liquidity."
"Today’s filing allows VeraSun to address its short-term liquidity constraints as we navigate historically challenging market conditions while we focus on restructuring to address the company’s long-term future," said Don Endres, chief executive officer.
Significant losses in the third quarter of 2008 resulted from a dramatic spike in corn costs, reflecting in part costs for corn procurement and hedging arrangements, and historically unfavorable margins, the company said, which contracted its liquidity and impaired its ability to operate and invest in production facilities.
VeraSun said it plans to resume normal operations during the chapter 11 proceedings, and that it has taken steps to ensure continued supply of product to its customers and that corn and other supplies "will continue to be paid in full for all goods and services furnished after the filing date."
At a "first-day" hearing set for today, the company said it expected the court would approve a request that it be allowed to pay employees without interruption. VeraSun said it had expected to reach an agreement with lenders for additional committed financing to fund normal operations before the first-day hearing.
VeraSun, headquartered in Sioux Falls, has 16 production facilities in eight states, one of which is under construction. By the end of 2008 the company was expected to have ethanol production capacity of 1,640 million gallons, making it the nation’s largest ethanol producer, according to data from the Renewable Fuels Association. The company was founded in 2001.