World’s Largest Ethanol Producer, Verasun Energy Corp, Files for Bankruptcy
by Matthew McDermott, New York, NY on 11. 3.08
photo: Edward Leger
South Dakota-based Verasun Energy Corp., which claims to be the world's largest producer of ethanol, operating 14 refineries producing some 1.4 billion gallons of fuel annually, has filed for chapter 11 bankruptcy. According to the company’s press release on the matter, it will continue normal operations and “has taken steps to ensure continued supply of product to its customers and to fulfill all customer obligations.”
The company said that the bankruptcy filing came about because:
Significant Third Quarter Losses
The Company suffered significant losses in the third quarter of 2008 from a dramatic spike in its corn costs, reflecting in part costs attributable to its corn procurement and hedging arrangements, and historically unfavorable margins. Beginning in the third quarter, worsening capital market conditions and a tightening of trade credit resulted in severe constraints on the Company’s liquidity position. Faced with these constraints, VeraSun and 24 of its subsidiaries filed their chapter 11 petitions to facilitate access to additional liquidity while they reorganize to take better advantage of VeraSun’s position as one of the nation's largest producers of ethanol.
Company $1.5 Billion in Debt
According to Jeff Osbourne, an analyst at Thomas Weisel Partners, Verasun is currently about $1.5 billion in debt; Osbourne last week cut his price target for Verasun’s stock from $4.50 to $2 per share, after the company closed one of its facilities in Linden, Indiana. (Greentech Media)
map of Verasun ethanol facilities: Verasun
More at: Verasun Energy Corp and Greentech Media
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So, even with billions in Government subsidies and tax breaks, they can't make this economic model work? Bear in mind that this is after having starved millions of people to satisfy this mad dream to turn food into fuel. Yet another murderous money pit our tax dollars are being thrown into.
Between this, our endless objective-less wars, and the incredibly counterproductive response to the financial crisis, it really leads one to wonder if our politicians choose the most destructive policies intentionally. If not, perhaps it would be wise to do the opposite of what their instincts tell them from now on.
"Bear in mind that this is after having starved millions of people to satisfy this mad dream to turn food into fuel."
BS
There is enough food in the world for everyone, it's just not distributed equally. Many of the countries that we TRY to help by sending them food are so corrupt that it never gets to the people who NEED it.
Sure, ethanol from corn was a bad idea in so many ways, but ethanol sure seems a lot better than MTBE.
This is what happens when you go against natural forces...everyone in the business knew that corn ethanol is the least efficient means of producing ethanol and cannot play along with sugar ethanol. By imposing trade barriers on the import of cheaper sugar ethanol the US government tried to cheat natural market forces that are now showing off their true colors...this is a lesson that should be remembered in the future to how important global integration is now a days.