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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