VeraSun Energy Corporation last week signed an agreement to sell
substantially all of its production
facilities to Valero Energy Corporation.
The ethanol company and 24 of its subsidiaries filed petitions for relief under
chapter 11 of the U.S. Bankruptcy Code in Delaware on October 31, 2008.
The company filed a Bid Procedures and Sale Motion in the United States Bankruptcy Court for the District of Delaware seeking authority to sell the assets of VeraSun Energy Corporation and 24 of its affiliates through a court-approved sale process.
The sale includes production facilities in Aurora, South Dakota; Charles City, Fort Dodge, and Hartley, Iowa; and Welcome, Minnesota; and a development site in Reynolds, Indiana.
The Valero agreement provides for a purchase price of $280 million, plus the value of inventory and certain pre-paid expenses. Having entered into the Valero agreement, the Company is now required to hold an auction to determine if other bidders will offer more favorable terms than Valero’s bid, referred to as a “stalking horse” bid.
Under the proposed Bid Procedures, the Company is seeking to sell all of its production facilities and operations in separate or combined transactions. While the Company has received expressions of interest with respect to assets other than those that are the subject of the proposed Valero transaction, the Company has not yet negotiated a definitive agreement to sell any other facilities.
Through the sale process, the Company is offering for sale substantially all of its assets, which may be generally characterized as four distinct operating groups:
• The “VSE Group” consisting of production facilities subject to the Valero bid.
• The “US BioEnergy Group” consisting of production facilities in Central City and Ord, Nebraska; Albert City and Dyersville, Iowa; Hankinson, North Dakota; Janesville, Minnesota, and Woodbury, Michigan.
• The “ASA Group” consisting of production facilities in Albion, Nebraska, Bloomingburg, Ohio, and Linden, Indiana.
• The “Marion Group” consists of the production facility in Marion, South Dakota.
The Company believes it has sufficient liquidity to maintain its production facilities and workforce through the anticipated conclusion of the sale process.
Pursuant to the proposed Bid Procedures, interested bidders must submit qualifying bids by March 13, 2009. If qualifying bids are received, the Company would conduct an auction on March 16, 2009 and, following Bankruptcy Court approval at a sale hearing, expect to complete the asset sales by March 31, 2009, or early in the second quarter. The initial hearing for approval of the proposed Bid Procedures is scheduled for February 19, 2009 at 9 a.m. in Wilmington, Delaware.
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