VeraSun Energy Corporation (NYSE: VSE), one of the nation’s largest ethanol producers, which announced Friday it filed for chapter 11 bankruptcy protection, announced today that it had received commitments for up to $215 million in debtor in possession (DIP) financing from certain holders of VeraSun’s 9 7/8% senior secured notes due 2012 and groups of lenders led by AgStar Financial Services.
At today’s "first day" hearing, the U.S. Bankruptcy Court entered an interim order allowing VeraSun and its affiliates to borrow up to $40 million from these DIP facilities and authorized the use of cash collateral to enable VeraSun to operate its business.
VeraSun is also in negotiations with its other lenders and expects to receive, when combined with commitments received from the 2012 noteholders and AgStar lenders, aggregate DIP financing commitments totaling $250 million, the company said in a release.
Judge Brendan L. Shannon of the U.S. Bankruptcy Court, District of Delaware in Wilmington also granted VeraSun’s emergency request to pay outstanding employee checks, to pay suppliers for postpetition goods and services and up to $20 million for goods delivered on or after October 11, 2008, and for other emergency relief. The Bankruptcy Court is expected to conduct a hearing tomorrow to rule on the remaining relief requested by VeraSun in its "first day" motions.
"The financing package approved today allows VeraSun to maintain operations and continue supplying its customers. The relief granted by the Court today will allow us to focus on our operations and, at the same time, provide VeraSun with the liquidity and ability to continue operations, which means producing ethanol and distillers grains, paying suppliers, and satisfying customer needs for product," said Don Endres, VeraSun’s Chief Executive Officer.
VeraSun and 24 of its subsidiaries filed for relief under chapter 11 of the U.S. Bankruptcy Code in U.S. Bankruptcy Court for the District of Delaware in Wilmington, on October 31, 2008. The chapter 11 cases are being jointly administered as case number 08-12606.
About VeraSun Energy Corporation
VeraSun Energy Corporation, headquartered in Sioux Falls, S.D., is a leading producer and marketer of ethanol and distillers grains. Founded in 2001, the company has a fleet of 16 production facilities in eight states, of which one is still under construction. VeraSun Energy is scheduled to have an annual production capacity of approximately 1.64 billion gallons of ethanol and more than 5 million tons of distillers grains by the end of 2008. VeraSun also markets E85, a blend of 85% ethanol and 15% gasoline for use in Flexible Fuel Vehicles (FFVs), directly to fuel retailers under the brand VE85®.
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