VeraSun Energy Corporation (NYSE: VSE), a major U.S. producer of ethanol that filed for bankrupty protection on October 31, said Monday it has received an unsolicited "indication of interest" to purchase the company’s assets.
Poet LLC, the nation’s top ethanol producer said Monday that it is in buyout talks with a number of ethanol companies.
Neither company would confirm whether or not they are engaged in talks.
"We just feel there is a lot of promise in the future of the ethanol industry," Jeff Broin, CEO of Poet told the Associated Press. He added that his company is considering acquiring plants and/or entire companies.
"I think, quite honestly, some of the plants out there may be stranded capital. They were built in the wrong locations," Broin said. "But there are some that we have significant interest in."
VeraSun said in a statement that it intends to evaluate the proposal, and any others it may receive, in accordance with it obligations as a debtor under chapter 11 of the Bankruptcy Code.
The margins for ethanol companies thinned during the first six months of 2008 as grain prices increased. VeraSun locked in prices before the commodities bubble burst at the end of the summer, leaving the company stuck with higher-than-market prices on corn.
Both VeraSun and Poet are headquartered in Sioux Falls, South Dakota.
VeraSun has a fleet of 16 production facilities in eight states and an annual production capacity potential of approximately 1.64 billion gallons of ethanol and 5 million tons of distillers grains.
Privately owned Poet Poet operates 26 ethanol plants with a potential yearly output of 1.54 billion gallons. Broin told the Associated Press his company has brought three plants online in the past 70 days and has plans to start building at least two new plants in the spring, unless acquisition prove to be a better option.
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