ADM Passes on VeraSun Assets - Valero is Big Winner
Bankruptcy auction apparently gets a big-time players to at least look at what's available. Meanwhile ADM is also looking at Brazil opportunities.
Compiled by staff
Published: Mar 18, 2009
Wire reports issued late Tuesday report that Archer Daniels Midland Co. bid on some of bankrupt VeraSun Energy Corp.'s ethanol plants, but in the end didn't buy. ADM declined to say which of the 17 VeraSun facilities it bid on.
VeraSun has announced that Valero Renewable Fuels is the successful bidder for assets contained in the VSE Group which includes production facilities in Aurora, S.D.; Charles City, Fort Dodge and Hartley, Iowa; and Welcome, Minn.; and a development site in Reynolds, Ind. In addition, Valero gets facilities in Albion, Neb. and Albert City, Iowa.
At the end of the auction, VeraSun selected Valero as a successful bidder to purchase the VSE Group facilities for a base purchase price of $350 million, $72 million for the US Bio Energy facility in Albert City, Iowa and $55 million for the ASA facility in Albion, Neb., plus working capital and other certain adjustments, according to a corporate release.
VeraSun filed for Chapter 11 bankruptcy last October, as the result of what many observers call a poorly executed risk management strategy. The assets for sale in the effort have drawn a lot of interest due to their low price. The floor bid for assets from Valero were about 50 cents per gallon of ethanol production capacity - which is about a quarter of the plants' original production cost.
Secured lenders for the remaining facilities submitted successful credit bids. Dougherty Funding, LLC submitted a credit bid of $93 million for the Marion, S.D. production facility. A group of lenders led by AgStar Financial Services submitted a credit bid of $324 million for the remaining "US BioEnergy Group", which includes ethanol production facilities in Central City and Ord, Neb.; Dyersville, Iowa; Hankinson, N.D.; Janesville, Minn., and Woodbury, Mich. A group of lenders led by West LB AG submitted a credit bid of $99 million for the remaining "ASA Group" facilities, consisting of production facilities in Bloomingburg, Ohio and Linden, Ind.
VeraSun will seek approval of the successful bids at a sale hearing conducted by the US Bankruptcy Court on Wednesday, March 18, 2009 at noon. The sales are expected to close in April.
In a separate press report, there's word that ADM is also looking at purchasing the Brazilian ethanol group Unialco, along with a mill belonging to Da Mata. ADM has not commented to the media on this move, but at least one shareholder at Unialco says a memorandum of understanding has been signed in that deal.
A potential Brazilian ethanol capacity purchase would still face the import tariff stumbling block of a 54-cent-per-gallon charge. Some observers say the news of the ADM move may be wishful thinking for Unialco shareholders.
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Tagged: ethanol, ASA, bioenergy, Agstar
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