Ethanol Maker's Bankruptcy Proceeds in Courts
VeraSun Energy Corporation arranges new financing under Chapter 11 reorganization.
Compiled by staff
Published: Nov 4, 2008
The next chapter at VeraSun Energy Corporation - maker of as much as 13% of the nation's ethanol - begins as the company enters Chapter 11 reorganization. The company announced the move late Friday, and Monday trading in the company's stock was halted, but not before it fell to 23 cents per share.
The company also announced that it had received commitments for up to $215 million in debtor-in-possession financing and the court approved $40 million in interim financing. That authority allows the company to pay employee outstanding checks, pay suppliers for post-Chapter 11 goods, and pay suppliers for goods delivered on or after October 11.
The $215 million debtor in possession financing cam from certain holders of VeraSun's 9-7/8% senior secured notes due 2012 and groups of lenders led by AgStar Financial Services. 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 keep the company operating.
The company continues to negotiate with other lenders and expected to receive a final total of $250 million in DIP financing.
VeraSun and 24 of its subsidiaries filed for Chapter 11 relief on Oct. 31. A wide range of companies have operated in Chapter 11 in the past, with the aim of getting finances and shape and re-emerging from bankruptcy. Two major examples include Delta and Northwest Airlines (who later merged). Essentially, a Chapter 11 reorganization prevents creditors from simply seeking repayment and requires that the company submit to a court-appointed bankruptcy trustee to oversee the reorganization.
You can learn more about these moves at www.verasun.com.
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Tagged: ethanol, Agstar
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