VeraSun to Sell Five Fuel Ethanol Plants to Valero

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Researched by Industrial Info Resources (Sugar Land, Texas)--Bankrupt VeraSun Energy Corporation (NYSE:VSE) (Brookings, South Dakota) has asked the bankruptcy court for authorization to sell five fuel-ethanol facilities to refiner Valero Energy Corporation (NYSE:VLO) (San Antonio, Texas). Last week, Valero offered $280 million for the facilities located in Aurora, South Dakota; Charles City, Fort Dodge, and Hartley, Iowa; Welcome, Minnesota, as well as a site in Reynolds, Indiana, where the company suspended construction in October of 2007.

In January, VeraSun announced it would be attempting to sell its assets; for more information, see January 19, 2009, news article VeraSun to Auction off Seven Fuel-Ethanol Plants Representing 640 Million Gallons of Annual Capacity. Don Endres, VeraSun's CEO said, "Given current difficult industry conditions and continued constrained credit markets, we believe that commencing a sale process is in the best interest of company stakeholders."

The plants represent 670 million gallons of ethanol production capacity and an estimated $1.3 billion in capital investment. The auction, which will be held March 16, will allow more favorable terms than the $280 million Valero bid for the facilities.

As of last week, VeraSun had only four plants operating. The operational plants are located in Charles City, Fort Dodge, and Hartley, Iowa, and Aurora, South Dakota. The remaining plants will sit in "hot idle" until the April 30, and no plants are expected to resume production until the second quarter of 2009.

Industrial Info's Ethanol Database provides a comprehensive outline of all current development activities in the emerging alternative fuels market. This database covers 177 ethanol plants in operation and 530 plants under development. It also covers 145 operational biodiesel plants and 245 biodiesel plants under development.

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