Engineering News

Valero Signs Deal To Buy VeraSun Assets
February 09, 2009

VeraSun Energy Corp. on Friday announced that the Company filed a Bid Procedures and Sale Motion in the United States Bankruptcy Court for the District of Delaware seeking authority to sell substantially all of the assets of VeraSun Energy Corp. and 24 of its affiliates through a court-approved sale process.

As part of the sales process, the Company has signed an agreement with Valero Energy Corporation to sell substantially all of its assets relating to the VeraSun production facilities in Aurora, South Dakota; Charles City, Fort Dodge, and Hartley, Iowa; and Welcome, Minnesota; and a development site in Reynolds, Indiana. The Valero purchase agreement provides for a purchase price of $280 million, plus the value of inventory and certain pre-paid expenses, subject to certain customary adjustments. Having entered into the Valero agreement, the Company is now required to hold an auction to determine if other bidders will offer more favorable terms than Valero's bid, referred to as a "stalking horse" bid.

Under the proposed Bid Procedures, the Company is seeking to sell all of its production facilities and operations in separate or combined transactions. While the Company has received expressions of interest with respect to assets other than those that are the subject of the proposed Valero transaction, the Company has not yet negotiated a definitive agreement to sell any other facilities.

"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," said Don Endres, VeraSun's Chief Executive Officer.

Through the sale process, the Company is offering for sale substantially all of its assets, which may be generally characterized as four distinct operating groups:

-- The "VSE Group" consisting of production facilities subject to the Valero bid.

-- The "US BioEnergy Group" consisting of production facilities in Central City and Ord, Nebraska; Albert City and Dyersville, Iowa; Hankinson, North Dakota; Janesville, Minnesota, and Woodbury, Michigan.

-- The "ASA Group" consisting of production facilities in Albion, Nebraska, Bloomingburg, Ohio, and Linden, Indiana.

-- The "Marion Group" consists of the production facility in Marion, South Dakota.

The Company believes it has sufficient liquidity to maintain its production facilities and workforce through the anticipated conclusion of the sale process.

"We continue to be optimistic about the long-term viability of the renewable fuels industry," added Endres. "Ethanol is a valuable, clean, high-octane, low-carbon fuel that is reducing America's reliance on foreign oil, creating jobs and stimulating the economy."

Pursuant to the proposed Bid Procedures, interested bidders must submit qualifying bids by March 13, 2009. If qualifying bids are received, the Company would conduct an auction on March 16, 2009 and, following Bankruptcy Court approval at a sale hearing, expect to complete the asset sales by March 31, 2009, or early in the second quarter, subject to regulatory and other customary closing conditions. The initial hearing for approval of the proposed Bid Procedures is scheduled for February 19, 2009 at 9 a.m. in Wilmington, Delaware.

Rothschild, Inc. is serving as VeraSun's financial advisor on the transaction and will be managing the sale process. Credit Suisse is acting as exclusive financial advisor to Valero Energy Corporation.

VeraSun and 24 of its subsidiaries filed petitions for relief under chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court in Wilmington, Delaware on October 31, 2008. The chapter 11 cases are being jointly administered under Case No. 08-12606 (BLS).

VeraSun Energy Corp., 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. VeraSun Energy currently has an annual potential production capacity of approximately 1.64 billion gallons of ethanol and 5 million tons of distillers grains. VeraSun also markets E85, a blend of 85 percent ethanol and 15 percent gasoline for use in Flexible Fuel Vehicles (FFVs), directly to fuel retailers under the brand VE85(R).

Source: VeraSun Energy Corp

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