South Dakota, United States [RenewableEnergyWorld.com] VeraSun Energy Corporation, one of the nation’s largest ethanol producers, today announced that it recently received a non-binding unsolicited indication of interest with respect to the purchase of its assets. The company intends to pursue this indication of interest to its conclusion and evaluate other proposals it may receive in accordance with its obligations as a debtor in possession under chapter 11 of the Bankruptcy Code.
The indication of interest received by the company is subject to significant conditions, and there is no assurance that it will result in a transaction. Due to confidentiality considerations, the identity of the third party and the terms of its indication of interest were not disclosed.
This follows news earlier in the month that VeraSun Energy Corporation and 24 of its subsidiaries have filed voluntary petitions for relief under chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The company said that it made the move in order to enhance liquidity while it reorganizes its operations.
The filing comes after a series of events that led to a contraction in VeraSun’s liquidity. The company suffered losses in the third quarter of 2008 from a spike in its corn costs. This was caused in part by costs attributable to its corn procurement and hedging arrangements, as well as historically unfavorable margins. Beginning in the third quarter, the national and international problems in the credit and capital resulted in severe constraints on the company’s liquidity position.