South Dakota, United States [RenewableEnergyWorld.com] VeraSun Energy Corporation announced that it 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.
During the chapter 11 proceedings, VeraSun said that it plans to resume normal operations. The company also said that it has taken steps to ensure continued supply of product to its customers and to fulfill all customer obligations.
“Today’s filing allows VeraSun to address its short-term liquidity constraints as we navigate historically challenging market conditions while we focus on restructuring to address the company’s long-term future,” said Don Endres, VerSun’s CEO. “We appreciate the loyalty of our employees, customers and suppliers during this challenging time.”
VeraSun said on Tuesday that it had received commitments for up to US $215 million in debtor in possession (DIP) financing from certain holders of its 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 US $40 million from these DIP facilities and authorized the use of cash collateral to enable VeraSun to operate its business.
Meanwhile, other ethanol companies have moved forward with plans in both the corn and cellulosic ethanol spaces. Poet announced plans to showcase it’s Project Liberty plant in Iowa to the media and local farmers.
The project involves the transformation of a 50 million-gallon-per-year (MGPY) grain-to-ethanol plant in Emmetsburg, Iowa into an integrated corn-to-ethanol and cellulose-to-ethanol biorefinery and is jointly funded by Poet and the U.S. Department of Energy (DOE). The company also announced last week the start up of a plant capable of producing 65 million gallons of corn ethanol per year in Marion, Ohio.
KL Energy Corp. announced that it has acquired KL Process Design Group (KLPDG), a leading process design and engineering firm and a pioneer in the commercialization of second generation cellulose-based ethanol (CBE) production. This acquisition and accompanying funding will allow KL Energy Corp. to develop its second commercial scale CBE production facility, the company said.