VeraSun Targets One Billion Gallons of Ethanol for 2008

VeraSun Energy Corp., one of the largest ethanol producers in the U.S., yesterday announced plans to acquire three ethanol plants with a combined annual production capacity of 330 million gallons per year (MMGY) from ASAlliances Biofuels, LLC for $725 million. The acquisition will increase VeraSun’s production capacity to approximately one billion gallons by the end of 2008.

The three facilities are each expected to operate at 110 MMGY and are located in Albion, Nebraska, Bloomingburg, Ohio, and Linden, Indiana. The facilities will provide VeraSun with immediate production capacity and revenue.

The Linden facility will begin startup operations this month, followed by Albion in the fourth quarter and Bloomingburg by the end of first quarter 2008.

“This is a unique opportunity to acquire immediate production and revenue at a cost similar to that of building new facilities,” said Don Endres, VeraSun Chairman and CEO. “The capacity gained through this acquisition underscores a commitment to our long-term growth strategy while maintaining our focus on being an efficient, low-cost ethanol producer.”

VeraSun currently has 340 MMGY of production capacity through its operating facilities in Aurora, South Dakota and Fort Dodge and Charles City, Iowa—and another 330 MMGY of production presently under construction and development in Hartley, Iowa, Welcome, Minnesota, and Reynolds, Indiana. The facilities being acquired are sister facilities to VeraSun’s current fleet as they are all designed by ICM and built by Fagen, Inc.

The company is funding the acquisition through $200 million of equity, $250 million of cash and $275 million in project financing. The acquisition is expected to be accretive to earnings and free cash flow within the first 12 months without accounting for potential synergies. The acquisition should become final in 30 to 45 days and is subject to customary closing conditions.

“Reaching one billion gallons of annual production will be a benchmark for VeraSun and represents a maturing of the renewable fuels industry,” added Endres.

VeraSun Energy Corp. Plant Profile:

Operating Facilities
VeraSun Aurora (SD) – 120MMGY (2003 Startup)
VeraSun Fort Dodge (IA) – 110MMGY (2005 Startup)
VeraSun Charles City (IA) – 110MMGY (2007 Startup)
Current Operating Capacity – 340MMGY
Facilities Under Construction or Development
VeraSun Hartley (IA) – 110MMGY (Q1 2008 Startup)
VeraSun Welcome (MN) – 110MMGY (Q1 2008 Startup)
VeraSun Reynolds (IN) – 110MMGY (Q4 2008 Startup)
Capacity Under Construction and Development – 330MMGY

Facilities from Acquisition
Linden (IN) – 110MMGY (Q3 2007 Startup)
Albion (NE) – 110MMGY (Q4 2007 Startup)
Bloomingburg (OH) – 110MMGY (Q1 2008 Startup)
Capacity Under Acquisition – 330MMGY

5 Plants, 560MMGY by end of 2007
8 Plants, 890MMGY by end of Q1 2008
9 Plants, One Billion Gallons of Annual Production Capacity by end of 2008

“We are pleased that the transaction allows us to continue our investment in ethanol through VeraSun,” said Tom Manuel, ASAlliances Biofuels President and CEO. “VeraSun brings experience and expertise to the operation of large, efficient biorefineries.”

Current ASAlliances plant employees will become VeraSun employees at the conclusion of the sale. Morgan Stanley & Co. Incorporated is serving as the financial adviser, and Cravath, Swaine & Moore LLP is acting as legal counsel for VeraSun on this transaction.

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