On Friday, VeraSun asked the U.S. Bankruptcy Court for the District of Delaware to grant them the right to sell all assets of the company including the assets of its 24 affiliates.
"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.
San Antonio-based oil company Valero Energy Corporation has signed a purchase agreement with VeraSun to buy production facilities in Aurora, S.D.; Charles City, Fort Dodge, and Hartley, Iowa; and Welcome, Minn.; and a development site in Reynolds, Indiana for $280 million. The initial hearing for approval of the proposed bid procedures is scheduled for Feb. 19, 2009 at 9 a.m. in Wilmington, Del.
If the court grants permission, VeraSun will accept qualifying bids from interested parties until March, 13, 2009. If bids are received an auction will take place on March, 16, 2009. A sale hearing before the court will be held following the auction and if approved, the sale of assets should be completed by March 31, 2009.
There have been other parties who have expressed interest in assets other than those included in the Valero agreement, but VeraSun has not yet negotiated sales agreements for any of their other facilities.
The Sioux Fall ArgusLeader reported that some in the industry have embraced Valero's interest in ethanol because it sends a strong signal renewable fuels are going to be a long-term player in the U.S. energy industry. However some corn producers wonder whether Big Oil's participation in the ethanol industry is cause for celebration or alarm.
"We understand that ethanol isn't going away. It is going to be part of the fuel mix as long as government has a requirement for renewable fuels, and we will be buying it one way or another," Valero Spokesman Bill Day said.
Valero is one of the largest buyers of ethanol to blend into gasoline in the nation, Day said. Acquiring the VeraSun plants "is an opportunity for Valero to purchase some assets at a very good price."