Production Facilities Expected to Continue Operations
SIOUX FALLS, S.D., Oct. 31 /PRNewswire-FirstCall/ -- VeraSun Energy
Corporation (NYSE: VSE), one of the nation's largest ethanol producers
announced today the Company 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 to enhance
liquidity while they reorganize.
The filing was precipitated by a series of events that led to a
contraction in VeraSun's liquidity, impairing its ability to operate its
business and invest in production facilities. The Company suffered
significant losses in the third quarter of 2008 from a dramatic spike in its
corn costs, reflecting in part costs attributable to its corn procurement and
hedging arrangements, and historically unfavorable margins. Beginning in the
third quarter, worsening capital market conditions and a tightening of trade
credit resulted in severe constraints on the Company's liquidity position.
Faced with these constraints, VeraSun and 24 of its subsidiaries filed their
chapter 11 petitions to facilitate access to additional liquidity while they
reorganize to take better advantage of VeraSun's position as one of the
nation's largest producers of ethanol.
Company Intends To Maintain Operations
During the chapter 11 proceedings, VeraSun plans to resume normal
operations. The Company has taken steps to ensure continued supply of product
to its customers and to fulfill all customer obligations. In that regard,
VeraSun is working closely with its lenders and expects to reach an agreement
before the "first day" hearing on Monday for additional committed financing to
provide adequate liquidity to fund operations in the normal course.
The Company expects that it will not scale back its purchases of raw
materials, and corn and other suppliers will continue to be paid in full for
all goods and services furnished after the filing date as required by the
Bankruptcy Code. The Company has also sought authority from the bankruptcy
court to pay for goods delivered to the Company on or after October 11, 2008.
VeraSun has also requested the bankruptcy court's approval to continue to
pay employees in the ordinary course without interruption, and expects the
request to be granted as part of the court's "first day" orders.
"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," Don Endres
CEO said. "We appreciate the loyalty of our employees, customers and suppliers
during this challenging time."
About VeraSun Energy Corporation
VeraSun Energy Corp. (NYSE: VSE), 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, of
which one is still under construction. VeraSun Energy is scheduled to have an
annual production capacity of approximately 1.64 billion gallons of ethanol
and more than 5 million tons of distillers grains by the end of 2008.
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). For more information, please visit VeraSun Energy's
websites at http://www.verasun.com or http://www.VE85.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. In particular, statements by
VeraSun and its subsidiaries (the "Company") regarding future events and
developments and the Company's future performance, including statements
regarding proceedings relating to the Company's petitions for relief under
Chapter 11 of Title 11 of the United States Code and the Company's operations
and funding during the chapter 11 process, as well as other statements of
management's expectations, anticipations, beliefs, plans, intentions, targets,
estimates, or projections and similar expressions relating to the future, are
forward-looking statements within the meaning of these laws. Forward-looking
statements in some cases can be identified by their being preceded by,
followed by or containing words such as "estimate," "plan," "project,"
"forecast," "intend," "expect," "anticipate," "believe," "seek," "target" and
other similar expressions. Forward-looking statements are based on assumptions
and assessments made by the Company's management in light of their experience
and their perception of historical trends, current conditions, expected future
developments and other factors they believe to be appropriate. Any
forward-looking statements are not guarantees of the Company's future
performance and are subject to risks and uncertainties that could cause actual
results, developments and business decisions to differ materially from those
contemplated by any forward-looking statements. Except as required by law, the
Company undertakes no obligation to update any forward-looking statements.
Some of the factors that may cause actual results, developments and
business decisions to differ materially from those contemplated by any
forward-looking statements include the following: the ability of the Company
to continue as a going concern; the ability of the Company to obtain
debtor-in-possession financing and to operate pursuant to the terms of any
debtor-in-possession financing; the Company's ability to obtain court approval
with respect to motions in the chapter 11 proceeding prosecuted by it from
time to time, including approval of motions relating to the priority of the
lender's security interest under any debtor-in-possession financing; the
ability of the Company to develop, prosecute, confirm and consummate one or
more plans of reorganization with respect to the chapter 11 cases; risks
associated with third parties seeking and obtaining court approval to
terminate or shorten the exclusivity period for the Company to propose and
confirm one or more plans of reorganization, for the appointment of a chapter
11 trustee or to convert the cases to chapter 7 cases; the ability of the
Company to obtain and maintain normal terms with vendors and service
providers; the Company's ability to maintain contracts that are critical to
its operations; the potential adverse impact of the chapter 11 cases on the
Company's liquidity or results of operations; the ability of the Company to
fund and execute its business plan; the ability of the Company to attract,
motivate and/or retain key executives and employees; the ability of the
Company to attract and retain customers; the volatility and uncertainty of
corn, natural gas, ethanol, unleaded gasoline and other commodities prices;
the Company's ability to generate sufficient liquidity to fund its operations
and capital expenditures; the results of the Company's hedging transactions
and other risk mitigation strategies; risk of potential goodwill and other
intangible impairment; operational disruptions at the Company's facilities;
the effects of vigorous competition and excess capacity in the industries in
which the Company operates; the costs and business risks associated with
developing new products and entering new markets; the development of
infrastructure related to the sale and distribution of ethanol; the effects of
other mergers and consolidations in the biofuels industry and unexpected
announcements or developments from others in the biofuels industry; the
uncertainties related to the Company's acquisitions of US BioEnergy
Corporation, ASA OpCo Holdings, LLC and other businesses, including the
Company's ability to achieve the expected benefits from these acquisitions;
the impact of any new, emerging and competing technologies on the Company's
business; the possibility of one or more of the markets in which the Company
competes being impacted by political, legal and regulatory changes or other
external factors over which the Company has no control; changes in or
elimination of governmental laws, credits, tariffs, trade or other controls or
enforcement practices; the impact of any potential Renewable Fuel Standards
waiver; the Company's ability to comply with various environmental, health,
and safety laws and regulations; the success of the Company's marketing and
sales efforts; the Company's reliance on key management personnel; the
Company's ability to secure additional financing; the volatility of the market
price of VeraSun's stock; the Company's ability to implement additional
financial and management controls, reporting systems and procedures and
continue to comply with Section 404 of the Sarbanes-Oxley Act, as amended; and
the risk factors described in VeraSun's filings with the Securities and
Exchange Commission, including the prospectus supplement filed on September
16, 2008. Similarly, these and other factors, including the terms of any
reorganization plan ultimately confirmed, can affect the value of the
Company's various pre-petition liabilities and VeraSun's common stock. No
assurance can be given as to what values, if any, will be ascribed in the
chapter 11 proceeding to each of these constituencies. Accordingly, the
Company urges that the appropriate caution be exercised with respect to
existing and future investments in any of these liabilities and/or securities.
VeraSun Contacts:
Media:
Mike Lockrem
605-978-7055
mlockrem@verasun.com
Investors:
Patty Dickerson
605-978-7137
pdickerson@verasun.com
SOURCE VeraSun Energy Corporation