There's always a sucker to find to sell a worthless, and less than worthless piece of business property to, and VeraSun Energy Corp. surprisingly has done just that in clueless Valero Energy Corp., which will pay VeraSun Energy $280 million for the privilege of taking fiver VeraSun plants off their hands.
Boy am I glad I don't own shares in Valero Energy, as this will pull them down in a big way, as the hapless ethanol prodcution industry collapses around it. I would have thought VeraSun would have paid that much just to get rid of them.
Now that the company has received and agreed to a deal, per terms of their bankruptcy, tehy now must hold an auction to give other companies a chance to make rival bids. Anyone else dumb enough to do this out there?
If perchance any other qualifying bids are offered, an auction will be held on March 16 to battle over the VeraSun corpse. Bidders have until March 13 to submit qualifying bids.
VeraSun is attempting to sell all 16 of their existing of its ethanol plants.
Along with the acquisition price of $280 million, the deal would be plus value of inventory and certain pre-paid expenses, for production facilities in Aurora, South Dakota; Charles City, Fort Dodge, and Hartley, Iowa; and Welcome, Minnesota; and a site under development in Reynolds, Indiana.
Under terms of their Chapter 11 bankruptcy, the court also gave Verasun permission to sell seven of the eight ethanol plants they acquired from U.S. BioEnergy last year (smart company to get out at the right time), although none of those are included in the Valero energy deal.
VeraSun CEO Don Endres said that taking into consideration the terrible conditions of the ethanol industry and supposedly difficulty in getting credit (who would give it to them in the best of conditions), this seems to be the best avenue to take.
The truth is the ethanol industry is a disaster and shouldn't be part of the alternative fuel scene in any form. VeraSun is the best example of that, as they would be completely destroyed if someone didn't come buy and pick up the shattered pieces.
I don't know what Valero Energy executives are thinking, but this makes no sense. If I was a shareholder I would be screaming bloody murder and lining up lawyers. This is an outrage that will push Valero Energy's value down for years to come. There just isn't any upside for this at all.
VeraSun should have simply been allowed to fold up and fail. But this is being pushed behind the scenes by government officials who know the truth would come out more into the light about the misguided fuel mandate involving ethanol as a biofuel. Opposition is growing as they attempt to salvage one of the more unpopular government hand outs ever.
All the operations and production facilities are being attempted to be sold by VeraSun so they don't make the government fiasco look so bad. I'm really surprised anyone with an ounce of brains would have taken on this huge debt and was willing to throw money down a bottomless rabbit hole.
Managing the sales process and acting as a financial adviser for VeraSun is Rothschild Inc, while advising Valera is Credit Suisse.
Someone is finally doing something right for VeraSun, too bad it wasn't before they entered into the ethanol industry at all, and were decimated and humiliated as they couldn't even make money with a taxpayer subsidized industry. I can see Valero Energy getting into shareholder trouble in the future as the weight of adding this to their bottom line pummels shareholder value in the company.
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