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Valero Renewable Fuels Purchases Bulk of VeraSun’s Assets

The U.S. Bankruptcy Court has affirmed the sale of substantially all of VeraSun Energy Corporation’s assets. This after VeraSun selected Valero Renewable Fuels as the successful bidder for its assets at auction on Tuesday, March 17, in Wilmington, DE.

Valero Renewable Fuels is a subsidiary of Valero Energy Corporation, North America’s largest petroleum refiner and marketer based in San Antonio, TX. Valero agreed to purchase the VSE Group facilities for a base purchase price of $350 million. The VSE Group consists of production facilities in Aurora, SD; Charles City, Fort Dodge and Hartley, IA; Welcome, MN; and a development site in Reynolds, IN.

Valero also agreed to purchase the US BioEnergy facility in Albert City, IA for $72 million and the ASA facility in Albion, NE, plus working capital and other certain adjustments for $55 million. The sales are expected to close during the next two to six weeks.

Successful credit bids for VeraSun’s remaining facilities were submitted by the following secured lenders: Dougherty Funding, LLC ($93 million for the Marion, SD production facility); a group of lenders led by AgStar Financial Services ($324 million for the remaining “US BioEnergy Group,” including ethanol production facilities in Central City and Ord, NE.; Dyersville, IA; Hankinson, ND; Janesville, MN; and Woodbury, MI); and a group of lenders led by West LB AG ($99 million for the remaining “ASA Group” facilities, consisting of production facilities in Bloomingburg, OH and Linden, IN). For more information, please visit www.verasun.com.

“This is the first significant investment by the oil industry in the ethanol industry,” said Todd Alexander, partner, Chadbourne & Parke, LLP, New York, which represents developers, investors and lenders participating in U.S. and international biofuels financings. “People have been waiting to see what role the oil industry wanted to play in the ethanol complex.”

Successful Bid a Benchmark

Prior to this auction, there had been a wide discrepancy between the price at which sellers were willing to sell assets and the price at which buyers were willing to buy. The VeraSun auction has helped set a benchmark price going forward, Alexander suggested.

The purchase of VeraSun’s assets should be good for corn growers who now have a new ethanol feedstock buyer with a strong balance sheet, he added.

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