AgStar Group's Goal is to Resell Plants "As Quickly As Possible"
MANKATO, MN- The Ord ethanol plant has a new owner. A group of lenders led by AgStar Financial Services submitted a successful bid of $324 million for six plants of the "US BioEnergy Group" a division of bankrupt VeraSun Energy. AgStar lending groups' credit bid for six of the seven VeraSun Energy plants was approved by a Delaware bankruptcy court on Wednesday, March 18, 2009. According to information from AgStar the price for the Ord facility was $31 million. In addition to the Ord plant the AgStar group bought former US Bio ethanol production facilities in Central City, Neb.; Dyersville, Iowa; Hankinson, N.D.; Janesville, Minn., and Woodbury, Mich. The six plants will remain
"for sale" and run in ‘idle' mode for an estimated 60 days while AgStar secures new buyers for the plants.
The "credit bid" is a purchase of assets by the creditor of these same assets. It's used in bankruptcies to allow creditors to protect the value of their secured assets. According to AgStar the bankruptcy auction process was tightly controlled by the debtor, which made it difficult for bidders to successfully bid on individual plants. AgStar said they had "ample interest" from potential buyers for one or more of the six plants, even during the auction process.
Paul DeBriyn, President and CEO of AgStar Financial Services stated, "This purchase will protect the interests of AgStar stockholders and our fellow creditors in the lending group. That's what this credit bid accomplishes. Basically, we've taken the necessary steps to ensure these plants will be sold for fair market value. These facilities, and the people working at them, are highly valued assets." The AgStar purchase is expected to close in April.
The AgStar-lead lending group, comprised of 16 financial institutions, collectively financed the U.S. Bio Energy ethanol plants for the past three years. These plants were purchased by VeraSun in a merger. VeraSun declared bankruptcy on October 31, 2008.
"Ethanol has experienced recent volatility but remains a viable industry," stated DeBriyn. "Our goal is to have these plants sold as quickly as possible. This is vital so that corn will again be purchased from local sources, jobs will be brought back to rural America, and the renewable fuels industry as a whole will be reinvigorated."
The Congressionally-approved Renewable Fuels Standard requires 10.5 billion gallons of corn-based ethanol to be blended into the U.S. fuel supply in 2009. An experienced senior leadership team, internal industry, legal and financial advisors will continue to actively manage the sale of these ethanol plants. AgStar will be contracting with an experienced third-party company to oversee plant maintenance and prepare for potential start-up of operations.
VeraSun also announced that Valero Renewable Fuels was the successful bidder for the ethanol production facility in Albion, Neb., Valero bid $55 million for the ASA facility in Albion, Neb., plus working capital and other certain adjustments.
The remaining plant financed by AgStar's lending group, located in Albert City, IA, was bought by Valero Energy Corporation for $72 million.
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