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Last Updated: Nov 4th, 2008 - 14:54:19 |
VeraSun Energy Corporation, one of the nation’s largest ethanol producers, announced Monday, November 3, 2008, that it had received commitments for up to $215 million in debtor in possession (DIP) financing from certain holders of VeraSun’s 9 7/8% senior secured notes due 2012 and groups of lenders led by AgStar Financial Services.
At Monday's "first day" hearing, the U.S. Bankruptcy Court entered an interim order allowing VeraSun and its affiliates to borrow up to $40 million from these DIP facilities and authorized the use of cash collateral to enable VeraSun to operate its business. VeraSun is also in negotiations with its other lenders and expects to receive, when combined with commitments received from the 2012 noteholders and AgStar lenders, aggregate DIP financing commitments totaling $250 million.
Judge Brendan L. Shannon of the U.S. Bankruptcy Court, District of Delaware in Wilmington also granted VeraSun’s emergency request to pay outstanding employee checks, to pay suppliers for postpetition goods and services and up to $20 million for goods delivered on or after October 11, 2008, and for other emergency relief. The Bankruptcy Court is expected to conduct a hearing tomorrow to rule on the remaining relief requested by VeraSun in its “first day” motions.
“The financing package approved today allows VeraSun to maintain operations and continue supplying its customers. The relief granted by the Court today will allow us to focus on our operations and, at the same time, provide VeraSun with the liquidity and ability to continue operations, which means producing ethanol and distillers grains, paying suppliers, and satisfying customer needs for product,” said Don Endres, VeraSun’s Chief Executive Officer.
VeraSun and 24 of its subsidiaries filed for relief under chapter 11 of the U.S. Bankruptcy Code in U.S. Bankruptcy Court for the District of Delaware in Wilmington, on October 31, 2008. The chapter 11 cases are being jointly administered as case number 08-12606.
UPDATE FROM NOVEMBER 4, 2008:
VeraSun Energy Corp., one of the nation’s largest ethanol producers, today announced that it is indefinitely delaying the startup of its 110 million gallon per year (MMGY) ethanol biorefinery in Janesville, Minnesota. VeraSun will continue operations at its 14 facilities across an eight-state region.
VeraSun filed voluntary petitions for relief under chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court on Friday, Oct. 31 to enhance liquidity while it reorganizes. However, at this time, the secured lender of the plant has not provided the necessary financing to continue construction and startup activities. Efforts to secure financing for Janesville are underway.
Construction on the Janesville facility is nearly completed and the plant was scheduled to begin operations prior to the end of the year. Construction began in January 2007 and ownership of the plant moved under VeraSun on April 1, 2008, following its merger with US BioEnergy. Most of the 53 employees will be furloughed immediately.
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