VeraSun, One of USA’s Largest Ethanol Producers, Files Chapter 11
According to a VeraSun press release, a “series of events” had shrunk its liquidity, impairing its ability to invest in production facilities and operate its business. “A dramatic spike in corn costs,” partly due to its hedging arrangements and “worsening capital market conditions and a tightening of trade credit resulted in severe constraints on the company’s liquidity position,” the release said.
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The statement went on to say that the Sioux Falls, S.D.-based company said it planned to maintain operations while the company and 24 of its subsidiaries reorganize. In addition it expects to reach a deal with lenders on additional financing to fund its operations before a hearing Monday. It also expects to get court approval at this hearing to keep paying employees without interruption.
In 2006, VeraSun shares made a stunning debut at more than $30 a share, helping fund the company’s rapid expansion. Its 16 production facilities are scheduled to have production capacity of 1.64 billion gallons of ethanol by the end of this year. VeraSun’s shares lost nearly 16% Friday to close at $0.48.
Unprecedented moves in corn prices and a global credit tightening proved the company’s undoing. A run-up in corn prices earlier this year, in part due to increased demand from ethanol makers, squeezed margins for VeraSun and other ethanol producers.
Corn prices have tumbled to $4.01 a bushel Friday from a record of around $8 a bushel in June. But because of hedges it entered in July, when corn prices were still high, VeraSun wasn’t able to take advantage of this swift descent. Its corn costs averaged between $6.75 and $7 a bushel for the third quarter, it estimated in September, triggering a loss for the period.
“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,” VeraSun Chief Executive Don Endres said in the statement.
Source: Market Watch
Photo courtesy of Danial Y Go via Creative Commons Lisence
so much for your stupid corn gas idea. environmental mental disorder. Global warming stupidity
“[C]hallenging market conditions” my ass. This “market” wouldn’t even exist without the governmental distortions of subsidies, mandates and protective tariffs. Despite all the taxpayer giveaways to this stupid “industry”, one of the largest participants still can’t make it work. The real market tells us what this “industry” is worth - $30.00/share to $00.48/share in two years. This food to fuel “industry” deserves to fail. When it’s possible to produce competitively priced fuel from plants/bio-mass then there will be a market. Until that time, the whole corn to ethanol “industry” is a total taxpayer ripoff.
JH,
There are all different types of alternative fuel technologies. Being Pro Environment doesn’t mean that you have to agree with every one of them.
Adam,
But if I disagree with some of the fuel technologies in terms of their usefulness and their cost to taxpayers, does that make me ‘anti environment’?
Is ANYONE anti environment? That’s just nuts. We all want clean air and water and beautiful nature.
What we don’t want is socialism/communism, and it’s unfortunate but the environmental movement too closely resembles those things. “For the good of the State” in Stalin’s day has changed to “For the good of the planet”, but NOTHING ELSE IS DIFFERENT.
Owned. Stupid commies can’t run anything without forcing the taxpayers to bail them out…. I have no doubt the next bail out bill will include money for this worthless POS commie control system… they after all have to gain control of the food supply to make the plebs do their bidding and be able to throw them scraps.
Now if they would all follow suit.
When you start putting food in your gas tank you don’t have an energy problem you have a mental problem.
If you are stupid enough to want to put ethanol in your gas at least be smart enough to buy it from Brazil where the economics/energy savings almost make sense. Almost being the operative word.
Keep in mine that the reason they are “alternative” instead of dominante is they are more costly. That is they consume more resources for the same output. Using more resources instead of less is almost always Anti Environment. Agricultural motor fuel is a great example.
JH and Bill have it right. The ethanol corn-to-gas con has gone on long enough. It’s time to arrest, try, and convict the Archer-Daniels Midland gangs, eco-wackos and all their politician pets who foisted this food-to-fuel famine-risking nonsense onto the taken-for-taxes paying public.
Remember that tomorrow on election day: Term limits are not enough. They deserve jail.
I won’t go off on a “commie/pinko” jag, but ethanol is the stupidest idea to ever come down the pike and if ADM wasn’t bribing the government to hand it sacks full of my tax dollars, this idea woulda been laughed out of the room the day it was introduced.
I often wonder if the greenies realize just how wasteful it is to fill my car with loaves of bread.
The wind power and silicon photovotaic “energy” industries aren’t far behind ethanol.
Only perfectly sited installations for either system will be net energy producers. There’s far too many subsidized installations which only make sense due to the subsidy. They simply don’t produce more energy than they consume. They do, however, become profitable when subsidized hydropower is used to make the systems, and then sell their energy output at the highest retail rate of power, as is required in most cases.
Nothing about “saving the planet” here, lots about central planning and hidden taxation.