VeraSun posts $476 million third-quarter loss

By Bryan Sims | November 03, 2008
Web exclusive posted Nov. 24, 2008 at 10:53 a.m. CST

VeraSun Energy Corp., the second-largest U.S. ethanol producer, reported a third-quarter net loss of $476.1 million for its three months ending Sept. 30, compared with a net income of $7.8 million during the same quarter last year, according to a filing with the U.S. Securities and Exchange Commission on Nov. 19.

The net loss for its third quarter reflects non-cash charges of $384.5 million, which includes $263.3 million arising from impairment of the company's goodwill, intangible assets, and $121.2 million arising from impairment of long-lived assets in connection with VeraSun's evaluation of the value of goodwill recorded as a result of acquiring ASA OpCo Holdings LLC and U.S. BioEnergy Corp.

Additionally, VeraSun recorded a gross loss of $218 million in the quarter versus a 23.4 million gain it posted the same period last year. Conversely, VeraSun's ethanol sales climbed to $1.08 billion from $221.9 million.

"We are working diligently to secure financing in order to maintain operations during these unprecedented, difficult market conditions," said Don Endres, chief executive officer of VeraSun. "Ethanol margins continue to suffer while our industry continues to increase capacity at the same time as demand for transportation fuel is being reduced."

On Oct. 31, VeraSun filed for Chapter 11 bankruptcy protection. According to its bankruptcy filing, the company owed more than 1,700 creditors approximately $1.5 billion. In an effort to sustain short-term operations, VeraSun obtained debtor-in-possession financing of up to $215 million from its lenders to provide liquidity during its reorganization process.

Meanwhile, VeraSun "temporarily suspended construction" of its 110 MMgy ethanol plant under construction in Janesville, Minn., as a result of the bankruptcy.

Founded in 2001, VeraSun has 16 production facilities in eight states. The company currently has an annual production capacity potential of approximately 1.64 billion gallons of ethanol and 5 million tons of distillers grains.