Five former VeraSun plants sold to producer/owners

By Craig A. Johnson | September 15, 2009
Purchasers of former VeraSun Energy Corp. plants have provided a silver lining on the dark cloud of the company's bankruptcy. The major ethanol producer's bankruptcy filing in March was a blow to the industry and interested parties have since monitored the status of VeraSun's properties in anticipation of their sale, possibly as a signal of the industry's recovery from a difficult period. It has taken longer than expected, but sales agreements for many of the production facilities have been reached. According to AgStar Financial Services spokesman Jim McKissick, sales are complete on five of the six VeraSun ethanol plants the group acquired. AgStar President and CEO Paul DeBriyn said that although the sales took longer than the lending group initially anticipated, lenders are satisfied and the outcome is consistent with the acquisition plan.

Most recently, on Aug. 4 a lending group led by AgStar announced that Shakopee, Minn.-based Guardian Energy LLC had entered into an agreement to purchase the 100 MMgy Janesville, Minn., ethanol plant. Guardian Energy, a wholly owned subsidiary of Guardian Eagle Investments, was formed to own and operate the Janesville ethanol plant. The group is comprised of farmers and locally owned ethanol plants known for the development of Renewable Products Marketing Group. Group members represent an annual production capacity of more than 500 MMgy.

In late August, a binding purchase agreement had been signed and the sale was expected to close by Sept. 15. Guardian Energy said the never-operated plant would be fully operational within 30 to 60 days of the closing date. AgStar will continue to lead a group of lenders in financing Guardian Energy. "We are excited to have a regional group of producers who own successful ethanol plants purchase this facility," DeBriyn said. "We know they are committed to maintaining the value of the ethanol industry for local producers."

A purchase agreement has also been signed for the Dyersville, Iowa, facility. Big River United Energy LLC, a company comprised of Big River Resources LLC, United Cooperative and Rumbold & Kuhn Inc., said it planned to have the 100 MMgy production plant up and running in the third quarter, under the management of Big River Resources. AgStar will also continue to lead lenders in financing the Dyersville plant.

In addition, Central Farmers Co-op recently bought back the 110 MMgy ethanol plant it built in Marion, S.D., and has been successfully operating since May. The plant was renamed NuGen Energy LLC, and is a wholly owned subsidiary of Central Farmers Co-op. The facility was purchased from Marion Energy Investments LLC, the banking group that bought the plant out of bankruptcy when VeraSun filed for Chapter 11 bankruptcy protection, said Steve Domm, general manager of Central Farmers Co-op.

The Marion facility, which began production in 2008, was originally built and owned by Millennium Ethanol LLC, which was also a subsidiary of Central Farmers Co-op. "We were able to negotiate a deal with the original lender on the facility that we felt gave us long-term staying power and gave us the opportunity for long-term success to make it work, and we closed the deal," Domm said.

Finally, Green Plains Renewable Energy acquired two former VeraSun ethanol plants located in Central City and Ord Nebraska. The 100 MMgy Central City plant and the 50 MMgy Ord plant were purchased for $123.5 million; $10 million was committed by GPRE and the remainder is being financed by AgStar's lending group.

In mid-August, AgStar continued to seek a buyer for the 110 MMgy production plant in Hankinson, N.D. Former VeraSun facilities in Bloomingburg, Ohio, and Linden, Ind., that had been acquired by lender WestLB had also yet to be sold.