VeraSun Asset Sale Draws Plenty of Bidders

Bankruptcy auction apparently gets a big-time players to at least look at what's available. Meanwhile ADM is also looking at Brazil opportunities.

Published on: Mar 18, 2009

Wire reports issued late Tuesday report that Archer Daniels Midland Co. bid on some of bankrupt VeraSun Energy Corp.'s ethanol plants, but in the end didn't buy. ADM declined to say which of the 17 VeraSun facilities it bid on.

A VeraSun spokesperson apparently didn't disclose results of the auction, which began Monday and continued into Tuesday because the event drew multiple bidders - according to reports. A report on the auction is expected in the bankruptcy court later today.

Valero Energy Corp., an independent refiner, placed a public bid for five assets, but there's no word on the results of that effort.

VeraSun filed for Chapter 11 bankruptcy last October, as the result of what many observers call a poorly executed risk management strategy. The assets for sale in the effort have drawn a lot of interest due to their low price. The floor bid for assets from Valero were about 50 cents per gallon of ethanol production capacity - which is about a quarter of the plants' original production cost.

In a separate press report, there's word that ADM is also looking at purchasing the Brazilian ethanol group Unialco, along with a mill belonging to Da Mata. ADM has not commented to the media on this move, but at least one shareholder at Unialco says a memorandum of understanding has been signed in that deal.

A potential Brazilian ethanol capacity purchase would still face the import tariff stumbling block of a 54-cent-per-gallon charge. Some observers say the news of the ADM move may be wishful thinking for Unialco shareholders.