Valero Energy outbids rivals for VeraSun assets

19 March 2009

US refiner Valero Energy Corp has outbid its rivals for seven facilities of the bankrupt ethanol maker VeraSun Energy Corp, for a price of $477 million. In addition, secured lenders for the remaining facilities submitted successful combined credit bids of $516 million, VeraSun said in a statement.

The largest was a credit bid of $324 million submitted by a group of lenders led by AgStar Financial Services. VeraSun sought approval of the successful bids at a sale hearing conducted by the US Bankruptcy Court yesterday, and expects the sales to close in April.

The deal is expected to boost the biofuel industry at a time when it is suffering from excess production capacities and falling petrol consumption. The facilities bought by Valero are spread across southern USA, including the states of South Dakota, Iowa, Minnesota, Nebraska and Indiana.

VeraSun auctioned off its assets during a two-day auction that began on Monday. The second-largest ethanol maker in the US was seeking to sell all of its plants and operations in separate or combined deals at the auction.

Archer Daniels Midland Co, the largest ethanol maker, made a competing bid for some of VeraSun's assets at the closed auction, ''but did not acquire any assets", according to a company statement.

Valero was the "stalking horse" bidder at the auction, and was entitled to make the lead bid. In February, Valero said it would bid $280 million for five of VeraSun's production facilities, subject to the bankruptcy court auction process. Valero itself declined to comment on the auction.