Refiner Valero wins auction for 7 VeraSun ethanol plants, 1 development facility

Traditional refiner Valero Energy Corp. will acquire seven ethanol plants and one development site from VeraSun Energy Corp. after a successful auction bid of $477 million.

VeraSun, which filed for Chapter 11 bankruptcy protection in October, will seek the Delaware court's approval of the bid at a hearing planned for Wednesday. The sale is expected to close in April.

Valero's bid is for plants in Aurora, S.D.; Charles City, Fort Dodge, and Hartley, Iowa; Welcome, Minn.; Albion, Neb.; and a development site in Reynolds, Ind.

Valero has said previously that it would group the plants under a subsidiary, Valero Renewable Fuels, and use staff already in place.

Agribusiness giant Archer Daniels Midland Co. participated in the process but did not acquire any assets, ADM spokesman Roman Blahoski told the Argus Leader newspaper of Sioux Falls on Tuesday.

Secured lenders submitted successful credit bids for the remaining VeraSun facilities.

A group of lenders led by AgStar Financial Services submitted a credit bid of $324 million for plants previously obtained by VeraSun during its buyout of US BioEnergy Corp. They include biorefineries in Central City, Neb.; Ord, Neb.; Dyersville, Iowa; Hankinson, N.D.; Janesville, Minn.; and Woodbury, Mich.

Dougherty Funding LLC submitted a credit bid of $93 million for a plant in Marion, S.D., and a group of lenders led by West LB AG successfully bid $99 million for plants in Bloomingburg, Ohio and Linden, Ind., obtained in its purchase of Dallas-based ASAlliances Biofuels.

The ethanol industry has been hammered during the past year by volatile commodities and shrinking profit margins.

Those market conditions pummeled the stocks of many smaller publicly traded companies and landed Sioux Falls, S.D.-based VeraSun, the nation's second largest producer, in bankruptcy protection.

VeraSun owns 16 biorefineries with the total capacity to produce 1.4 billion gallons of ethanol annually, or about 13 percent of the country's total capacity.

Valero shares gained 58 cents, or 3.2 percent, to close at $18.50 on Tuesday.