VeraSun Asset Sale Draws Plenty of Bidders

WASHINGTON-(Farm Progress)--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.

Another Ethanol Producer on Financial Ropes

WASHINGTON-(Farm Progress)--Ethanol maker Aventine Renewable Energy Holdings, Pekin, Ill., says this week that it has defaulted on some debt payments and could be seeking Chapter 11 bankruptcy protection, according to wire service reports.

Shares for the company fell to 12 cents on the news, and the company reports it is working to raise more capital. In addition, it is seeking equity financing or a buyer for all or part of the company, but will choose bankruptcy if those efforts fail.

VeraSun, a larger ethanol maker, slipped into bankruptcy last fall. The challenge is shrinking ethanol margins as gasoline prices have fallen. And despite the renewable fuel standard, the price for the renewable fuel hasn't kept pace with production costs.

The company reported a fourth-quarter loss of $36.9 million compared to a profit of $3.3 million a year earlier. The company reports it does not have the cash to make a $15 million interest payment, or to pay more than $24 million it owes a builder for plant construction. Sales at the company rose $537.2 million.

Interior Secretary Orders Renewable Energy Projects

WASHINGTON-(Farm Progress)--Secretary of the Interior Ken Salazar has issued a Secretarial Order making the production, development and delivery of renewable energy top priority for the Department of the Interior. While signing the order, the Secretary said, "With job losses continuing to mount, we need to steer the country onto a new energy path. One that creates new jobs, and puts America out front in new, growing industries.

The order also establishes an energy and climate change task force that will identify specific zones on U.S. public lands where Interior can facilitate a rapid and responsible move to large-scale production of solar, wind, geothermal, and biomass energy. Salazar said they will assign a high priority to identifying renewable energy zones and completing the permitting and appropriate environmental review of transmission rights-of-way applications.

Interior manages one fifth of the country's landmass, over 1.7 billion offshore acres, and lands with some of the highest renewable energy potential in the nation. Interior's Bureau of Land Management has identified about 21 million acres of public land with wind energy potential in the 11 western states and about 29 million acres with solar energy potential in the six southwestern states. There are also 140 million acres of public land in western states and Alaska that have geothermal resource potential.