As the City of Albert City and the local VeraSun workers wait to hear more about what the future will hold for the massive, now-idled local VeraSun ethanol plant, some say they feel somewhat left in the dark as what will become of the two-year-old facility and the jobs it brought to town.
"We as a group know nothing. It's all behind close doors. There's a lot of corporate hush-hush," a VeraSun employee, who wished to remain anonymous, told the Pilot-Tribune. "We've been all pretty bummed out since Thanksgiving - it has not been a real happy happy Christmas."
In early December VeraSun Energy Corporation announced that the U.S. Bankruptcy Court had entered orders granting final approval for debt-in-possession (DIP) financing totalling $196.6 million including $93.6 million of incremental financing, $25 million of which was previously loaned to the company on an interim basis, to be provided by certain holders of VeraSun's 97/8 percent senior secured notes due 2012. The incremental financing will be avilable, subject to certain conditions, to fund operations at ethanol production facilities in Aurora, South Dakota and Fort Dodge, Charles City and Hartley and to maintain the idled Welcome, MN facility. The balance of the financing consists of approximately $103 million used to refinance prepeition loans that had been made by the noteholders who participated in the DIP financing. This DIP financing is expected to mature on Nov. 30, 2009.
According to Verasun $9.5 million is being used to maintain idled production facilities including the Albert City plant in a safe and operable condition through January 15, pending a more permanent financing arrangement. Employees are still being paid full wages. "We're still all here, not losing any hours yet," said the employee. However, VeraSun says they did not expect the facilities to produce any ethanol until permanent financing is secured.
Albert City Council Member Doug Anderson said the City definitely misses the regular truck traffic that flowed through Albert City to the plant but says he says he feels some confidence that the plant will continue operation in the future. "There's too much value sitting there. It's just an issue of who can come up with a price - it's just how soon we don't know."
Councilmember Keith Moe said he hadn't heard much either on what was going to happen. "We're hopeful that the Albert City facility will be purchased by another entity and will continue to operate - we're going to hope for the best."
The plant provides about 45 jobs.
The Bankruptcy Court issued final approval for a group of lenders led by AgStar Financial Services to provide $24.5 million, including $15 million that was previously loaned on an interim basis, for VeraSun production facilities located in Nebraska, North Dakota and Michigan as well as the Albert City site. The Bankruptcy Court further approved an intitial $10 million in DIP financing on an interim basis to fund operations in Albion, NE; Linden, Ind. and Bloomburg, OH. The West LB DIP plan is expected to provide an aggregate of $20 million in funding, the balance of which will become available upon final approval. "The DIP financing will allow us to focus on running the business while undergoing the restructuring process as part of addressing VeraSun's long-term future," said Don Endres, VeraSun's CEO.
The Court approved the Company's request to reject certain corn contracts for delivery through the month of December at the idled Welcome and Janesville facilities. The Company also intends to reject corn contracts for delivery through January 31 at those facilties. In addition, because the company does not expect to operate four plants including Albert City through Jan. 15, the Company intends to reject contracts for delivery of corn scheduled at these facilties during this period. The announcement came as producers were left wanting answers about the status and potential need to remarket their 2008 corn crop.
It appears the local plant will stay idle but meeting payroll until Jan. 15. What happens after that date, the company has not announced.