SIOUX FALLS, S.D. - VeraSun Energy Corp., the nation's second largest ethanol producer, is putting seven of its biorefineries - including the local plant in Albert City - up for auction.
VeraSun needs up to $12.3 million in additional funds to maintain its work force and plants in Albert City and Dyersville in Iowa; Ord and Central City in Nebraska; Woodbury, Mich., Hankinson, N.D., and Janesville, Minn., through April 30, according to a filing approved Thursday by a federal bankruptcy court in Delaware.
"As part of the agreement, the lender is calling for a sales process by auction," VeraSun spokesman Mike Lockrem said Friday.
The debtor-in-posession agreement calls for the auction to begin March 16 with closing of sales by March 31.
VeraSun's outlook took a sudden nosedive late in the year. The company projected a $464 million loss in the third quarter, and then fired its president, Danny Herron, who had been at the helm less than a year. The Albert City plant had been opened with great fanfare as a state-of-the-art facility, just two years ago.
All seven of the plants to be auctioned were obtained by VeraSun as part of the company's March buyout of St. Paul, Minn.-based US BioEnergy Corp.
VeraSun filed for Chapter 11 bankruptcy protection Oct. 31 as credit markets froze. The company had bought up corn contracts at record high prices following flooding earlier this year, and then saw crop prices fall dramatically.
The Sioux Falls, S.D.-based company 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. But only four - Charles City, Fort Dodge and Hartley in Iowa and Aurora in South Dakota - remain operational, with the rest idled until market conditions improve.
Albert City officials recently told the Pilot-Tribune that they retain hopes that the local employer will recover. Local workers were told the plant would be idled until January 15, maintained in an operable condition but producing no fuel until long-term financing would be obtained. The jobs were to be preserved at full pay during the idled period, but contracts for corn delivery were to be turned away through the end of the month.
Lockrem said the company hasn't made any announcements relating to its other plants.
In November, VeraSun announced it had received an unsolicited takeover bid, just hours after the nation's biggest producer, Poet LLC, said it was in talks with other companies about buyouts. Neither Poet nor VeraSun will say if the two are negotiating a deal.
"This auction process is unrelated to that," Lockrem said.