Valero Renewable Fuels, a subsidiary of Valero Energy Corp., has received approval from the U.S. Bankruptcy Court to purchase the VeraSun ethanol plant near Albion and six other plants throughout the Midwest.
Although a sale closing date was not immediately known last week, Valero issued a statement saying that the company “bought the plants with the intention of running all of them at capacity with the available workforce.”
That was good news for VeraSun employees and the community of Albion. The local plant has not been producing at capacity since last December, when it was shut down following VeraSun Energy Corporation’s October Chapter 11 bankruptcy filing.
Valero had made an initial “Stalking Horse” bid for the VSE Group owned by VeraSun. They were successful in buying that group, which includes production facilities at Aurora, SD, Charles City, Fort Dodge and Hartley, IA, and Welcome, MN.
In addition to those five plants and a sixth site under development in Valero’s original bid, the bankruptcy court approved Valero’s purchase of additional VeraSun plants at Albion, NE, and Albert City, IA.
Valero agreed to pay $350 million for the VSE Group, $72 million for the US Bio Energy facility in Albert City, and $55 million for the ASA facility in Albion.
The sales are expected to close in the next two to six weeks, according to VeraSun.
Together, the plants have an annual production capacity of 780 million gallons. The aggregate purchase price of $477 million represented approximately 30 percent of the plants’ replacement cost. The purchase price excludes working capital and inventory currently estimated at about $75 million. Credit Suisse advised Valero on the transaction.
As North America’s largest petroleum refining and marketing company, Valero is a leading buyer of ethanol for blending in its gasoline, and its purchase of the plants will give Valero a dedicated supply of ethanol.