VeraSun Energy to Acquire 330 Million Gallons of Ethanol Capacity; Boosts Production Capacity to One Billion Gallons
|VeraSun’s growth in production capacity. Click to enlarge.|
VeraSun Energy Corporation plans to acquire three corn ethanol plants with a combined annual production capacity of 330 million gallons per year (MMGY) from ASAlliances Biofuels, LLC for US$725 million.
The acquisition will increase VeraSun’s production capacity to approximately one billion gallons by the end of 2008. Currently, only two producers break the billion-gallon capacity mark in the US: Archer Daniels Midland and POET.
The three acquired facilities are each expected to operate at 110MMGY and are located in Albion, Nebraska, Bloomingburg, Ohio, and Linden, Indiana. The acquisition should become final in 30 to 45 days and is subject to customary closing conditions.
The facilities will provide VeraSun with immediate production capacity and revenue. The Linden facility will begin startup operations this month, followed by Albion in the fourth quarter and Bloomingburg by the end of first quarter 2008.
VeraSun currently has 340MMGY of production capacity through its operating facilities in Aurora, South Dakota and Fort Dodge and Charles City, Iowa. VeraSun has another 330MMGY of production presently under construction and development in Hartley, Iowa, Welcome, Minnesota, and Reynolds, Indiana. The facilities being acquired are sister facilities to VeraSun’s current fleet as they are all designed by ICM and built by Fagen, Inc.
The company is funding the acquisition through $200 million of equity, $250 million of cash and $275 million in project financing. The acquisition is expected to be accretive to earnings and free cash flow within the first 12 months without accounting for potential synergies.
Reaching one billion gallons of annual production will be a benchmark for VeraSun and represents a maturing of the renewable fuels industry. We believe scale and efficiency are important as we continue to focus on reducing production and distribution costs and increasing value for our shareholders, customers and plant communities.—Don Endres, VeraSun Chairman and CEO