Two days after it began a public offering of 20,000,000 shares of its common stock, major ethanol producer VeraSun suspended the equity offering and announced that it had retained Morgan Stanley to act in an advisory capacity to evaluate strategic alternatives based on “strategic interest” expressed by multiple parties.
|VeraSun stock price, 2 January - 18 September 2008. Click to enlarge|
VeraSun, whose stock has been steadily declining, saw its share price fall off a cliff on Wednesday after it said that corn prices had driven its third-quarter expectations down to a loss. VeraSun (VSE) closed Wednesday at $1.41. At its high in 2006, it traded at $28.10.
The company, like other corn ethanol producers, has been hurt financially by rising corn costs. Earlier this year, the company said it would delay openings of some production plants until market conditions improved.
In 2007, VeraSun Energy Corp. and US BioEnergy Corp. entered into a definitive merger agreement. By the end of 2008, the company had expected to have a total production capacity of more than 1.6 billion gallons per year (BGY). At that size, assuming projected facilities come on line on time, the new VeraSun would have edged past ADM by the end of 2008 as the largest ethanol producer in the US. (Earlier post.)