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Valero Renewables to Purchase Three More Ethanol Plants; Total Capacity 1.1B Gallons Per Year

Valero Renewable Fuels Company, LLC, a wholly owned subsidiary of Valero Energy Corporation, has signed an agreement with ASA Ethanol Holdings, LLC to buy two ethanol plants that had been previously owned by VeraSun Energy Corporation. ASA Ethanol Holdings, LLC is a company owned by a former syndicate of lenders to the facilities, agented by West LB AG, which acquired the plants through the VeraSun bankruptcy auction.

The plants—located in Linden, Ind. and Bloomingburg, Ohio—each have an annual production capacity of 110 million gallons. Valero will pay $200 million to buy the plants.

Additionally, Valero has received approval from a bankruptcy court to acquire Renew Energy’s 110 million gallon per year ethanol facility located near Jefferson, Wis. for $72 million following a bankruptcy auction held 11 Dec. Together, Valero will buy the three plants for roughly 41% of their estimated replacement cost.

These acquisitions expand the company’s ethanol production capacity to 1.1 billion gallons per year. Valero Renewables also operates ethanol plants in Albert City, Charles City, Fort Dodge and Hartley, Iowa; Aurora, SD; Welcome, Minn.; and Albion, Neb.

The Linden and Bloomingburg plants have the same high-quality design that we got with our earlier purchase of seven ethanol plants, and they’re also relatively new assets. The purchase of the plant from Renew gives us additional production capacity. The ethanol plants we bought earlier this year have been very successful for Valero, and we expect these newly purchased plants to build on that success.

—Valero Chairman and Chief Executive Officer Bill Klesse

The Linden and Bloomingburg plants are currently idled, but will be restarted within approximately three to six months following the closing of the transaction. Both plants will also produce dry distillers grains, a co-product of the ethanol production process that is sold as a livestock feed. The Renew facility is currently operating at reduced rates but is expected to increase to full production over time.

Both transactions are expected to close in early 2010, following regulatory approvals including termination of the review period under the Hart-Scott-Rodino Act. Credit Suisse advised Valero on the Linden and Bloomingburg acquisition.

Besides Valero’s ethanol plant purchases, the company has explored other alternative energy sources in the past year, including completing a 50 megawatt wind farm near its McKee Refinery in the Texas Panhandle and investing in companies that are developing technologies to produce cellulosic ethanol, biofuel from plant material, algae and animal fat, and a synthetic gasoline made from landfill waste.



A smart move given the global petroleum outlook - massive amounts of supply for years to come. They can swoop in and buy bankrupt ethanol producers, and continue "investing in companies that are developing technologies to produce cellulosic ethanol, biofuel from plant material, algae and animal fat, and a synthetic gasoline made from landfill waste". Like ExxonMobil, I think Valero is sitting on a warchest of $$$$ from when gas prices were $4-5 per gallon.


It would be good to look at who bid up the price of corn the last few years. Market manipulation can be very profitable directly and indirectly. I am not saying that this occurred, but the possibility is there.


I believe the same speculators that manipulated gas prices were manipulating commodity prices (ahem HEDGE FUNDS and their regulatory exemptions / loopholes). Luckily the regulations work differently now (including with short selling), and will even more so with the new banking bill. Short selling was wreaking havoc on the market during the period of high gas prices.

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