VeraSun Energy Corp., one of the nation’s largest ethanol producers announced late Friday that it is filing for Chapter 11 bankruptcy protection.
The South Dakota-based company says it expects to continue normal operations and pay its workers regular salaries while it reorganizes. According to a company news release “the filing was precipitated by a series of events that led to a contraction in VeraSun’s liquidity, impairing its ability to operate its business and invest in production facilities.”
VeraSun made bad bets on the corn market over the summer as grain prices reached record highs, resulting in significant losses for the company. That came just as the U.S. economy began deteriorating.
“Worsening capital market conditions and a tightening of trade credit resulted in severe constraints on the Company’s liquidity position,” the company said.
It intends to maintain its operations during bankruptcy proceedings while working with lenders to secure “additional committed financing to provide adequate liquidity to fund operations in the normal course.”
VeraSun also says it expects to continue purchasing raw materials, like corn, and continue to pay suppliers.
“Today’s filing allows VeraSun to address its short-term liquidity constraints as we navigate historically challenging market conditions while we focus on restructuring to address the company’s long-term future,” said company Chief Executive Don Endres. “We appreciate the loyalty of our employees, customers and suppliers during this challenging time.”
Write to Lauren Etter at Lauren.Etter@wsj.com
NOVEMBER 1, 2008, 4:27 A.M. ET
Source: The Wall Street Journal