From the Canadian Press:
VeraSun Energy Corp. is seeking Chapter 11 bankruptcy protection following a spike in corn costs and deterioration in capital markets, the ethanol producer said late Friday.
VeraSun (NYSE:VSE) was working with lenders and expected to reach an agreement on additional financing to fund normal operations before a court hearing scheduled for Monday, according to the company.
VeraSun said it plans to resume operations during the Chapter 11 proceedings, and it doesn't expect to reduce raw material purchases.
"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," chief executive Don Endres said in a statement.
VeraSun said it had significant losses in the third quarter due to a "dramatic spike" in the cost of corn, which VeraSun uses to make ethanol. The company also said the capital markets and a tightening of trade credit placed "severe constraints" on its liquidity....MORE
From the Wall Street Journal:
...VeraSun has lined up $250 million in financing in preparation for a so-called prepackaged bankruptcy. In such a bankruptcy, creditors agree to restructure debts prior to a company's seeking court protection. Details of the filing were still being settled Friday, said the people familiar with the matter, and it was still possible a filing could be forestalled....
...Pinched to pay its debts, VeraSun recently hired Skadden, Arps, Slate, Meagher & Flom LLC as bankruptcy counsel, and financial adviser Rothschild Inc. to help craft a reorganization plan, people familiar with the matter said. It has also secured $250 million in debtor-in-possession financing from Ableco, an arm of New York-based hedge fund Cerberus Capital Management LP, at a high interest rate of about 14% to 15%, people familiar with the terms said.
Company creditors already have convened a committee to hammer out a potential restructuring, according to one VeraSun bondholder. A majority of creditors have to approve a restructuring deal for VeraSun to receive court approval for a prepackaged bankruptcy....MORE