Ethanol maker VeraSun (VSUNQ) is currently in Chapter 11, and is spreading the suffering to growers because it has stopped buying feedstock (corn) that it can’t pay for. But never fear, help is on the way. Maybe.
VeraSun announced yesterday that it has received "a non-bindingunsolicited indication of interest" from an unnamed buyer for"substantially all of its assets." It’s hard to imagine anything exceptan offer from a producer cooperative like CHS (NASDAQ:CHSCP), or a big,non-public ag company like Cargill. They’re the only guys who reallyhave a dog in this hunt. If there’s an sense left in the ethanolbusiness, any publicly-traded company that makes an offer for VeraSun will belooking for new management within the hour.
If you have gotten so used to bad news that you can’t stomach the thought of anything positive, you may still get your medicine you are used to. An offer to buy assets out of bankruptcy generally helps the company and the creditors at the expense of the common stock holders. Sometimes White Knights are nothing more than road bandits.
Paul Ausick
November 25, 2008
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