Posted on 11/03/2008 12:01:03 PM PST by Leisler
According to a VeraSun press release, a “series of events” had shrunk its liquidity, impairing its ability to invest in production facilities and operate its business. “A dramatic spike in corn costs,” partly due to its hedging arrangements and “worsening capital market conditions and a tightening of trade credit resulted in severe constraints on the company’s liquidity position,” the release said The statement went on to say that the Sioux Falls, S.D.-based company said it planned to maintain operations while the company and 24 of its subsidiaries reorganize. In addition it expects to reach a deal with lenders on additional financing to fund its operations before a hearing Monday. It also expects to get court approval at this hearing to keep paying employees without interruption.
In 2006, VeraSun shares made a stunning debut at more than $30 a share, helping fund the company’s rapid expansion. Its 16 production facilities are scheduled to have production capacity of 1.64 billion gallons of ethanol by the end of this year. VeraSun’s shares lost nearly 16% Friday to close at $0.48.
(Excerpt) Read more at gas2.org ...
Note to self, “Self, sell all Green shares today! Buy more Exxon stock.”
Hmmmm, the market place is cruel. Time to get yet another federal subsidy because all the hype and federal subsidies heretofore extended could not get this crap industry to a profitable position. Tell them they should approach BoA to get bought. Pitiful. Let them die.
Well at least I’m paying out the nose for and ear of corn now.
Thanks ethanol industry.
Did this company also get federal subsidies?
Ethanol struggling does not mean oil companies will do well. More likely the opposite is true.
For Ethanol to be profitable, the price of oil must also be very high, and there are likely better profit margins in the oil than the ethanol.
Until there is a technological breakthrough that makes ethanol production significantly cheaper, and preferably that allows it to be produced from a non-food crop that is easy to produce, Ethanol is likely to struggle in good economic times, and in bad economic times it will only be viable to the extent it is forced on us by the government.
Does this mean that we can stop mandating ethanol in our gasoline?
Thank rather the Republican Kongress and the Republican president who paid off their contirbutors at ADM at your expense for cramming this energy wasting tax wasting load of obvious crap down the electorate's throats, and now we're about to reap what those fools have sown.
Well just dang! Now we’re gonna have to EAT all that food!
I think ethanol definitely has a future in our national energy plans - but not in a corn-based manner.
Universities and yes, even some private companies are looking at other sources (switchgrass, etc) that are cheaper and more effective.
I bought shares of Vernenium Corporation (sym: VRNM) that is working on developing cellulosic ethanol. I’m not saying this to hype the stock. I just believe there’s a chance that it can be profitable and effective using something other than corn.
I’m willing to take my chances and see what develops.
We better take some coal company profits and pump ‘em into this enterprise, stat! LOL.
What killed them was that they locked themselves into long-term corn hedges as corn approached historic highs. Their overall balance sheet is still positive; the point of the bankruptcy seems to be to get out from under the hedges.
Environmentalists and their friends among the democratic party have long been taking steps to limit oil production and refining capacity in order to drive up the price of gasoline so alternatives had a chance at being cost effective.
It is going to take both technological advancements, and expensive oil to make ethanol cost effective without the huge subsidies it receives now.
If it starts actually competing with gasoline, it will drive down the price of gas through competition. It will also make politicians less likely to keep the tax subsidies so high, because if ethanol were used widely enough it would cut significantly into tax revenues. We know federal congressmen aren't going to give up the power allocating all those fuel tax dollars gives them, so ethanol can only rely on such subsidies to get it started.
Uh, not exactly. Corn is at 4
20 billion dollar subsidy.
W’s ethanol bubble is popping. I hope i never have to put that junk in my car.
Instead of drilling here in Florida and Alaska we pay farmers and ethanol producers to produce fuel that costs us more to produce as a result of congressional subsidies.
And it makes food costs skyrocket wasting these foodstuffs.
Hell, we subsidize big sugar here in Florida to pollute our water land and air and make our products more expensive too
The fact is that they speculated that the price of corn would continue to rise. It didn’t and they weren’t hedged against their delivery contracts.
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