VeraSun receives interim financing

VeraSun Energy Corp. received commitments for up to $215 million in debtor-in-possession (DIP) financing from undisclosed holders of VeraSun’s 9 7/8 percent senior secured notes due 2012 and groups of lenders led by AgStar Financial Services.

Four days after it voluntarily filed Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court District of Delaware, Brookings, S.D.-based ethanol producer VeraSun Energy Corp. received commitments for up to $215 million in debtor-in-possession (DIP) financing from undisclosed holders of VeraSun’s 9 7/8 percent senior secured notes due 2012 and groups of lenders led by AgStar Financial Services.

During the hearing, the U.S. Bankruptcy Court entered an interim order allowing VeraSun and its affiliates to borrow up to $40 million from those DIP facilities and authorized it to use cash collateral enabling the company to operate while continuing to restructure its balance sheet. VeraSun is also in negotiations with its other lenders and expects to receive, when combined with commitments received from the 2012 noteholders and AgStar lenders, aggregate DIP financing commitments totaling $250 million.

AgStar led a group of 16 other lenders in providing the interim financing. According to AgStar, over the past three years its finance group collectively financed the U.S. BioEnergy ethanol plants, which were acquired by VeraSun through a merger earlier this year. Potential AgStar losses from this situation are not expected to be material and any losses sustained should not impact AgStar's overall financial soundness, the company stated in a news release.