VeraSun Reports Loss, Seeks Permision to Void Corn Contracts

November 19, 2008 06:00 PM

Pro Farmer Editors

Ethanol maker VeraSun reported a sizable loss in the quarter ended Sept. 30, and other reports say the firm has asked a bankruptcy judge to allow it to void contracts it holds with farmers to buy corn. The firm signed the contracts at prices considerably higher than current price levels.

Those with objections to allowing VeraSun to void contracts have to file those views with the Delaware bankruptcy court by Friday and there is expected to be a Dec. 2 hearing on the matter.

As expected, reactions to the request to void contracts has not set well in farm country. The Des Moines Register quoted Iowa Secretary of Agriculture Bill Northey as saying that approval of the VeraSun request would "deprive farmers of the opportunity to take advantage of any improvements in the corn markets while their grain was tied up with VeraSun, and yet VeraSun would have the option to void contracts at its pleasure."

Relative to its loss, the firm said in filings with the Securities & Exchange Commission (SEC) that it was "currently evaluating various courses of action to address the operational and liquidity issues the company is facing."

For the quarter ended Sept. 30, VeraSun reported a net loss of $476 million, compared with net income of $7.7 million a year earlier. The company reported net sales of $1.08 billion, up from $221.9 million a year earlier. It also said it had $9.2 million in cash on hand as of Sept. 30, down from nearly $111 million just one year ago.

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