VeraSun Energy

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Lender Advisor
VeraSun was the largest producer of ethanol in the world, owning 16 ethanol production facilities with an aggregate production capacity in excess of 1.6 billion gallons.

Carl Marks was retained by the Senior Secured Lenders to the US BioEnergy facilities (collateral consisting of seven ethanol production facilities in five states) of VeraSun Energy Corporation.

VeraSun precipitously filed for Chapter 11 bankruptcy protection on October 31, 2008. It’s total consolidated debt obligations were in excess of $1.5 billion with various tranches (revolver, term loan, secured and unsecured notes, construction financing, etc.), each with often conflicting interests and objectives.

Engagement Highlights

  • Carl Marks successfully advised the senior lender group on multiple, defensive debtor-in-possession financings, multiple comprehensive§363 credit bid strategies and acquisitions to maximize the value of its collateral, post-acquisition financing and transition services for the lender group to maintain operations throughout the secondary sale processes to third parties, as well as the re-sale of acquired assets to such third parties following emergence from bankruptcy.
  • CMA advised the lender group on the sale of one of its facilities to Valero Energy Corporation at the bankruptcy auction in March 2009, while simultaneously advising the lender group on its successful credit bid strategy for each of its remaining six facilities. The lender group, with assistance from CMA, subsequently sold these six facilities to five distinct buyers in less than seven months after emerging from bankruptcy.
  • Aside from the incredibly tumultuous market conditions prevailing throughout the domestic ethanol industry at the time, the complexity of the engagement stems from the nature of the capital structure. The Debtor had numerous credit facilities supporting various collateral pools of ethanol production facilities throughout the country from its prior acquisitions/roll-up strategy. Carl Marks was instrumental in assisting the lender group navigate this extremely complex capital structure, while protecting the value of its own collateral ahead of the auction.

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