NEW YORK (Reuters) – Ethanol producer VeraSun Energy Corp. has asked a bankruptcy court to approve debtor-in-possession financing of as much as $30 million from WestLB to help maintain operations, according to court documents.
The DIP financing is necessary to “fund purchases of corn, natural gas and other routine operating expenses such as transportation costs” among other expenses, according to documents filed at the U.S. Bankruptcy Court in Delaware.
“Without the proposed sources of post-petition financing, the debtors will be forced to discontinue their ASA operations, resulting in a nonorderly shutdown of their ethanol production facilities,” according to court documents.
The WestLB facility will provide VeraSun with a revolving credit facility up to $30 million, $15 million of which will likely be made available on an interim basis and the balance after a final court order. The exact amount of the facility is subject to continued negotiations, the court documents said.
VeraSun Energy and 24 of its subsidiaries and affiliates filed for Chapter 11 bankruptcy protection on Oct. 31.
The Sioux Falls, South Dakota, company produces and sells ethanol, a type of corn-based alcohol used in gasoline. But fluctuations in the price of corn and ethanol, plus the difficulty of raising capital amid a depressed stock market, pushed the company into bankruptcy, VeraSun said in court documents.
(Reporting by Chelsea Emery; Editing by Brian Moss)