2008/10/31 VeraSun

VeraSun Energy Corporation Launches Chapter 11 Case To Enhance Liquidity While It Reorganizes
@@Production Facilities Expected to Continue Operations

VeraSun Energy Corporation, one of the nation's largest ethanol producers announced today the Company and 24 of its subsidiaries have filed voluntary petitions for relief under chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware to enhance liquidity while they reorganize.

The filing was precipitated by a series of events that led to a contraction
k in VeraSun's liquidity, impairing its ability to operate its business and invest in production facilities. The Company suffered significant losses in the third quarter of 2008 from a dramatic spike in its corn costs, reflecting in part costs attributable to its corn procurement and hedging arrangements, and historically unfavorable margins. Beginning in the third quarter, worsening capital market conditions and a tightening of trade credit resulted in severe constraints on the Company's liquidity position. Faced with these constraints, VeraSun and 24 of its subsidiaries filed their chapter 11 petitions to facilitate access to additional liquidity while they reorganize to take better advantage of VeraSun's position as one of the nation's largest producers of ethanol.

Company Intends To Maintain Operations
During the chapter 11 proceedings, VeraSun plans to resume normal operations. The Company has taken steps to ensure continued supply of product to its customers and to fulfill all customer obligations. In that regard, VeraSun is working closely with its lenders and expects to reach an agreement before the
"first-day" hearing on Monday for additional committed financing to provide adequate liquidity to fund operations in the normal course.

The Company expects that it will not scale back its purchases of raw materials, and corn and other suppliers will continue to be paid in full for all goods and services furnished after the filing date as required by the Bankruptcy Code. The Company has also sought authority from the bankruptcy court to pay for goods delivered to the Company on or after October 11, 2008.

VeraSun has also requested the bankruptcy court
's approval to continue to pay employees in the ordinary course without interruption, and expects the request to be granted as part of the court's "first day" orders.

"Today's filing allows VeraSun to address its short-term liquidity constraints as we navigate historically challenging market conditions while we focus on restructuring to address the company's long-term future," Don Endres CEO said. "We appreciate the loyalty of our employees, customers and suppliers during this challenging time."

About VeraSun Energy Corporation

VeraSun Energy Corp., headquartered in Sioux Falls, S.D., is a leading producer and marketer of ethanol and distillers grains. Founded in 2001, the company has a fleet of 16 production facilities in eight states, of which one is still under construction. VeraSun Energy is scheduled to have an annual production capacity of approximately 1.64 billion gallons of ethanol and more than 5 million tons of distillers grains by the end of 2008.

VeraSun also markets E85, a blend of 85 percent ethanol and 15 percent gasoline for use in Flexible Fuel Vehicles (FFVs), directly to fuel retailers under the brand VE85®. For more information, please visit VeraSun Energy's websites at
www.verasun.com or www.VE85.com.

VeraSun Energy Retains Morgan Stanley to Evaluate Strategic Alternatives

In light of strategic interest expressed by multiple parties during its current equity offering, VeraSun Energy Corporation (VeraSun) has retained Morgan Stanley to act in an advisory capacity to evaluate strategic alternatives. In addition, VeraSun suspended its previously announced equity offering.

VeraSun Announces Common Stock Offering

VeraSun Energy Corporation (VeraSun) announced today that it has commenced a public offering of 20,000,000 shares of its common stock, subject to market conditions. VeraSun expects to grant its underwriters a 30-day option to purchase up to an additional 3,000,000 shares to cover overallotments, if any.
VeraSun intends to use the net proceeds of the offering for general corporate purposes.

VeraSun Energy Corporation, one of the nationfs largest ethanol producers, today announced its financial results for the three months ended June 30, 2008. The Company increased revenues by 499% over the second quarter of 2007, to $1.015 billion, and generated earnings of $.15 per diluted share. EBITDA for Q2 2008 increased to $73 million as compared to $33 million for Q2 2007.

Second Quarter 2008 Financial Highlights

Total revenues, which include revenues from the sale of ethanol, distillers grains, VE85®, and corn increased by $845.6 million, or 498.7%, to $1,015.2 million for the three months ended June 30, 2008, compared to $169.6 million for the three months ended June 30, 2007. The increase in total revenues was primarily the result of a 420.6% increase in ethanol volume sold and an increase in average ethanol prices of $.38 per gallon, or 17.1%, compared to 2007. For the three months ended June 30, 2008, the Company sold 329.9 million gallons of ethanol, which includes 83.4 million gallons of ethanol that were purchased from others and resold to our customers. Ethanol production increased by 175.0 million gallons, or 214.8%, to 256.5 million gallons compared with the three months ended June 30, 2007, as a result of the added capacity from Linden, Indiana facility in August 2007, the Albion, Nebraska facility in October 2007, the Bloomingburg, Ohio facility in March 2008 and the US BioEnergy acquisition on April 1, 2008.

Net sales from ethanol increased $710.4 million, or 499.4%, to $852.7 million for the three months ended June 30, 2008 compared with $142.3 million for the three months ended June 30, 2007. Of the increase, $588.2 million was driven by additional volumes of ethanol sold. The increased volume resulted from additional production at the Linden, Albion, and Bloomingburg facilities, which came on line since June 30, 2007, output from the US BioEnergy facilities acquired April 1, 2008, and ethanol that was purchased and resold to our customers. Higher ethanol prices contributed $122.2 million of the increased revenue. The average price of ethanol sold was $2.59 per gallon for the three months ended June 30, 2008, compared to $2.21 per gallon for the three months ended June 30, 2007.

Net sales from distillers grains increased $97.0 million, or 431.0%, to $119.5 million for the three months ended June 30, 2008 compared with $22.5 million for the three months ended June 30, 2007. The impact of increased volume was $56.9 million and the impact of higher prices of $48.35 per ton contributed $40.1 million of the increased revenues.

Net sales of VE85®, our branded E85 product, increased $8.2 million, or 206.5%, to $12.2 million for the three months ended June 30, 2008 compared with $4.0 million for the three months ended June 30, 2007, primarily due to an increase in the number of retail outlets selling VE85® resulting in a $6.3 million increase and the impact of higher prices contributing to an additional increase of $1.9 million.

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November 2 2008 The Financial Times

VeraSun files for protection

VeraSun Energy has filed for protection from creditors, becoming the latest symbol of the corn-based ethanol industry's failure to meet lofty expectations as a viable source of energy.

Hailed by George W. Bush, US president, as a valuable alternative that would reduce US dependence on foreign oil and limit pollution and could be produced locally, ethanol attracted billions of dollars in tax breaks, government subsidies and private investment.

The product's promise helped propel the value of VeraSun and other companies that have sold shares to the public since 2005. By the third quarter of this year, steep losses from its portfolio of commodity hedges and the credit crisis, which crimped access to new financing, had placed "severe constraints on the company's liquidity position," said VeraSun, which is based in Sioux Falls, South Dakota.

The company's shares have lost almost 98 per cent of their value since their debut in June 2006.

The Chapter 11 bankruptcy filing "allows VeraSun to address its short-term liquidity constraints as we navigate historically challenging market conditions while we focus on restructuring to address the company's long-term future," Don Endres, VeraSun's chief executive, said in a statement.

VeraSun aims to resume normal operations during the reorganisation, will continue to pay its employees, will not scale back its purchases of corn and other raw materials and "has taken steps to ensure continued supply of product to its customers and to fulfil all customer obligations."

The company also said it expected to reach an agreement with its lenders on additional financing by Monday.

VeraSun produces about 1.64bn gallons of ethanol annually. It operates 16 facilities in eight US states.

The world consumes about 36.5bn litres of ethanol a year compared with 1,200bn litres of gasoline and 1,100bn litres of diesel fuel.

VeraSun warned investors in September it would report a third-quarter net loss of as much as $103m after corn prices declined, reducing the value of hedges the company bought to lock in costs when the commodity was more expensive.

VeraSun also sought to raise money through the sale of 20m shares. The company suspended the offering two days later and hired Morgan Stanley, the US investment bank, to help it evaluate "strategic alternatives". In a statement, the company said it filed for protection from creditors in the Delaware District of the US Bankruptcy Court.