NEW YORK, Jan 16 (Reuters) - Ethanol maker VeraSun Energy Corp VSUNQ.OB received interim approval from a Delaware bankruptcy court judge to auction most of its U.S. BioEnergy ethanol plants by the end of March, according to court documents.
VeraSun, which filed for bankruptcy in October due to high corn prices, weak ethanol prices and a lack of access to financing, has had the U.S. BioEnergy plants idled since last year. It bought the plants for less than $700 million in 2008.
The court approval for the sale of seven of the eight U.S. BioEnergy plants is part of a new bankruptcy financing agreement with lenders that replaces incremental funds that expired on Jan. 15, according to the documents.
U.S. BioEnergy’s Marion, South Dakota plant is backed by a different lender and isn’t included in the plan, VeraSun spokesman Mike Lockrem said.
The timeline for the sale includes filing a motion on the sale by Jan. 27, conducting an auction on or before March 16 obtaining a sale order on or before March 17 and a closing target date of March 31, the filing said.
U.S. Bankruptcy Judge Brendan Shannon entered the interim order on financing, which included the credit agreement in which lenders required the sale in return for providing the financing, in a Jan. 15 order. A final hearing is set for Feb. 10. The lead lender is AgStar Financial Services.
VeraSun’s official committee of unsecured creditors objected to the terms of the financing of each of the US BioEnergy plants, saying they needed time to negotiate more favorable terms. A lawyer for the creditors committee was not available for comment.
The auction process is unrelated to the company’s previously announced indication of interest received by VeraSun. He said it is not known if that interest and the auction will be related in any way. (Reporting by Caroline Humer; editing by Richard Chang)
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