'BioTown' ethanol firm files for bankruptcy

By Norm Heikens, The IBJ

nheikens@ibj.com

The ethanol producer that planned to build a plant in Reynolds, the town where Gov. Mitch Daniels is attempting to showcase energy independence, has filed for Chapter 11 bankruptcy protection.

VeraSun Energy Corp. announced yesterday that it and 24 of its subsidiaries filed the voluntary petition yesterday in U.S. Bankruptcy Court in Delaware.

The Sioux Falls, S.D., company blamed the move on losses resulting from rising corn prices and tight credit. It said it intends to continue operating as usual.

VeraSun opened a plant in August 2007 at Linden, which is between Lafayette and Crawfordsville.

VeraSun's project in Reynolds, which is north of Lafayette, started in April last year. However, the company announced months later that it would suspend construction because ethanol prices had fallen. The plant was to have capacity to produce 110 million gallons a year.

In September this year, VeraSun said it had hired Wall Street firm Morgan Stanley to evaluate strategic options.

VeraSun trades on the New York Stock Exchange, where its shares have plummeted to 48 cents each from $17.75 as recently as December last year.

Not long after entering office in 2005, Daniels designated Reynolds "BioTown" and planned to demonstrate technology that could make the town independent of foreign oil. Reynolds also was to have shown how waste from nearby livestock farms could be used to generate electricity.

VeraSun operates plants in seven other Midwestern states.