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As filed with the Securities and Exchange Commission on December 14, 2007
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
VERASUN ENERGY CORPORATION
(Exact name of Registrant as specified in its charter)
South Dakota | 20-3430241 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
100 22nd Avenue
Brookings, South Dakota 57006
(605) 696-7200
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Donald L. Endres
Chief Executive Officer
VeraSun Energy Corporation
100 22nd Avenue
Brookings, South Dakota 57006
(605) 696-7200
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
John Schweitzer Senior Vice President, General Counsel and Secretary VeraSun Energy Corporation 100 22nd Avenue Brookings, South Dakota 57006 Phone: (605) 696-7200 Fax: (605) 696-7250 | David B. Miller Faegre & Benson LLP 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, Minnesota 55402-3901 Phone: (612) 766-7000 Fax: (612) 766-1600 |
Approximate date of commencement of proposed sale to public: From time to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box: ¨
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box: x
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ¨
If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ¨
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ¨
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Registered | Amount to be Registered | Proposed Maximum Offering Price Per Share(1) | Proposed Maximum Aggregate Offering Price(1) | Amount of Registration Fee | ||||
Common Stock, $.01 par value | 13,801,384 | $13.28 | $183,282,379.52 | $5,626.77 | ||||
(1) | Estimated solely for the purpose of calculating the registration fee. The estimate is made pursuant to Rule 457(c) of the Securities Act of 1933, as amended, based on $13.28, which represents the average of the high and low sales prices of the Registrant’s common stock on December 12, 2007 as reported on the New York Stock Exchange. |
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED DECEMBER 14, 2007
PROSPECTUS
13,801,384 Shares
Common Stock
This prospectus relates to 13,801,384 shares of common stock of VeraSun Energy Corporation, which may be offered for sale from time to time by the selling shareholders named under “Selling Shareholders.” Such shares were issued to the security holders of ASAlliances Biofuels, LLC in a private placement in connection with our acquisition of ASA OpCo Holdings, LLC.
All of the proceeds from the sale of the shares covered by this prospectus will be received by the selling shareholders. We will not receive any proceeds from the sale of these shares.
Our common stock is listed on the New York Stock Exchange under the symbol “VSE.” On December 11, 2007, the last reported sale price of our common stock was $12.85 per share.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. See the “Risk Factors” beginning on page 4 for factors you should consider before buying shares of our common stock.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is , 2007.
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You should rely only on the information provided in this prospectus, including the information incorporated by reference. We have not authorized anyone to provide you with different information. You should not assume that the information in this prospectus, or any supplement to this prospectus, is accurate at any date other than the date indicated on the cover page of these documents.
We have not taken any action to permit a public offering of the shares of common stock covered by this prospectus outside the United States or to permit the possession or distribution of this prospectus outside the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to the offering of the shares of common stock and the distribution of this prospectus outside of the United States.
Unless the context indicates otherwise, all references in this prospectus to “VeraSun,” the “company,” the “registrant,” “our,” “us” and “we” refer to VeraSun Energy Corporation and its subsidiaries as a combined entity.
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FORWARD LOOKING STATEMENTS
This prospectus, including the documents we have incorporated by reference, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. These statements are indicated by words such as “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “project,” “should,” “target,” “will,” and other expressions, which refer to future events and trends, and identify forward-looking statements that involve risks and uncertainties. Any forward-looking statements are not guarantees of our future performance and are subject to risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by any forward-looking statements. We disclaim any duty to update any forward-looking statements.
Some of the factors that may cause actual results, developments and business decisions to differ materially from those contemplated by any forward-looking statements include the risk factors discussed under the heading “Risk Factors” and the following:
• | the volatility and uncertainty of corn, natural gas, ethanol and unleaded gasoline prices; |
• | the results of our hedging transactions and other risk mitigation strategies; |
• | operational disruptions at our facilities; |
• | our ability to implement our expansion strategy as planned or at all; |
• | our ability to realize the expected benefits from the ethanol facilities acquired from ASAlliances Biofuels, LLC; |
• | our ability to locate and integrate potential future acquisitions; |
• | our ability to develop a corn oil extraction business; |
• | development of infrastructure related to the sale and distribution of ethanol; |
• | our limited operating history; |
• | excess production capacity in our industry; |
• | our ability to compete effectively in our industry; |
• | our ability to implement a marketing and sales network for our ethanol; |
• | changes in or elimination of governmental laws, tariffs, trade or other controls or enforcement practices; |
• | environmental, health and safety laws, regulations and liability; |
• | our reliance on key management personnel; |
• | future technological advances; |
• | limitations and restrictions contained in the instruments and agreements governing our indebtedness; |
• | our ability to raise additional capital and secure additional financing; |
• | our ability to implement additional financial and management controls, reporting systems and procedures and comply with Section 404 of the Sarbanes-Oxley Act, as amended; |
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• | fluctuations in the market value of our common stock and other factors that could influence the recorded values of our intangible assets; |
• | our ability to successfully invest in viable commercial processes for ethanol production based on cellulosic material; |
• | our ability to locate and acquire suitable facility sites and to construct and equip new facilities in a manner consistent with anticipated timetables and budgets; |
• | our ability to realize the expected benefits of the proposed merger with US BioEnergy Corporation, including cost savings, synergies and increased production capacity; and |
• | other factors described elsewhere in this prospectus. |
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The following summary contains basic information about the company and this offering. It does not contain all of the information that you should consider in making your investment decision. You should read and consider carefully all of the information in this prospectus, including the information set forth under “Risk Factors,” as well as the more detailed financial information, including the consolidated financial statements and related notes thereto, appearing elsewhere or incorporated by reference in this prospectus, before making an investment decision.
Overview
VeraSun is one of the largest ethanol producers in the United States based on production capacity, according to the Renewable Fuels Association (“RFA”). We focus primarily on the production and sale of ethanol and its co-products. This focus has enabled us to significantly grow our ethanol production capacity and to work with automakers, fuel distributors, trade associations and consumers to increase the demand for ethanol. As an industry leader, we play an active role in developments within the renewable fuels industry.
Ethanol is a type of alcohol produced in the U.S. principally from corn. Ethanol is primarily used as a blend component in the U.S. gasoline fuel market, which approximated 142 billion gallons in 2006 according to the Energy Information Administration (“EIA”). Refiners and marketers historically have blended ethanol with gasoline to increase octane and reduce tailpipe emissions. The ethanol industry has grown significantly over the last few years, expanding production capacity at a compounded annual growth rate of approximately 22% from 2000 to 2006. We believe the ethanol market will continue to grow as a result of ethanol’s cleaner burning characteristics, a shortage of domestic petroleum refining capacity, geopolitical concerns, and federally mandated renewable fuel usage. We also believe that E85, a fuel blend composed of 85% ethanol, may become increasingly important as an alternative to unleaded gasoline.
We own and operate five of the largest ethanol production facilities in the U.S., with a combined ethanol production capacity of 560 million gallons per year, or “MMGY.” As of November 1, 2007, our ethanol production capacity represented approximately 8.9% of the total ethanol production capacity in the U.S., according to the RFA.
Our facilities are designed to operate on a continuous basis and use current dry-milling technology, a production process that results in increased ethanol yield and reduced capital costs compared to wet-milling facilities. In addition to producing ethanol, we produce and sell wet and dry distillers grains as ethanol co-products, which serve to partially offset our corn costs. In 2006, we produced approximately 226.3 million gallons of fuel ethanol and 492,000 tons of distillers grains.
We commenced operations at our facility in Aurora, South Dakota in December 2003, at our facility in Fort Dodge, Iowa in October 2005, at our facility in Charles City, Iowa in April 2007, at our facility in Linden, Indiana in August 2007, and at our facility in Albion, Nebraska in October 2007. Construction of our facilities in Hartley, Iowa; Welcome, Minnesota; and Bloomingburg, Ohio has commenced and we expect each of those facilities to begin production during the first six months of 2008. Upon completion of these facilities, we will have production capacity of 890 MMGY. We also broke ground for a facility in Reynolds, Indiana in April 2007. However, in October 2007 we suspended construction there because of market conditions. We expect to resume construction at Reynolds in 2008, depending on the return of more favorable market conditions, and bring our production capacity to one billion gallons per year by the end of 2009.
Recent Developments
Proposed US BioEnergy Merger. On November 29, 2007, we announced that we entered into a definitive merger agreement with US BioEnergy Corporation (“US BioEnergy”). US BioEnergy owns and operates four
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ethanol plants with total ethanol production capacity of 310 MMGY and is constructing four additional ethanol plants with expected total ethanol production capacity of 440 MMGY. We refer to this transaction in this prospectus as the “Merger.” Under the merger agreement, .81 share of our common stock will be issued for each outstanding share of US BioEnergy common stock. Our existing shares will remain outstanding and will represent approximately 60% of the shares outstanding after the Merger.
Holders of approximately 33% of US BioEnergy’s shares and approximately 19.9% of our shares have agreed to vote their shares in favor of the Merger. The Merger is expected to close during the first quarter of 2008, pending shareholder approval, anti-trust regulatory clearance and the completion of other customary conditions.
Upon completion of the Merger, we will have nine ethanol production facilities in operation and seven additional facilities under construction. By the end of 2008, the combined company is expected to have a total production capacity of more than 1.6 billion gallons per year (“BGY”) and 16 facilities. For more information about the Merger, see “Recent Developments—Pending US BioEnergy Merger.”
Reynolds Suspension.On October 1, 2007, we issued a press release announcing that we were suspending construction of our 110 million gallons per year ethanol biorefinery in Reynolds, Indiana, due to market conditions.
ASA Acquisition. On August 17, 2007, we closed on a transaction with ASAlliances Biofuels, LLC (“ASAlliances”). Under a Unit Purchase Agreement, we purchased all of the equity interests in ASA OpCo Holdings, LLC (“ASA Holdings”) from ASAlliances for an aggregate purchase price of $675,176,000. Of this amount, we issued 13,801,384 shares of our common stock valued at $194,323,000 and paid $250,000,000 of cash to the seller at closing. The balance of the purchase price consisted of $230,853,000 of indebtedness owed by ASA Holdings and its subsidiaries, ASA Albion, LLC, ASA Bloomingburg, LLC and ASA Linden, LLC, which remained outstanding after the closing under a Credit Agreement, dated February 6, 2006 among ASA Holdings, ASA Albion, LLC, ASA Bloomingburg, LLC and ASA Linden, LLC, as borrowers, and WestLB AG, New York branch, as administrative agent for the lenders and the lenders named therein (“Senior Credit Facility”). ASA Holdings owned companies with three biorefineries and developmental rights to two sites. For more information about the ASA Acquisition, see “Recent Developments—ASA Acquisition.”
A more detailed description of our business is contained in our annual and quarterly reports, which we have incorporated by reference into this prospectus.
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Issuer | VeraSun Energy Corporation | |
Common stock offered by the selling shareholders | 13,801,384 | |
Use of Proceeds | The proceeds from the sale of the securities covered by this prospectus will be received by the selling shareholders. We will not receive any of the proceeds from any sale by any selling shareholder of the securities covered by this prospectus. See “Use of Proceeds.” | |
Listing of common stock | Our common stock is listed on the New York Stock Exchange under the symbol “VSE.” |
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An investment in our common stock involves certain risks. You should carefully consider the risks described below, as well as the other information included or incorporated by reference in this prospectus before making an investment decision. Our business, financial condition or results of operations could be materially adversely affected by any of these risks. The market or trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment. In addition, please read “Forward-Looking Statements” where we describe additional uncertainties associated with our business and the forward-looking statements included or incorporated by reference in this prospectus. The risks below should be considered along with the other information included or incorporated by reference into this prospectus, including the risk factors related to the Merger included in the Joint Proxy Statement/Prospectus of VeraSun and US BioEnergy dated , 2008. Please note that additional risks not presently known to us or that we currently deem immaterial may also impair our business and operations.
Risks Relating to Our Business
Our results of operations, financial position and business outlook are highly dependent on commodity prices, which are subject to significant volatility and uncertainty, and the availability of supplies, so our results could fluctuate substantially.
Our results are substantially dependent on commodity prices, especially prices for corn, natural gas, ethanol and unleaded gasoline. As a result of the volatility of the prices for these items, our results may fluctuate substantially and we may experience periods of declining prices for our products and increasing costs for our raw materials, which could result in operating losses. Although we may attempt to offset a portion of the effects of fluctuations in prices by entering into forward contracts to supply ethanol or purchase corn, natural gas or other items or by engaging in transactions involving exchange-traded futures contracts, the amount and duration of these hedging and other risk mitigation activities may vary substantially over time and these activities also involve substantial risks. See “We engage in hedging transactions and other risk mitigation strategies that could harm our results of operation.”
Our business is highly sensitive to corn prices and we generally cannot pass on increases in corn prices to our customers.
The principal raw material we use to produce ethanol and co-products, including dry and wet distillers grains, is corn. As a result, changes in the price of corn can significantly affect our business. In general, rising corn prices produce lower profit margins. Because ethanol competes with non-corn-based fuels, we generally are unable to pass along increased corn costs to our customers. At certain levels, corn prices may make ethanol uneconomical to use in fuel markets. Corn costs constituted approximately 59.7% of our total cost of goods sold for the nine months ended September 30, 2007, compared to 46.0% for the nine months ended September 30, 2006. Over the ten-year period from 1997 through 2006, corn prices (based on the Chicago Board of Trade (the “CBOT”) daily futures data) have ranged from a low of $1.75 per bushel on August 11, 2000 to a high of $3.90 per bushel on December 29, 2006, with prices averaging $2.32 per bushel during this period. At November 5, 2007, the CBOT price per bushel of corn for December delivery was $3.75.
The industry has experienced significantly higher corn prices commencing in the fourth quarter of 2006, which have remained in 2007 at substantially higher levels than in 2006. In the nine months ended September 30, 2007, CBOT corn prices have ranged from a low of $3.08 per bushel to a high of $4.37 per bushel, with prices averaging $3.67 per bushel. These higher corn prices contributed to adverse comparisons in the three-month and nine-month period ended September 30, 2007 to the same 2006 periods in our cost of goods sold, gross profit, operating income, net income and EBITDA, and we anticipate these higher corn prices will continue to adversely affect such year-over-year comparisons through 2007.
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The price of corn is influenced by weather conditions and other factors affecting crop yields, farmer planting decisions and general economic, market and regulatory factors. These factors include government policies and subsidies with respect to agriculture and international trade, and global and local demand and supply. The significance and relative effect of these factors on the price of corn is difficult to predict. Any event that tends to negatively affect the supply of corn, such as adverse weather or crop disease, could increase corn prices and potentially harm our business. We may also have difficulty, from time to time, in physically sourcing corn on economical terms due to supply shortages. Such a shortage could require us to suspend operations until corn is available at economical terms, which would have a material adverse effect on our business, results of operations and financial position. In addition, the price we pay for corn at a facility could increase if an additional ethanol production facility is built in the same general vicinity.
The spread between ethanol and corn prices can vary significantly and may not return to recent high levels.
Our gross margin depends principally on the spread between ethanol and corn prices. During the five-year period from 2002 through 2006, ethanol prices (based on average U.S. ethanol rack prices from Bloomberg (“Bloomberg”)) have ranged from a low of $0.94 per gallon to a high of $3.98 per gallon, averaging $1.70 per gallon during this period. For the year ended December 31, 2006, ethanol prices averaged $2.53 per gallon, reaching a high of $3.98 per gallon and a low of $1.72 per gallon (based on the daily closing prices from Bloomberg). In early 2006, the spread between ethanol and corn prices was at historically high levels, driven in large part by oil companies removing a competitive product, MTBE, from the fuel stream and replacing it with ethanol in a relatively short time period. However, this spread has fluctuated widely and narrowed significantly during 2007. Fluctuations are likely to continue to occur. Any reduction in the spread between ethanol and corn prices, whether as a result of an increase in corn prices or natural gas prices or a reduction in ethanol prices, would adversely affect our results of operations and financial position. Further, it is possible that ethanol prices could decline below our marginal cost of production, which could cause us to suspend production of ethanol at some or all of our facilities.
The market for natural gas is subject to conditions that create uncertainty in the price and availability of the natural gas that we use in our manufacturing process.
We rely upon third parties for our supply of natural gas, which is consumed in the manufacture of ethanol. The prices for and availability of natural gas are subject to volatile market conditions. These market conditions often are affected by factors beyond our control such as higher prices resulting from colder than average weather conditions and overall economic conditions. Significant disruptions in the supply of natural gas could impair our ability to manufacture ethanol for our customers. Furthermore, increases in natural gas prices or changes in our natural gas costs relative to natural gas costs paid by competitors may adversely affect our results of operations and financial position. Natural gas costs represented approximately 10.1% of our cost of goods sold for the nine months ended September 30, 2007, compared to 16.6% for the nine months ended September 30, 2006. The price fluctuations in natural gas prices over the seven-year period from December 31, 1999 through December 31, 2006, based on the New York Mercantile Exchange, or NYMEX, daily futures data, have ranged from a low of $1.83 per MMBTU on September 26, 2001 to a high of $15.38 per MMBTU on December 13, 2005, averaging $5.63 per MMBTU during this period. At November 5, 2007, the NYMEX price of natural gas for December delivery was $8.00 per MMBTU.
Fluctuations in the selling price and production cost of gasoline may reduce our profit margins.
Ethanol is marketed both as an important gasoline component to reduce vehicle emissions from gasoline and as an octane enhancer to improve the octane rating of gasoline with which it is blended. As a result, ethanol prices are influenced by the supply and demand for gasoline and our results of operations and financial position may be materially adversely affected if gasoline demand or prices decrease.
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Historically, the price of a gallon of gasoline has been lower than the cost to produce a gallon of ethanol. In addition, some of our sales contracts provide for pricing on an indexed basis, so that the price we receive for products sold under these arrangements is adjusted as gasoline prices change.
We may not realize the expected benefits from the ethanol facilities acquired from ASAlliances Biofuels, LLC in the time frame anticipated or at all.
The expected benefits of our acquisition of three ethanol facilities from ASAlliances Biofuels, LLC will depend, in part, on the timely construction and operation of the acquired ethanol facilities, which involve the following risks, among others:
• | Failure of contractors to meet construction milestones; and |
• | Our inability to achieve the expected production schedules of the acquired ethanol facilities. |
The expected benefits of the transaction also depend on the timely and efficient integration of the operations and personnel of the acquired ethanol facilities. The risks involved in this integration include, among others:
• | Disruption of our ongoing business and distraction of management; |
• | Loss of key employees of the acquired ethanol facilities; and |
• | Loss of, or disputes with, existing service providers and suppliers of the acquired ethanol facilities. |
We also may encounter unforeseen obstacles or costs in the timely construction and operation of the acquired ethanol facilities and the integration of such ethanol facilities. The presence of one or more material liabilities of the acquired ethanol facilities that are unknown to us at the time of acquisition may have a material adverse effect on our business.
We also are dependent on Cargill, Incorporated (“Cargill”) and its subsidiaries for various services at the acquired ethanol facilities, including corn procurement, the marketing and sale of ethanol and distillers grains produced at the facilities and risk management. As a result, our results of operations and financial position may be adversely affected if Cargill does not perform these services in an effective manner.
Our goodwill could become impaired and we may be required to write down the value of our goodwill.
As of September 30, 2007, we had $192.5 million of goodwill resulting from the ASA Acquisition. Current accounting rules require that goodwill and certain intangible assets be assessed for impairment using fair value measurement techniques. If the carrying amount of a reporting unit exceeds its fair value, then a goodwill impairment test is performed to measure the amount of the impairment loss, if any. The goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as in a business combination. Determining the fair value of the implied goodwill is judgmental in nature and often involves the use of significant estimates and assumptions. These estimates and assumptions could have a significant impact on whether or not an impairment charge is recognized and also the magnitude of any such charge. Estimates of fair value primarily are determined using discounted cash flows and market comparisons. These approaches use significant estimates and assumptions, including projection and timing of future cash flows, discount rates reflecting the risk inherent in future cash flows, perpetual growth rates, determination of appropriate market comparables, and determination of whether a premium or discount should be applied to comparables. The plans and estimates used to value these assets may be incorrect. If our actual results are worse than the plans and estimates we used to assess the recoverability of ASA Holdings assets in connection with the ASA Acquisition, or our plans and estimates are otherwise incorrect, we could incur impairment charges relating to the goodwill resulting from the ASA Acquisition, including up to the full $192.5 million of goodwill.
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Our business is subject to seasonal fluctuations.
Our operating results are influenced by seasonal fluctuations in the price of our primary operating inputs, corn and natural gas, and the price of our primary product, ethanol. The spot price of corn tends to rise during the spring planting season in May and June and tends to decrease during the fall harvest in October and November. The price of natural gas, however, tends to move opposite that of corn and tends to be lower in the spring and summer and higher in the fall and winter. In addition, our ethanol prices are substantially correlated with the price of unleaded gasoline especially in connection with any indexed, gas-plus sales contracts we may have. The price of unleaded gasoline tends to rise during each summer and winter. Given our limited history and the growth of our industry, we do not know yet how these seasonal fluctuations will affect our results over time.
We engage in hedging transactions and other risk mitigation strategies that could harm our results of operations.
In an attempt to partially offset the effects of volatility of ethanol prices and corn and natural gas costs, we enter into contracts to supply a portion of our ethanol production or purchase a portion of our corn or natural gas requirements on a forward basis and also engage in other hedging transactions involving exchange-traded futures contracts for corn, natural gas and unleaded gasoline from time to time. The price of unleaded gasoline also affects the price we receive for our ethanol under indexed contracts. The financial statement impact of these activities is dependent upon, among other things, the prices involved and our ability to sell sufficient products to use all of the corn and natural gas for which we have futures contracts. Hedging arrangements also expose us to the risk of financial loss in situations where the other party to the hedging contract defaults on its contract or, in the case of exchange-traded contracts, where there is a change in the expected differential between the underlying price in the hedging agreement and the actual prices paid or received by us. Hedging activities can themselves result in losses when a position is purchased in a declining market or a position is sold in a rising market. A hedge position is often settled in the same time frame as the physical commodity is either purchased (corn and natural gas) or sold (ethanol). Hedging losses may be offset by a decreased cash price for corn and natural gas and an increased cash price for ethanol. We also vary the amount of hedging or other risk mitigation strategies we undertake, and we may choose not to engage in hedging transactions at all. As a result, our results of operations and financial position may be adversely affected by increases in the price of corn or natural gas or decreases in the price of ethanol or unleaded gasoline.
We may become in default or be required to make mandatory prepayments under the Senior Credit Facility as a result of actions of third parties that are unrelated to our business.
The Senior Credit Facility contains customary events of default and also includes events of default based on certain actions by Fagen, Inc. (“Fagen”), the design-builder of the Linden, Albion and Bloomingburg facilities, Cargill, and other third parties that provide goods and services to the facilities, including actions that are unrelated to the construction and operation of the facilities. In particular, the material breach by any such third parties of their agreements relating to the facilities, the failure of any such third parties to pay their indebtedness, including trade payables, and the entry of material judgments or the occurrence of an insolvency event with respect to any such third party would constitute an event of default under the Senior Credit Facility. We have no control over such third parties and could experience an event of default with no ability to cure the default. In that event, the lenders could demand payment of all indebtedness outstanding under the Senior Credit Facility under circumstances where alternative financing may be unavailable or available on unfavorable terms. If we were unable to obtain alternative financing to pay the Senior Credit Facility, the lenders could foreclose on the Linden, Albion, and Bloomingburg facilities and we could lose our investment in those facilities. We may also be required to make mandatory prepayments under the Senior Credit Agreement if the Volumetric Ethanol Excise Tax Credit expires or is scheduled to expire less than eighteen months after July 1, 2009.
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We may not achieve anticipated operating results and our financial position may be adversely affected if we do not successfully develop our corn oil extraction business.
Our anticipated operating results and financial position may depend in part on our ability to develop and operate our planned corn oil extraction facilities successfully. We plan to extract corn oil from distillers grains, a co-product of the ethanol production process, and to sell the oil or convert it into biodiesel. We have contracted with Crown Iron Works Company for the purchase of corn oil extraction equipment. Large scale extraction of corn oil from distillers grains, as we contemplate, is unproven, and we may not achieve planned operating results. Our operating results and financial position will be affected by events or conditions associated with the development, operation and cost of the planned corn oil extraction equipment, including:
• | the outcome of negotiations with government agencies, vendors, customers or others, including, for example, our ability to negotiate favorable contracts with customers, or the development of reliable markets; |
• | changes in development and operating conditions and costs, including costs of services, equipment and construction; |
• | unforeseen technological difficulties, including problems that may delay startup or interrupt production or that may lead to unexpected downtime, or construction delays; |
• | corn prices and other market conditions, including competition from other producers of corn oil; |
• | government regulation; and |
• | development of transportation, storage and distribution infrastructure supporting the facilities and the biodiesel industry generally. |
We are subject to and will become subject to additional financial reporting and other requirements for which our accounting, internal audit and other management systems and resources may not be adequately prepared.
We are subject to and will become subject to additional reporting and other obligations under the Securities Exchange Act of 1934, as amended, including the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 no later than December 31, 2007. Section 404 requires annual management assessment of the effectiveness of our internal controls over financial reporting and a report by our independent auditors addressing these assessments. These reporting and other obligations will increasingly place significant demands on our management, administrative, operational, internal audit, tax and accounting resources. We are implementing additional financial and management controls, reporting systems and procedures and an internal audit function and are hiring additional accounting, internal audit and finance staff. If we are unable to accomplish these objectives in a timely and effective fashion, our ability to comply with our financial reporting requirements and other rules that apply to reporting companies could be impaired. In connection with the audit of our consolidated financial statements for the year ended December 31, 2006, we identified several material weaknesses in our internal controls over financial reporting relating to inadequate monitoring of accounting recognition matters and significant accounting estimates, including derivative financial instruments and income taxes, and deficiencies in our financial closing process. We believe we have remediated these weaknesses, but we cannot assure you that we will have no future deficiencies or weaknesses in our internal controls over financial reporting.
We are substantially dependent on our production facilities, and any operational disruption could result in a reduction of our sales volumes and could cause us to incur substantial losses.
Most of our revenues are and will continue to be derived from the sale of ethanol and the related co-products that we produce at our facilities. Our operations may be subject to significant interruption if any of our facilities experiences a major accident or is damaged by severe weather or other natural disasters. In addition, our operations may be subject to labor disruptions and unscheduled downtime, or other operational hazards inherent
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in our industry, such as equipment failures, fires, explosions, abnormal pressures, blowouts, pipeline ruptures, transportation accidents and natural disasters. Some of these operational hazards may cause personal injury or loss of life, severe damage to or destruction of property and equipment or environmental damage, and may result in suspension of operations and the imposition of civil or criminal penalties. Our insurance may not be adequate to fully cover the potential operational hazards described above and we may not be able to renew this insurance on commercially reasonable terms or at all.
We may not be able to implement our expansion strategy as planned or at all.
We plan to grow our business by investing in new or existing facilities and to pursue other business opportunities, such as marketing VE85™ and other ethanol-blended fuel. We believe that there is increasing competition for suitable facility sites. We may not find suitable additional sites for construction of new facilities or other suitable expansion opportunities.
We may need additional financing to implement our expansion strategy and we may not have access to the funding required for the expansion of our business or such funding may not be available to us on acceptable terms. We may finance the expansion of our business with additional indebtedness or by issuing additional equity securities which would further dilute our shareholders’ interests. We could face financial risks associated with incurring additional indebtedness, such as reducing our liquidity and access to financial markets and increasing the amount of cash flow required to service such indebtedness.
We must also obtain numerous regulatory approvals and permits in order to construct and operate additional or expanded facilities, including our Hartley, Welcome, Bloomingburg and Reynolds facilities. These requirements may not be satisfied in a timely manner or at all. In addition, as described below under “We may be adversely affected by environmental, health and safety laws, regulations and liabilities,” federal and state governmental requirements may substantially increase our costs, which could have a material adverse effect on our results of operations and financial position. Our expansion plans may also result in other unanticipated adverse consequences, such as the diversion of management’s attention from our existing operations.
Our construction costs may also increase to levels that would make a new facility too expensive to complete or unprofitable to operate. Our construction contracts with respect to the construction of our facilities generally do not limit our exposure to higher costs. Contractors, engineering firms, construction firms and equipment suppliers also receive requests and orders from other ethanol companies and, therefore, we may not be able to secure their services or products on a timely basis or on acceptable financial terms. We may suffer significant delays or cost overruns as a result of a variety of factors, such as shortages of workers or materials, transportation constraints, adverse weather, unforeseen difficulties or labor issues, any of which could prevent us from commencing operations as expected at our facilities.
Our expansion strategy also depends on prevailing market conditions for the price of ethanol and the costs of corn and natural gas and our expectations of future market conditions. We recently suspended construction of our Reynolds facility due to market conditions. If market conditions do not improve as anticipated, we could lose our investment in this facility and could incur additional costs associated with terminating various construction contracts. We also may not proceed with construction at other development sites and could incur losses associated our investments in those sites.
Additionally, any expansion of our existing facilities or any installation of corn oil extraction system at one of our existing facilities would be sufficiently novel and complex that we may not be able to complete either successfully or without incurring significant cost overruns and construction delays. We have only limited experience with facility expansion and we have never installed large-scale, corn oil extraction systems at our facilities.
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Accordingly, we may not be able to implement our expansion strategy as planned or at all. We may not find additional appropriate sites for new facilities and we may not be able to finance, construct, develop or operate these new or expanded facilities successfully.
Potential future acquisitions could be difficult to find and integrate, divert the attention of key personnel, disrupt our business, and adversely affect our financial results.
As part of our business strategy, we may consider acquisitions of building sites, production facilities, storage or distribution facilities and selected infrastructure. We may not find suitable acquisition opportunities.
Acquisitions involve numerous risks, any of which could harm our business, including:
• | difficulties in integrating the operations, technologies, products, existing contracts, accounting processes and personnel of the target and realizing the anticipated synergies of the combined businesses; |
• | difficulties in building an ethanol plant on a site we purchase, including obtaining zoning and other required permits; |
• | risks relating to environmental hazards on sites we purchase; |
• | risks relating to acquiring or developing the infrastructure needed for facilities or sites we may acquire, including access to rail networks; |
• | difficulties in supporting and transitioning customers, if any, of the target company or assets; |
• | diversion of financial and management resources from existing operations; |
• | the price we pay or other resources that we devote may exceed the value we realize, or the value we could have realized if we had allocated the purchase price or other resources to another opportunity; |
• | risks of entering new markets or areas in which we have limited or no experience or are outside our core competencies; |
• | potential loss of key employees, customers and strategic alliances from either our current business or the business of the target; |
• | assumption of unanticipated problems or latent liabilities, such as problems with the quality of the products of the target; and |
• | inability to generate sufficient revenue to offset acquisition and development costs. |
Acquisitions also frequently result in the recording of goodwill and other intangible assets which are subject to potential impairments, periodic amortization, or both that could harm our financial results. As a result, if we fail to properly evaluate acquisitions or investments, we may not achieve the anticipated benefits of any such acquisitions, and we may incur costs in excess of what we anticipate. The failure to successfully evaluate and execute acquisitions or investments or otherwise adequately address these risks could materially harm our business and financial results.
For risks related to our proposed merger with US BioEnergy, see “Risk Factors Relating to the Merger” incorporated by reference into this prospectus from the Joint Proxy Statement/Prospectus of VeraSun and US BioEnergy dated , 2008.
Growth in the sale and distribution of ethanol is dependent on the changes to and expansion of related infrastructure which may not occur on a timely basis, if at all, and our operations could be adversely affected by infrastructure disruptions.
Our growth is dependent on substantial development of infrastructure by persons and entities outside of our control for our operations, and the ethanol industry generally. Areas requiring expansion include, but are not limited to:
• | rail capacity; |
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• | storage facilities for ethanol; |
• | truck fleets capable of transporting ethanol within localized markets; |
• | refining and blending facilities to handle ethanol; |
• | service stations equipped to handle ethanol fuels; and |
• | the fleet of flexible fuel vehicles, or FFVs, capable of using E85 fuel. |
Substantial investments required for these infrastructure changes and expansions may not be made or they may not be made on a timely basis. Any delay or failure in making the changes to or expansion of infrastructure could hurt the demand or prices for our products, impede our delivery of products, impose additional costs on us or otherwise have a material adverse effect on our results of operations or financial position. Our business is dependent on the continuing availability of infrastructure and any infrastructure disruptions could have a material adverse effect on our business.
We have a limited operating history and our business may not be as successful as we envision.
We began our business in 2001, and our operating facilities have less than five years of commercial operations. Accordingly, we have a limited operating history from which you can evaluate our business and prospects. In addition, our prospects must be considered in light of the risks and uncertainties encountered by a company with limited operating history in rapidly evolving markets, such as the ethanol market, where supply and demand may change significantly in a short amount of time.
Some of these risks relate to our potential inability to:
• | effectively manage our business and operations; |
• | successfully execute our plan to sell our ethanol directly to customers; |
• | recruit and retain key personnel; |
• | successfully maintain a low-cost structure as we expand the scale of our business; |
• | manage rapid growth in personnel and operations; |
• | develop new products that complement our existing business; and |
• | successfully address the other risks described throughout this registration statement. |
If we cannot successfully address these risks, our business and our results of operations and financial position would suffer.
New plants under construction or decreases in the demand for ethanol may result in excess production capacity in our industry.
According to the RFA, domestic ethanol production capacity will have increased from 1.8 BGY as of January 2001 to more than 7 BGY by the end of 2007. The RFA estimates that, as of November 1, 2007, approximately 6.4 BGY of additional production capacity is under construction. The ethanol industry in the U.S. now consists of more than 130 production facilities. Excess capacity in the ethanol industry would have an adverse effect on our results of operations, cash flows and financial position. In a manufacturing industry with excess capacity, producers have an incentive to manufacture additional products for so long as the price exceeds the marginal cost of production (i.e., the cost of producing only the next unit, without regard for interest, overhead or fixed costs). This incentive could result in the reduction of the market price of ethanol to a level that is inadequate to generate sufficient cash flow to cover costs.
Excess capacity may also result from decreases in the demand for ethanol, which could result from a number of factors, including, but not limited to, regulatory developments and reduced U.S. gasoline
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consumption. Reduced gasoline consumption could occur as a result of increased prices for gasoline or crude oil, which could cause businesses and consumers to reduce driving, acquire vehicles with more favorable gasoline mileage or acquire hybrid vehicles. There is some evidence that this has occurred in the recent past as U.S. gasoline prices have increased.
We may not be able to compete effectively in our industry.
In the U.S., we compete with other corn processors, ethanol producers and refiners, including Archer Daniels Midland Company, POET, LLC, US BioEnergy Corporation, Hawkeye Renewables, LLC, Aventine Renewable Energy Holdings, Inc., and Cargill. As of November 1, 2007, the top five producers accounted for approximately 46% of the ethanol production capacity in the U.S. according to the RFA. A number of our competitors are divisions of substantially larger enterprises and have substantially greater financial resources than we do. Smaller competitors also pose a threat. Farmer-owned cooperatives and independent firms consisting of groups of individual farmers and investors have been able to compete successfully in the ethanol industry. These smaller competitors operate smaller facilities that do not affect the local price of corn grown in the proximity of the facility as much as larger facilities like ours do. In addition, many of these smaller competitors are farmer owned and often require their farmer-owners to commit to selling them a certain amount of corn as a requirement of ownership. A significant portion of production capacity in our industry consists of smaller-sized facilities. Most new ethanol plants under development across the country are individually owned. In addition, institutional investors and high net worth individuals could heavily invest in ethanol production facilities and oversupply the demand for ethanol, resulting in lower ethanol price levels that might adversely affect our results of operations and financial position.
In addition to domestic competition, we also face increasing competition from international suppliers. Currently there is a $0.54 per gallon tariff on foreign produced ethanol which is scheduled to expire January 1, 2009. If this tariff is not renewed, we would face increased competition from international suppliers. Ethanol imports equivalent up to 7% of total domestic production in any given year from various countries were exempted from this tariff under the Caribbean Basin Initiative to spur economic development in Central America and the Caribbean. Currently, international suppliers produce ethanol primarily from sugar cane and have cost structures that may be substantially lower than ours.
Any increase in domestic or foreign competition could cause us to reduce our prices and take other steps to compete effectively, which could adversely affect our results of operations and financial position.
Our operating results may suffer if our direct marketing and sales efforts are not effective.
On March 31, 2007 we terminated our agreements with Aventine regarding the marketing and sale of our ethanol and, on April 1, 2007, we commenced direct sales of our ethanol to customers. In connection with this activity, we have established our own marketing, transportation and storage infrastructure. We lease tanker railcars and have contracted with storage depots near our customers and at our strategic locations for efficient delivery of our finished ethanol product. We have also hired a marketing and sales force, as well as logistical and other operational personnel to staff our distribution activities. The marketing, sales, distribution, transportation, storage or administrative efforts we have implemented may not achieve results comparable to those achieved by marketing through Aventine. Any failure to successfully execute these efforts would have a material adverse effect on our results of operations and financial position. Our financial results in 2007 also may be adversely affected by our need to establish inventory in storage locations to facilitate this transition.
Further, ethanol produced at our Linden, Albion and Bloomingburg facilities is or will be marketed by Cargill under agreements that remained in place after closing of the ASA Acquisition. We also compete with Cargill for sales of ethanol and distillers grains. Our direct marketing and sales efforts may be less efficient as a result of the marketing relationship we have with Cargill for a portion of our production.
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Operations at our new facilities and our additional planned facilities are subject to various uncertainties, which may cause them to not achieve results comparable to our Aurora and Fort Dodge facilities.
Test operations began at our Fort Dodge facility in September 2005. During this time, a failure occurred in a key piece of equipment. This failure, which has been remedied by installation of replacement equipment from a new supplier, delayed our startup process. In October 2005, we recommenced our startup activities at the plant and are now operating at full capacity. As new plants, our Linden and Albion facilities are subject, and our additional planned facilities will be subject, to various uncertainties as to their ability to produce ethanol and co-products as planned, including the potential for additional failures of key equipment. Due to these uncertainties, the results of our new facilities or our additional planned facilities may not be comparable to those of our Aurora, Fort Dodge and Charles City facilities.
The U.S. ethanol industry is highly dependent upon federal and state legislation and regulation and any changes in legislation or regulation could materially and adversely affect our results of operations and financial position.
The elimination or significant reduction in the blenders’ credit could have a material adverse effect on our results of operations and financial position. The cost of production of ethanol is made significantly more competitive with regular gasoline by federal tax incentives. Before January 1, 2005, the federal excise tax incentive program allowed gasoline distributors who blended ethanol with gasoline to receive a federal excise tax rate reduction for each blended gallon they sold. If the fuel was blended with 10% ethanol, the refiner/marketer paid $0.052 per gallon less tax, which equated to an incentive of $0.52 per gallon of ethanol. The $0.52 per gallon incentive for ethanol was reduced to $0.51 per gallon in 2005 and is scheduled to expire in 2010. The blenders’ credits could be eliminated or reduced at any time through an act of Congress and may not be renewed in 2010 or may be renewed on different terms. In addition, the blenders’ credits, as well as other federal and state programs benefiting ethanol (such as tariffs), generally are subject to U.S. government obligations under international trade agreements, including those under the World Trade Organization Agreement on Subsidies and Countervailing Measures, and might be the subject of challenges thereunder, in whole or in part. The elimination or significant reduction in the blenders’ credit or other programs benefiting ethanol may have a material adverse effect on our results of operations and financial position.
Ethanol can be imported into the U.S. duty-free from some countries, which may undermine the ethanol industry in the U.S. Imported ethanol is generally subject to a $0.54 per gallon tariff that was designed to offset the $0.51 per gallon ethanol incentive available under the federal excise tax incentive program for refineries that blend ethanol in their fuel. A special exemption from the tariff exists for ethanol imported from 24 countries in Central America and the Caribbean Islands, which is limited to a total of 7% of U.S. production per year. Imports from the exempted countries may increase as a result of new plants under development. Since production costs for ethanol in these countries are estimated to be significantly less than what they are in the U.S., the duty-free import of ethanol through the countries exempted from the tariff may negatively affect the demand for domestic ethanol and the price at which we sell our ethanol. Although the $0.54 per gallon tariff has been extended through December 31, 2008, bills were previously introduced in both the U.S. House of Representatives and U.S. Senate to repeal the tariff. We do not know the extent to which the volume of imports would increase or the effect on U.S. prices for ethanol if the tariff is not renewed beyond its current expiration. Any changes in the tariff or exemption from the tariff could have a material adverse effect on our results of operations and financial position. In addition, the North America Free Trade Agreement, or NAFTA, which entered into force on January 1, 1994, allows Canada and Mexico to export ethanol to the United States duty-free or at a reduced rate. Canada is exempt from duty under the current NAFTA guidelines, while Mexico’s duty rate is $0.10 per gallon.
The effect of the renewable fuel standard (“RFS”) program in the Energy Policy Act of 2005 (“Act”) is uncertain. The Act eliminated the mandated use of oxygenates and established minimum nationwide levels of renewable fuels (ethanol, biodiesel or any other liquid fuel produced from biomass or biogas) to be included in gasoline. The elimination of the oxygenate requirement for reformulated gasoline may result in a decline in
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ethanol consumption, which in turn could have a material adverse effect on our results of operations and financial condition. The legislation also included provisions for trading of credits for use of renewable fuels and authorized potential reductions in the RFS minimum by action of a governmental administrator.
The mandated minimum level of use of renewable fuels in the RFS is significantly below projected ethanol production levels. Excess production capacity in our industry would negatively affect our results of operations, financial position and cash flows. See “New plants under construction or decreases in the demand for ethanol may result in excess production capacity in our industry.”
Waivers of the RFS minimum levels of renewable fuels included in gasoline could have a material adverse affect on our results of operations. Under the Energy Policy Act of 2005, the U.S. Department of Energy, in consultation with the Secretary of Agriculture and the Secretary of Energy, may waive the renewable fuels mandate with respect to one or more states if the Administrator of the U.S. Environmental Protection Agency, or U.S. “EPA,” determines that implementing the requirements would severely harm the economy or the environment of a state, a region or the U.S., or that there is inadequate supply to meet the requirement. Any waiver of the RFS with respect to one or more states would adversely offset demand for ethanol and could have a material adverse effect on our results of operations and financial condition.
We may be adversely affected by environmental, health and safety laws, regulations and liabilities.
We are subject to various federal, state and local environmental laws and regulations, including those relating to the discharge of materials into the air, water and ground, the generation, storage, handling, use, transportation and disposal of hazardous materials, and the health and safety of our employees. In addition, some of these laws and regulations require our facilities to operate under permits that are subject to renewal or modification. These laws, regulations and permits can often require expensive pollution control equipment or operational changes to limit actual or potential impacts to the environment. A violation of these laws and regulations or permit conditions can result in substantial fines, natural resource damages, criminal sanctions, permit revocations and/or facility shutdowns. In addition, we have made, and expect to make, significant capital expenditures on an ongoing basis to comply with increasingly stringent environmental laws, regulations and permits.
We may be liable for the investigation and cleanup of environmental contamination at each of the properties that we own or operate and at off-site locations where we arrange for the disposal of hazardous substances. If these substances have been or are disposed of or released at sites that undergo investigation and/or remediation by regulatory agencies, we may be responsible under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, or CERCLA, or other environmental laws for all or part of the costs of investigation and/or remediation, and for damages to natural resources. We may also be subject to related claims by private parties alleging property damage and personal injury due to exposure to hazardous or other materials at or from those properties. Some of these matters may require us to expend significant amounts for investigation, cleanup or other costs.
In addition, new laws, new interpretations of existing laws, increased governmental enforcement of environmental laws or other developments could require us to make additional significant expenditures. Continued government and public emphasis on environmental issues can be expected to result in increased future investments for environmental controls at our production facilities. Present and future environmental laws and regulations (and interpretations thereof) applicable to our operations, more vigorous enforcement policies and discovery of currently unknown conditions may require substantial expenditures that could have a material adverse effect on our results of operations and financial position.
The hazards and risks associated with producing and transporting our products (such as fires, natural disasters, explosions, and abnormal pressures and blowouts) may also result in personal injury claims or damage to property and third parties. As protection against operating hazards, we maintain insurance coverage against
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some, but not all, potential losses. However, we could sustain losses for uninsurable or uninsured risks, or in amounts in excess of existing insurance coverage. Events that result in significant personal injury or damage to our property or third parties or other losses that are not fully covered by insurance could have a material adverse effect on our results of operations and financial position.
We are dependent upon our officers for management and direction, and the loss of any of these persons could adversely affect our operations and results.
We are dependent upon our officers for implementation of our expansion strategy and execution of our business plan. The loss of any of our officers could have a material adverse effect upon our results of operations and financial position. We do not have employment agreements with our officers or other key personnel. In addition, we do not maintain “key person” life insurance for any of our officers. The loss of any of our officers could delay or prevent the achievement of our business objectives.
Our competitive position, financial position and results of operations may be adversely affected by technological advances and our efforts to anticipate and employ such technological advances may prove unsuccessful.
The development and implementation of new technologies may result in a significant reduction in the costs of ethanol production. For instance, any technological advances in the efficiency or cost to produce ethanol from inexpensive, cellulosic sources such as wheat, oat or barley straw could have an adverse effect on our business, because our facilities are designed to produce ethanol from corn, which is, by comparison, a raw material with other high value uses. We do not predict when new technologies may become available, the rate of acceptance of new technologies by our competitors or the costs associated with new technologies. In addition, advances in the development of alternatives to ethanol could significantly reduce demand for or eliminate the need for ethanol.
We plan to invest over time on projects and companies engaged in research, development and commercialization of processes for conversion of cellulosic material to ethanol. These investments will be early- and mid-stage and highly speculative. The use of cost-effective and efficient cellulosic material in the production of ethanol is unproven. There is no assurance when, if ever, commercially viable technology will be developed. Nor can there be any assurance that we can identify suitable investment opportunities, that such development will be the product of any investment we make in this technology and that we will not lose our investments in whole or in part, or that if developed by others it will be available to producers such as us on commercially reasonable terms.
Any advances in technology which require significant unanticipated capital expenditures to remain competitive or which reduce demand or prices for ethanol would have a material adverse effect on our results of operations and financial position.
Our debt level could negatively impact our financial condition, results of operations and business prospects.
As of September 30, 2007, our total debt was $879.3 million (net of unaccreted discount of $3.1 million). Under agreements governing our debt, we may be able to incur a significant amount of additional debt from time to time, including drawing under our credit agreement with First National Bank of Omaha and our Senior Credit Facility. If we do so, the risks related to our high level of debt could increase. Specifically, our high level of debt could have important consequences to our shareholders, including the following:
• | requiring us to dedicate a substantial portion of our cash flow from operations to required payments on debt, thereby reducing the availability of cash flow for working capital, capital expenditures and other general business activities; |
• | limiting our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions and general corporate and other activities; |
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• | limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; |
• | increasing our vulnerability to both general and industry-specific adverse economic conditions; and |
• | placing us at a competitive disadvantage against less leveraged competitors. |
Some of our debt bears interest at variable rates and exposes us to interest rate risk. If interest rates increase, our debt service obligations with respect to the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income would decrease.
Risks Relating to This Offering and Ownership of Our Common Stock
Insiders control a significant portion of our common stock and their interests may differ from those of other shareholders.
As of November 5, 2007, our executive officers and directors as a group beneficially own approximately 38.7% of our outstanding common stock, including Donald L. Endres, our Chief Executive Officer, who beneficially owns approximately 35.4% of our outstanding common stock. The interests of these shareholders may not always coincide with our interests as a company or the interests of other shareholders. The sale or prospect of sale of a substantial number of the shares could have an adverse effect on the market price of our common stock.
Our common stock price has been volatile and you may lose all or part of your investment.
The market price of our common stock has fluctuated significantly since our initial public offering. Future fluctuations could be based on various factors in addition to those otherwise described in this report, including:
• | our operating performance and the performance of our competitors; |
• | the public’s reaction to our press releases, our other public announcements and our filings with the SEC; |
• | changes in earnings estimates or recommendations by research analysts who follow us or other companies in our industry; |
• | variations in general economic conditions; |
• | the registration rights granted by us with respect to shares of our common stock that were issued in connection with our acquisition of ASA Holdings; |
• | the number of shares that are publicly traded; |
• | actions of our existing shareholders, including sales of common stock by our directors and executive officers; |
• | the arrival or departure of key personnel; and |
• | other developments affecting us, our industry or our competitors. |
In addition, in recent years the stock market has experienced significant price and volume fluctuations. These fluctuations may be unrelated to the operating performance of particular companies. These broad market fluctuations may cause declines in the market price of our common stock. The price of our common stock could fluctuate based upon factors that have little or nothing to do with our company or its performance, and those fluctuations could materially reduce our common stock price.
The market price of our common stock may also experience volatility due to our proposed merger with US BioEnergy. See “Risk Factors Relating to the Merger” incorporated by reference into this prospectus from the Joint Proxy Statement/Prospectus of VeraSun and US BioEnergy dated , 2008.
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Provisions in our charter documents and South Dakota law may delay or prevent our acquisition by a third party.
Our articles of incorporation, as amended, our bylaws, as amended, and South Dakota law contain several provisions that may make it substantially more difficult for a third party to acquire control of us without the approval of our Board of Directors. These provisions include cumulative voting, a classified board, blank check preferred stock and the control share and business combination provisions of the South Dakota Domestic Public Corporation Takeover Act. These provisions may make it more difficult or expensive for a third party to acquire a majority of our outstanding common stock. These provisions also may delay, prevent or deter a merger, acquisition, tender offer, proxy contest or other transaction that might otherwise result in our shareholders receiving a premium over the market price for their common stock.
We have the ability to issue additional equity securities, which would lead to dilution of our issued and outstanding common stock.
The issuance of additional equity securities or securities convertible into or exercisable for equity securities would result in dilution of then-existing shareholders’ equity interests in us. We may issue shares to raise capital, as acquisition consideration, as employee incentives or compensation, and for other corporate purposes. Our Board of Directors has the authority to issue, without vote or action of shareholders, up to 250,000,000 shares of common stock and 100,000,000 shares of preferred stock, of which 92,889,902 shares of common stock were outstanding as of November 5, 2007. We expect to issue approximately shares of our common stock in connection with the Merger and conversion of US BioEnergy stock options and restricted stock awards into our stock options or stock awards, as applicable. These shares would represent a % increase in our outstanding shares as of November 5, 2007. We may issue preferred stock in one or more series, and the Board of Directors has the ability to fix the rights, preferences, privileges and restrictions of any such series. Any such series of preferred stock could contain dividend rights, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences or other rights superior to the rights of holders of our common stock.
Future sale of shares of our common stock in the public market could depress our stock price.
We cannot predict the effect, if any, that market sales of shares of common stock or the availability of shares of common stock for sale will have on the market price of our common stock prevailing from time to time. In particular, upon the effectiveness of this registration statement, the selling shareholders, who have advised us they hold in the aggregate beneficially 13,801,384 shares of our common stock at the date of this prospectus, may sell their securities in the public market through any means described in the section hereof entitled “Plan of Distribution.” The shares of our common stock held by the selling shareholders also includes 4,127,476 shares of our common stock subject to an escrow agreement, which will be released on August 18, 2008. We also intend to register for offer and sale under the Securities Act approximately shares of our common stock issuable in the proposed Merger with US BioEnergy. As a result, these shares will be eligible for resale in the public market following consummation of the Merger (anticipated to occur during the first quarter of 2008) without restriction, subject to certain Rule 144 restrictions applicable to affiliates, and subject to lock-up agreements with our principal shareholder and the principal shareholders of US BioEnergy for 180 days after the closing of the Merger. In addition, we have an effective S-8 registration statement under the Securities Act pursuant to which we have registered 10,000,000 shares of the common stock issuable under our 2003 Stock Incentive Plan and we have agreed to file an S-8 registration statement registering those shares of our common stock necessary for conversion of US BioEnergy stock options and restricted stock awards. As a result, shares issued under our 2003 Stock Incentive Plan covered by the S-8 registration statement, and shares that we intend to convert from the US BioEnergy stock plans, will be eligible for resale in the public market without restriction, subject to certain Rule 144 limitations applicable to affiliates. If our existing shareholders, and those who become shareholders as a result of the US BioEnergy Merger, sell substantial amounts of our common stock in the public market or if there is a perception that these sale may occur, the market price of our common stock could decline.
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We may be a United States real property holding corporation, in which case non-U.S. holders may be subject to U.S. federal income tax (including withholding tax) in connection with the disposition of our shares, and U.S. holders selling our shares may be required to certify as to their status in order to avoid withholding.
We believe that we have not been and are not currently a “United States real property holding corporation” within the meaning of the Internal Revenue Code of 1986, as amended, or the Code, and we do not expect to become a United States real property holding corporation.
A non-U.S. holder of our common stock not otherwise subject to U.S. federal income tax on gain from the sale or other disposition of our common stock may nevertheless be subject to U.S. federal income tax with respect to such sale or other disposition if we are, or have been, a United States real property holding corporation at any time within the five-year period preceding the disposition (or the non-U.S. holder’s holding period if shorter). Generally, we will be a United States real property holding corporation if the fair market value of our U.S. real property interests equals or exceeds 50% of the sum of the fair market values of our worldwide real property interests and other assets used or held for use in a trade or business, all as determined under applicable U.S. Treasury regulations.
Certain non-U.S. holders of our common stock may be eligible for an exception to the forgoing general rule if our common stock is regularly traded on an established securities market during the calendar year in which the sale or disposition occurs and the non-U.S. holder holds no more than 5% of our outstanding common stock, directly or indirectly, during the five-year period preceding the disposition (or the non-U.S. holder’s holding period if shorter) (the “5% exception”). If we are a United States real property holding corporation during the relevant time period, and the 5% exception does not apply, a seller of our common stock will generally be required to withhold tax at the rate of 10% on the sales price, unless the transferor furnishes an affidavit certifying that it is not a foreign person in the manner and form specified in the applicable U.S. Treasury regulations.
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Pending Merger with US BioEnergy
On November 29, 2007, we, Host Acquisition Corporation, a South Dakota corporation and our direct, wholly owned subsidiary (“Sub”), and US BioEnergy entered into an Agreement and Plan of Merger (the “Merger Agreement”) whereby Sub will merge with and into US BioEnergy, with US BioEnergy continuing as the surviving corporation following the Merger. Simultaneously with the execution of the Merger Agreement, (i) we and certain principal shareholders of US BioEnergy (the “US BioEnergy Principal Shareholders”) entered into a shareholders agreement (the “US BioEnergy Shareholders Agreement”), pursuant to which, among other things, the US BioEnergy Principal Shareholders agreed to vote certain of their shares of common stock of US BioEnergy (the “US BioEnergy Common Stock”) to approve the Merger and (ii) US BioEnergy and Donald L. Endres (the “VeraSun Principal Shareholder”) entered into a shareholders agreement (the “VeraSun Shareholders Agreement” and, together with the US BioEnergy Shareholders Agreement, the “Shareholders Agreements”) pursuant to which, among other things, the VeraSun Principal Shareholder agreed to vote to approve the issuance of shares of our common stock in the Merger.
US BioEnergy is one of the largest producers of ethanol in the United States. US BioEnergy owns and operates four ethanol plants with total ethanol production capacity of 310 MMGY and is constructing four additional ethanol plants with expected total ethanol production capacity of 440 MMGY. US BioEnergy is also implementing US Bio Process Technology™, its proprietary process improvement initiatives, which is designed to achieve increased production levels at its plants. US BioEnergy believes these improvements will position it to achieve total ethanol production capacity of 800 MMGY once fully implemented at each of its plants.
US BioEnergy’s primary products are ethanol and distillers grains, which it derives from corn. US BioEnergy sells its ethanol to Provista Renewable Fuels Marketing, LLC (Provista), its ethanol marketing joint venture. with CHS, Inc., which in turn resells to refining and marketing companies, such as BP North America, Inc., Chevron Texaco Products Company and Marathon Petroleum Company, LLC. US BioEnergy believes that Provista’s customers blend ethanol with gasoline in order to capture attractive economics relative to refining costs, to achieve higher octane levels for their products, to facilitate compliance with clean air regulations and to extend their processing capacities. US BioEnergy sells its distillers grains to livestock operators and marketing companies in the U.S. and internationally primarily to be used as an animal feed. US BioEnergy also markets distillers grains for, and provides facilities management and other services to, other ethanol producers.
Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, each issued and outstanding share of US BioEnergy Common Stock (other than shares owned by US BioEnergy, VeraSun and Sub) will be converted into the right to receive 0.81 fully paid and nonassessable shares of our common stock based on the exchange rate in the Merger Agreement. In addition, at the effective time of the Merger, each outstanding US BioEnergy stock option and restricted stock award issued under a US BioEnergy equity-based compensation plan will be converted into our stock option or restricted stock award, as applicable, in each case on the same terms and conditions as were applicable under such US BioEnergy equity-based compensation plan.
The Merger is subject to a number of customary closing conditions, including (i) the approval of the Merger by the shareholders of US BioEnergy, (ii) the approval of the issuance of our common stock in the Merger by our shareholders and (iii) clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. We expect closing is to occur in the first quarter of 2008.
We and US BioEnergy have made customary representations and warranties and covenants in the Merger Agreement, including, among others, covenants (i) to hold meetings of our respective shareholders to consider the approval of the transactions contemplated by the Merger Agreement and (ii) not to solicit alternative transactions or, subject to certain exceptions, enter into discussions concerning, or provide information in connection with, an alternative transaction.
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At the effective time of the Merger, our current Chief Executive Officer and President will continue to serve in such capacity while US BioEnergy’s current Chief Executive Officer and President will serve as our non-executive Chairman of the Board of Directors. Our Board of Directors will also consist of ten members, of which four will be selected by US BioEnergy and six will be selected by us.
Pursuant to the US BioEnergy Shareholders Agreement, the US BioEnergy Principal Shareholders agreed to, among other things, vote certain of their respective shares of US BioEnergy Common Stock (representing in the aggregate 33% of the US BioEnergy Common Stock at any time outstanding) in favor of the approval of the Merger Agreement, the Merger and each of the other transactions contemplated by the Merger Agreement and against any alternative transactions. Pursuant to the VeraSun Shareholders Agreement, the VeraSun Principal Shareholder agreed to, among other things, vote certain of his shares of our common stock (representing in the aggregate 19.9% of our stock at any time outstanding) in favor of the approval of the issuance of our common stock in the Merger, the Merger and each of the other transactions contemplated by the Merger Agreement and against any alternative transactions. Each of the shareholders subject to the Shareholders Agreements also agreed not to solicit alternative transactions and not to transfer the shares of US BioEnergy or our common stock to which the voting arrangements described above apply. In addition, for 180 days after the closing of the Merger (the “Lock-Up Period”), (i) the US BioEnergy Principal Shareholders also agreed not to sell the shares of our common stock received in the Merger in exchange for the shares of US BioEnergy Common Stock to which the voting arrangements described above apply and (ii) the VeraSun Principal Shareholder also agreed not to sell any shares of our common stock to which the voting arrangements described above apply, in each case subject to certain exceptions.
The Shareholders Agreements will terminate upon the earlier of the consummation of the Merger (other than the provision relating to the Lock-Up Period) and the termination of the Merger Agreement in accordance with its terms. If, however, the Merger Agreement is terminated (i) in circumstances where we or US BioEnergy, as applicable, is or may be obligated to pay a termination fee or (ii) as a result of a willful breach by us or US BioEnergy, as applicable, of any of its covenants or agreements contained in the Merger Agreement, then the VeraSun Shareholders Agreement, in the case of any of the foregoing circumstances with respect to us, or the US BioEnergy Shareholders Agreement, in the case of any of the foregoing circumstances with respect to US BioEnergy, will continue in effect for twelve months after the date of termination of the Merger Agreement. However, during any such twelve month period under the US BioEnergy Shareholders Agreement, the aggregate number of shares subject to such agreement will be reduced to 19.9% of the US BioEnergy Common Stock outstanding at such time.
The Merger Agreement contains certain termination rights for us and US BioEnergy, and further provides that if the Merger Agreement is terminated under certain circumstances, (i) we will be (or may in the future become) required to pay US BioEnergy a termination fee of $61,000,000 and (ii) US BioEnergy will be (or may in the future become) required to pay us a termination fee of $42,000,000.
For further information related to the Merger and business, financial, and management information relating to US BioEnergy and us, on a combined basis with US BioEnergy, see the Joint Proxy Statement of VeraSun and US BioEnergy and prospectus of VeraSun dated , 2008 filed with the SEC and incorporated by reference in this prospectus. See “Information Incorporated by Reference.”
ASA Acquisition
On August 17, 2007, we closed on a transaction with ASAlliances. Under a Unit Purchase Agreement, we purchased all of the equity interests in ASA Holdings from ASAlliances for an aggregate purchase price of approximately $675.2 million. Of this amount, we issued 13,801,384 shares of our common stock valued at $194.3 million and paid $250.0 million of cash to the seller at closing. Of the 13,801,384 shares issued to the selling shareholders, 4,127,476 shares are held in escrow until August 18, 2008. The balance of the purchase price consisted of $230.9 million of indebtedness owed by ASA Holdings under the Senior Credit Facility. We
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also agreed to register under applicable securities laws, within 180 days of the acquisition date, the shares issued in the transaction. This prospectus registers these shares.
ASA Holdings owns companies with three biorefineries and developmental rights to two sites. The three acquired facilities are each expected to operate at 110 million gallons per year and are located in Albion, Nebraska, Bloomingburg, Ohio, and Linden, Indiana. This transaction allowed the Company to expedite its expansion in the ethanol market as the plants were near completion. The Linden facility began operations in August 2007 and the Albion facility began startup operations in October 2007. The Bloomingburg facility is expected to start up by the end of first quarter 2008.
The three facilities are located on the western and eastern edges of the Corn Belt of the United States. Each facility was or is being constructed by Fagen under a design-build contract. Each facility is guaranteed by Fagen to produce at least 100 MMGY of ethanol, and we have obtained permits to produce up to 123 MMGY of ethanol at each of these facilities. Each facility is adjacent to grain sites owned and operated by Cargill and has limited grain storage facilities. Instead, grain storage is provided to the facility by Cargill as part of the corn supply agreement described below. In the event the corn supply agreement is terminated for any reason, we have the right to use the adjacent grain storage facilities under a 20-year lease agreement upon payment of lease payments equal to market value or 150 percent of market value, depending on the reason the corn supply agreement was terminated. Similarly, each facility utilizes private track owned by Cargill to access common carrier rail facilities. In the event the corn supply agreement is terminated for any reason, we have the continuing right to use Cargill’s track to access common carrier rail facilities at each facility.
We acquired the Linden, Albion and Bloomingburg facilities subject to long-term agreements with Cargill and certain of its affiliates, under which Cargill is responsible for supplying all corn and natural gas to the facilities, providing commodities risk management services, and marketing all of the ethanol and distillers grains produced at the facilities. Generally, these agreements have ten year terms from the date of the commencement of commercial operations at each facility, except the corn supply agreement which has a twenty year term, and provide for the purchase and sale of commodities and products between the parties at market prices, and the payment of specified fees to Cargill.
For information relating to the ASA Acquisition and financial information relating to ASAlliances, see our current reports on Form 8-K dated July 25, 2007 (only with respect to Items 1.01 and 9.01) and August 20, 2007 (only with respect to Items 2.01 and 9.01) and our current report on Form 8-K/A dated November 2, 2007 each filed with the SEC and incorporated by reference in this prospectus. See “Information Incorporated by Reference.”
The proceeds from the sale of the common stock covered by this prospectus will be received by the selling shareholders. We will not receive any proceeds from the sale by any selling shareholder of the shares of common stock offered by this prospectus.
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We are registering 13,801,384 shares of our common stock for resale by the selling shareholders identified below. The shares are being registered to permit public secondary trading of the shares, and the selling shareholders may offer the shares for resale from time to time. The selling shareholders acquired the shares on August 17, 2007 in a private placement in connection with the acquisition of ASA Holdings.
In accordance with the terms of the Unit Purchase Agreement for the ASA Acquisition, an aggregate of 4,127,476 shares of our common stock were issued in the name of the selling shareholders and delivered into an escrow subject to the terms of an Escrow Agreement dated August 17, 2007, by and among ASAlliances, ASA Holdings, the Securityholders party thereto, JPMorgan Chase Bank, N.A. and us (the “Escrow Agreement”). These shares are held in escrow until August 18, 2008 to secure the indemnification obligations under the Unit Purchase Agreement. These escrowed shares are registered under the registration statement of which this prospectus forms a part and accordingly are covered by this prospectus. However, the selling shareholders will not have the right to sell the escrowed shares until they are released pursuant to the terms of the Escrow Agreement.
The following table presents the number of outstanding shares of our common stock owned by the selling shareholders as of December 14, 2007. The percentage of common stock owned by the selling shareholders is calculated based on 92,889,902 shares outstanding on November 5, 2007. The table also presents the maximum number of shares proposed to be sold by the selling shareholders and the number of shares they will own after the sales.
Unless otherwise noted in a footnote to the table, each selling shareholder named below in the table has sole voting and investment power with respect to the shares of common stock set forth opposite such selling shareholder’s name.
Number of Shares of Common Stock Owned Prior to Offering(1) | Maximum Number of Shares of Common Stock to be Sold Pursuant to this Prospectus(1) | Shares of Common Stock Owned After Offering(2) | ||||||||||
Name of Selling Shareholder | Number | Percent | Number | Percent | Number | Percent | ||||||
American Capital Strategies Ltd. | 3,625,786 | 3.9 | 3,625,786 | 3.9 | — | — | ||||||
American Capital Equity I, LLC(3) | 1,760,383 | 1.9 | 1,760,383 | 1.9 | — | — | ||||||
American Capital Equity II, LP(4) | 481,319 | 0.5 | 481,319 | 0.5 | — | — | ||||||
ASAlliances Holdings, LP(5) | 2,086,767 | 2.2 | 2,086,767 | 2.2 | — | — | ||||||
Cargill Biofuels Investments, LLC(6) | 1,391,142 | 1.5 | 1,391,142 | 1.5 | — | — | ||||||
D. E. Shaw Synoptic Portfolios 5, L.L.C.(7) | 1,398,151 | 1.5 | 1,398,151 | 1.5 | — | — | ||||||
FDC Ethanol, LLC(8) | 1,657,387 | 1.8 | 745,255 | 0.8 | 912,132 | * | ||||||
Midwest First Financial, Inc. | 253,860 | 0.3 | 253,860 | 0.3 | — | — | ||||||
USRG ASA, LLC | 2,058,721 | 2.2 | 2,058,721 | 2.2 | — | — | ||||||
Total | 14,713,516 | 15.8 | 13,801,384 | 14.8 | 912,132 | * | ||||||
* | Less than 1%. |
(1) | Includes shares held in escrow as follows: American Capital Strategies, Ltd., 1,228,281 shares; American Capital Equity I, LLC, 526,464 shares; D.E. Shaw Synoptic Portfolios 5, L.L.C., 418,134 shares; USRG ASA, LLC, 615,686 shares; Midwest First Financial, Inc., 75,920 shares; FDC Ethanol, LLC, 222,878 shares; Cargill Biofuels Investments, LLC, 416,038 shares; and ASAlliances Holdings, LP, 624,075 shares. The selling shareholders have the right to vote the escrowed shares and to receive all cash dividends on the escrowed shares. Stock dividends or any other securities distributed in respect of or in exchange for any of the escrowed shares, whether by way of stock dividends, stock splits or otherwise, will be issued in the name of the escrow agent and held under the Escrow Agreement. |
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(2) | Assumes the sale of all shares offered hereby and no other transactions regarding the common stock entered into by the selling shareholders. |
(3) | The manager of American Capital Equity I, LLC is American Capital Equity Management, LLC. American Capital Equity Management, LLC and American Capital Strategies, Ltd. exercise voting and dispositive power over the shares. |
(4) | The general partner of American Capital Equity II, LP is American Capital Equity Management II, LLC. American Capital Equity Management II, LLC and American Capital Strategies, Ltd. exercise voting and dispositive power over the shares. |
(5) | The sole general partner of ASAlliances Holdings, LP is ASAH GP, LLC (“ASAH”). ASAH exercises voting and dispositive power over the shares. |
(6) | Cargill Biofuels Investments, LLC is a wholly-owned subsidiary of Cargill, Incorporated (“Cargill”). Cargill and its affiliate, Cargill Commodity Services Inc., have entered into various agreements with our subsidiaries ASA Albion, LLC, ASA Bloomingburg, LLC, and ASA Linden, LLC for the procurement of grain, corn risk management, natural gas procurement and risk management, and ethanol and distillers grains marketing. For additional information, see “Recent Developments—ASA Acquisition.” |
(7) | D. E. Shaw & Co., L.P., as investment adviser, has voting and investment control over the shares beneficially owned by D. E. Shaw Synoptic Portfolios 5, L.L.C. Julius Gaudio, Eric Wepsic, Maximilian Stone, Anne Dinning, and Lou Salkind, or their designees, exercise voting and investment control over the shares on D. E. Shaw & Co., L.P.’s behalf. |
(8) | Roland “Ron” Fagen and Diane K. Fagen exercise voting and dispositive power over the shares. Fagen, Inc. (“Fagen”), an affiliate of FDC Ethanol, LLC, designed, engineered and constructed our Aurora, SD, Fort Dodge, IA, Charles City, IA, Linden, IN and Albion, NE facilities. In addition, we have entered into construction contracts or other arrangements with Fagen to design, engineer and build our Hartley, IA, Welcome, MN, Reynolds, IN and Bloomingburg, OH facilities. |
The selling shareholders and any of their pledges, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on the New York Stock Exchange or otherwise, in the over-the-counter market or in private transactions through one or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters or broker-dealers, the selling shareholders will be responsible for underwriting discounts or commissions or agent’s commissions. Under the terms of the Escrow Agreement, 4,127,476 shares of our common stock issued in the name of the selling shareholders are held in escrow until August 18, 2008. These sales may be at fixed prices, prevailing market prices at the time of sale, prices related to the prevailing market prices, varying prices determined at the time of sale, or negotiated prices.
The selling shareholders may use any one of the following methods when selling shares:
• | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
• | block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell; |
• | a portion of the block as principal to facilitate the transaction; |
• | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
• | an exchange distribution in accordance with the rules of the applicable exchange; |
• | privately negotiated transactions; |
• | underwritten offerings; |
• | broker-dealers may agree with the selling shareholder to sell a specified number of such shares at a stipulated price per share; |
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• | a combination of any such methods of sale; and |
• | any other method permitted pursuant to applicable law. |
Broker-dealers engaged by the selling shareholders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling shareholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling shareholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.
The selling shareholders may from time to time pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time under this prospectus, or under an amendment to this prospectus amending the list of selling shareholders to include the pledge, transferee or other successors-in-interest as selling shareholders under this prospectus.
We have advised the selling shareholders that the anti-manipulation provisions of Regulation M under the Securities Exchange Act of 1934 may apply to sales of shares in the market and to the activities of the selling shareholders and its affiliates. In addition, we will make copies of this prospectus available to the selling shareholder and have informed them of the need for delivery of copies of this prospectus to purchasers on or prior to sales of the shares offered hereby. The expenses of registering the shares under the Securities Act of 1933, including registration and filing fees, printing expenses, administrative expenses and our legal fees, are being paid by us. We have agreed to use our reasonable best efforts to keep the registration statement of which this prospectus forms a part effective until the sooner of August 17, 2009 or such time as the selling shareholders have sold all of the shares of common stock held by the selling shareholders. We have agreed to indemnify the selling shareholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act of 1933, in accordance with a registration rights agreement among us and the selling shareholders. We may be indemnified by the selling shareholders against liabilities under the Securities Act that may arise from any written information furnished to us by the selling shareholders.
The selling shareholders may transfer their shares of common stock in ways not involving market makers or established trading markets, including directly by gift, distribution, or other transfer. The selling shareholders may also sell any shares of common stock that qualify for sale pursuant to Rule 144.
The selling shareholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act of 1933 in connection with such sales. The selling shareholders may indemnify any broker-dealers that participate in transactions involving the sale of the shares of common stock against certain liabilities, including liabilities that arise out of the Securities Act of 1933. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
We will receive no proceeds from the sale of shares under this registration statement.
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The validity of the shares of common stock offered by this prospectus and other legal matters concerning South Dakota corporate law will be passed upon for us by Cadwell Sanford Deibert & Garry LLP, Sioux Falls, South Dakota.
The consolidated financial statements of VeraSun Energy Corporation and its subsidiaries incorporated in this prospectus by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2006 have been audited by McGladrey & Pullen, LLP, an independent registered public accounting firm, as stated in their report, which is incorporated by reference herein and is included in reliance upon such report given on their authority as experts in accounting and auditing.
The consolidated financial statements of ASAlliances Biofuels, LLC and subsidiaries (a development-stage company) as of December 31, 2006 and 2005 and for the years then ended and for the period from December 21, 2004 (inception) to December 31, 2006, have been incorporated by reference herein in reliance upon the report of KPMG LLP, independent auditor, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). You may read and copy materials that we have filed with the SEC at the following SEC public reference room:
100 F. Street N.E.
Room 1580
Washington, D.C. 20549
Please call the SEC at 1-800-SEC-0330 for further information on the public reference room.
Our SEC filings are also available to the public on the SEC’s internet website athttp://www.sec.gov and on our website athttp://www.verasun.com. Information on our website is not incorporated into this prospectus and should not be relied upon in determining whether to make an investment in our common stock.
INFORMATION INCORPORATED BY REFERENCE
This prospectus “incorporates by reference” the information we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and information that we file later with the SEC will automatically update and supersede the information in this prospectus. We incorporate by reference the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended:
• | Our Annual Report on Form 10-K for the year ended December 31, 2006; |
• | Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2007, June 30, 2007 and September 30, 2007; |
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• | Our Current Reports on Form 8-K filed on March 13, 2007, May 8, 2007, May 17, 2007, July 3, 2007, July 25, 2007 (only with respect to Items 1.01 and 9.01), August 8, 2007, August 20, 2007 (only with respect to Items 2.01 and 9.01), August 31, 2007, September 20, 2007, October 2, 2007, November 2, 2007, November 29, 2007, December 3, 2007 and December 5, 2007; |
• | The description of our common stock contained in the Registration Statement on Form 8-A12B filed with the SEC on June 12, 2006, including any amendments or reports filed for the purpose of updating the description; and |
• | The Joint Proxy Statement of VeraSun and US BioEnergy and Prospectus of VeraSun, dated , 2008. |
You may request a copy of these filings at no cost, by writing or telephoning us at the following address:
VeraSun Energy Corporation
100 22nd Avenue
Brookings, SD 57006
(605) 696-7200
Attention: Secretary
You should rely only on the information incorporated by reference or presented in this prospectus. We have not authorized anyone else to provide you with different information. We are only offering these securities in states where the offer is permitted. You should not assume that the information in this prospectus is accurate as of any date other than the date on the cover page of the prospectus.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. | Other Expenses of Issuance and Distribution |
The following table sets forth fees and expenses payable by the registrant, other than underwriting discounts and commissions, in connection with the issuance and distribution of the securities being registered hereby. All amounts set forth below are estimates.
SEC registration fee | $ | 5,626.77 | |
Legal fees and expenses | * | ||
Accounting fees and expenses | * | ||
Printing fees and expenses | * | ||
Miscellaneous expenses | * | ||
Total | $ | * | |
* | To be provided by amendment. |
Item 15. | Indemnification of Directors and Officers |
Our Articles of Incorporation, as amended (the “Articles”), and Amended and Restated Bylaws, as amended (the “Bylaws”), require us to indemnify officers and directors to the fullest extent not prohibited by law. The right to and amount of indemnification ultimately may be subject to determination by a court that indemnification in the circumstances presented is consistent with public policy considerations and other provisions of law. Our Articles require indemnification at least to the extent that indemnification is authorized by the South Dakota Business Corporation Act (the “SDBCA”). The indemnification provisions of the SDBCA are summarized as follows:
(a) | The SDBCA permits us to indemnify an officer or director who is a party to a proceeding by reason of being an officer or director against liability incurred in the proceeding if the officer or director: |
(1) | acted in good faith; |
(2) | reasonably believed: |
(i) | in the case of conduct in an official capacity, that the conduct was in our best interests; and |
(ii) | in all other cases, that the conduct was at least not opposed to our best interests; and |
(3) | in the case of any criminal proceeding, had no reasonable cause to believe the conduct was unlawful. |
The termination of a proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, is not, of itself, determinative that the person did not meet the relevant standard of conduct.
(b) | The SDBCA further permits us to indemnify an officer or director against liability to any person for any action taken, or any failure to take any action, as a director or officer, except liability for: |
(1) | the amount of a financial benefit received by a director to which the director is not entitled; |
(2) | an intentional infliction of harm on us or our shareholders; |
(3) | an unlawful distribution; or |
(4) | an intentional violation of criminal law. |
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(c) | The SDBCA does not permit us to indemnify an officer or director: |
(1) | in connection with a proceeding by or in the right of the Company, except for reasonable expenses incurred in connection with the proceeding if it is determined that the officer or director has met the relevant standard of conduct, discussed in (a) above; or |
(2) | in connection with any proceeding with respect to conduct for which the officer or director was adjudged liable on the basis that the officer or director received a financial benefit to which the officer or director was not entitled, whether or not involving action in his or her official capacity. |
(d) | Under the SDBCA, we may pay for or reimburse the reasonable expenses incurred in defending a proceeding in advance of the final disposition thereof if the officer or director receiving the advance furnishes: |
(1) | a written affirmation of the officer’s or director’s good faith belief that he or she has met the relevant standard of conduct, and |
(2) | a written undertaking to repay the advance if it is ultimately determined that person was not entitled to indemnification or did not meet the standard of conduct. |
(e) | Under the SDBCA, we may not indemnify an officer or director in respect of a proceeding described in (a) or (b) above unless it is determined that indemnification is permissible because the person has met the relevant standard of conduct by any one of the following: |
(1) | the board of directors, by a majority vote of all the disinterested directors, a majority of whom shall constitute a quorum for such purpose; |
(2) | by a majority of the members of a committee of two or more disinterested directors that is appointed by a majority of the disinterested directors; |
(3) | by special legal counsel: |
(i) | selected in the manner prescribed by (1) or (2) above; or |
(ii) | if there are fewer than two disinterested directors, selected by the board of directors, in which selection directors who do not qualify as disinterested directors may participate; or |
(4) | by the shareholders, but shares owned by or voted under the control of a director who at the time does not qualify as a disinterested director may not be voted. |
Authorization of the indemnification shall be made in the same manner as the determination that indemnification is permissible. However, if there are fewer than two disinterested directors or if the determination is made by special legal counsel, authorization of indemnification shall be made by those entitled under subsection (3)(ii) to select special legal counsel. Indemnification can also be ordered by a court if the court determines that indemnification is fair in view of all of the relevant circumstances. Notwithstanding the foregoing, every person who has been wholly successful, on the merits or otherwise, in defense of a proceeding described in (a) or (b) above is entitled to be indemnified as a matter of right against reasonable expenses incurred in connection with the proceeding.
Our Articles also contain provisions that limit the liability of our directors for money damages to the fullest extent permitted by South Dakota law. Consequently, our directors will not be personally liable to us or our shareholders for money damages for any action taken, or the failure to take any action, as a director, except liability for:
• | the amount of a financial benefit received by a director to which the director is not entitled; |
• | an intentional infliction of harm on the corporation or the shareholders; |
• | an unlawful distribution; or |
• | an intentional violation of criminal law. |
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We also have directors’ and officers’ liability insurance coverage which insures our directors and officers against specific liabilities.
Item 16. | Exhibits |
2.1 | Unit Purchase Agreement among VeraSun Energy Corporation, ASA OpCo Holdings, LLC, ASAlliances Biofuels, LLC and the Securityholders named therein (incorporated by reference to Exhibit 2.1 to VeraSun Energy Corporation’s current report on Form 8-K filed on July 25, 2007). | |
2.2 | Agreement and Plan of Merger, dated as of November 29, 2007, among VeraSun Energy Corporation, Host Acquisition Corporation and US BioEnergy Corporation (incorporated by reference to Exhibit 2.1 to VeraSun Energy Corporation’s current report on Form 8-K filed on December 5, 2007). | |
3.1 | Articles of Incorporation, as amended, of VeraSun Energy Corporation.* | |
3.2 | Amended and Restated Bylaws of VeraSun Energy Corporation (incorporated by reference to Exhibit 3.1 to VeraSun Energy Corporation’s current report on Form 8-K filed on May 17, 2007). | |
4.1 | Indenture, dated as of December 21, 2005, between VeraSun Energy Corporation, as Issuer, VeraSun Aurora Corporation, VeraSun Fort Dodge, LLC, VeraSun Charles City, LLC and VeraSun Marketing, LLC, as Subsidiary Guarantors, and Wells Fargo, N.A., as Trustee.* | |
4.2 | Registration Rights Agreement, dated as of December 21, 2005, by and among VeraSun Energy Corporation, VeraSun Aurora Corporation, VeraSun Fort Dodge, LLC, VeraSun Charles City, LLC, VeraSun Marketing LLC, Lehman Brothers Inc. and Morgan Stanley & Co. Incorporated.* | |
4.3 | First Supplemental Indenture, dated May 4, 2006, between VeraSun Energy Corporation, as Issuer, VeraSun Aurora Corporation, VeraSun Fort Dodge, LLC, VeraSun Charles City, LLC, VeraSun Marketing, LLC and VeraSun Welcome, LLC, as Subsidiary Guarantors, and Wells Fargo, N.A., as Trustee.* | |
4.4 | Second Supplemental Indenture, dated August 21, 2006, between VeraSun Energy Corporation, as Issuer, VeraSun Aurora Corporation, VeraSun Fort Dodge, LLC, VeraSun Charles City, LLC, VeraSun Hartley, LLC, VeraSun Marketing, LLC, and VeraSun Welcome, LLC, as Subsidiary Guarantors, and Wells Fargo, N.A., as Trustee (incorporated by reference to Exhibit 4.5 to VeraSun Energy Corporation’s quarterly report on form 10-Q for the period ending September 30, 2006). | |
4.5 | Third Supplemental Indenture, dated February 9, 2007, between VeraSun Energy Corporation, as Issuer, VeraSun Aurora Corporation, VeraSun Fort Dodge, LLC, VeraSun Charles City, LLC, VeraSun Hartley, LLC, VeraSun Marketing, LLC, VeraSun Welcome, LLC, VeraSun Granite City, LLC, and VeraSun Reynolds, LLC, as Subsidiary Guarantors, and Wells Fargo, N.A., as Trustee (incorporated by reference to Exhibit 4.4 to VeraSun Energy Corporation’s annual report on form 10-K for the period ending December 30, 2006). | |
4.6 | Fourth Supplemental Indenture, dated May 17, 2007, between VeraSun Energy Corporation as Issuer, VeraSun Aurora Corporation, VeraSun Fort Dodge, LLC, VeraSun Charles City, LLC, VeraSun Hartley, LLC, VeraSun Marketing, LLC, VeraSun Welcome, LLC, VeraSun Granite City, LLC, VeraSun Reynolds, LLC, and VeraSun Biodiesel, LLC, as subsidiary Guarantors, and Wells Fargo, N.A., as Trustee (incorporated by reference to Exhibit 4.2 to VeraSun Energy Corporation’s current report on Form 8-K filed on May 17, 2007). | |
4.7 | Indenture, dated as of May 16, 2007, between VeraSun Energy Corporation as Issuer, VeraSun Aurora Corporation, VeraSun Fort Dodge, LLC, VeraSun Charles City, LLC, VeraSun Hartley, LLC, VeraSun Marketing, LLC, VeraSun Welcome, LLC, VeraSun Granite City, LLC, VeraSun Reynolds, LLC, and VeraSun Biodiesel, LLC, as subsidiary Guarantors, and Wells Fargo, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to VeraSun Energy Corporation’s current report on Form 8-K filed on May 17, 2007). |
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4.8 | Registration Rights Agreement, dated as of May 16, 2007, between VeraSun Energy Corporation, VeraSun Aurora Corporation, VeraSun Fort Dodge, LLC, VeraSun Charles City, LLC, VeraSun Hartley, LLC, VeraSun Marketing, LLC, VeraSun Welcome, LLC, VeraSun Granite City, LLC, VeraSun Reynolds, LLC, VeraSun Biodiesel, LLC, Lehman Brothers Inc., Morgan Stanley & Co. Incorporated and UBS Securities LLC (incorporated by reference to Exhibit 4.3 to VeraSun Energy Corporation’s current report on Form 8-K filed on May 17, 2007). | |
4.9 | Registration Rights Agreement, dated as of August 17, 2007, among VeraSun Energy Corporation and the Holders of Registrable Securities named therein (incorporated by reference to Exhibit 4.9 to VeraSun Energy Corporation’s quarterly report on Form 10-Q for the period ending September 30, 2007). | |
5.1 | Opinion of Cadwell Sanford Deibert & Garry LLP. | |
23.1 | Consent of McGladrey & Pullen, LLP. | |
23.2 | Consent of KPMG LLP. | |
23.3 | Consent of Cadwell Sanford Deibert & Garry LLP (included in Exhibit 5.1). | |
24.1 | Powers of Attorney (included on signature page). |
* | Incorporated by reference to VeraSun Energy Corporation’s Registration Statement on Form S-1, as amended (file number 333-132861). |
Item 17. | Undertakings |
(a) | The undersigned registrant hereby undertakes: |
(1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(i) | To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
(ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
(iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
provided, however, that paragraphs (i), (ii) and (iii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Securities and Exchange Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
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(2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof. |
(3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
(4) | That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: |
(i) | Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and |
(ii) | Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof.Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date. |
(b) | The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report, pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof. |
(c) | Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Exchange Act and will be governed by the final adjudication of such issue. |
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all the requirement for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Brookings, State of South Dakota, on December 14, 2007.
VERASUN ENERGY CORPORATION | ||
By: | /s/ DONALD L. ENDRES | |
Donald L. Endres | ||
Chief Executive Officer |
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons on December 14, 2007 in the capacities indicated.
POWERS OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints each of Donald L. Endres and Danny C. Herron his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any amendments (whether pre-effective or post-effective) to this Registration Statement and any registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same with all exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, granting unto each of said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents, or their substitute or substitutes, may do or cause to be done by virtue hereof.
Signature | Title | |
/s/ DONALD L. ENDRES Donald L. Endres | Chief Executive Officer, President and Director (Principal Executive Officer) | |
/s/ DANNY C. HERRON Danny C. Herron | Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | |
/s/ D. DUANE GILLIAM D. Duane Gilliam | Director | |
/s/ T. JACK HUGGINS III T. Jack Huggins III | Director | |
/s/ STEVEN T. KIRBY Steven T. Kirby | Director | |
/s/ PAUL A. SCHOCK Paul A. Schock | Director |
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EXHIBIT INDEX
2.1 | Unit Purchase Agreement among VeraSun Energy Corporation, ASA OpCo Holdings, LLC, ASAlliances Biofuels, LLC and the Securityholders named therein (incorporated by reference to Exhibit 2.1 to VeraSun Energy Corporation’s current report on Form 8-K filed on July 25, 2007). | |
2.2 | Agreement and Plan of Merger, dated as of November 29, 2007, among VeraSun Energy Corporation, Host Acquisition Corporation and US BioEnergy Corporation (incorporated by reference to Exhibit 2.1 to VeraSun Energy Corporation’s current report on Form 8-K filed on December 5, 2007). | |
3.1 | Articles of Incorporation, as amended, of VeraSun Energy Corporation.* | |
3.2 | Amended and Restated Bylaws of VeraSun Energy Corporation (incorporated by reference to Exhibit 3.1 to VeraSun Energy Corporation’s current report on Form 8-K filed on May 17, 2007). | |
4.1 | Indenture, dated as of December 21, 2005, between VeraSun Energy Corporation, as Issuer, VeraSun Aurora Corporation, VeraSun Fort Dodge, LLC, VeraSun Charles City, LLC and VeraSun Marketing, LLC, as Subsidiary Guarantors, and Wells Fargo, N.A., as Trustee.* | |
4.2 | Registration Rights Agreement, dated as of December 21, 2005, by and among VeraSun Energy Corporation, VeraSun Aurora Corporation, VeraSun Fort Dodge, LLC, VeraSun Charles City, LLC, VeraSun Marketing LLC, Lehman Brothers Inc. and Morgan Stanley & Co. Incorporated.* | |
4.3 | First Supplemental Indenture, dated May 4, 2006, between VeraSun Energy Corporation, as Issuer, VeraSun Aurora Corporation, VeraSun Fort Dodge, LLC, VeraSun Charles City, LLC, VeraSun Marketing, LLC and VeraSun Welcome, LLC, as Subsidiary Guarantors, and Wells Fargo, N.A., as Trustee.* | |
4.4 | Second Supplemental Indenture, dated August 21, 2006, between VeraSun Energy Corporation, as Issuer, VeraSun Aurora Corporation, VeraSun Fort Dodge, LLC, VeraSun Charles City, LLC, VeraSun Hartley, LLC, VeraSun Marketing, LLC, and VeraSun Welcome, LLC, as Subsidiary Guarantors, and Wells Fargo, N.A., as Trustee (incorporated by reference to Exhibit 4.5 to VeraSun Energy Corporation’s quarterly report on form 10-Q for the period ending September 30, 2006). | |
4.5 | Third Supplemental Indenture, dated February 9, 2007, between VeraSun Energy Corporation, as Issuer, VeraSun Aurora Corporation, VeraSun Fort Dodge, LLC, VeraSun Charles City, LLC, VeraSun Hartley, LLC, VeraSun Marketing, LLC, VeraSun Welcome, LLC, VeraSun Granite City, LLC, and VeraSun Reynolds, LLC, as Subsidiary Guarantors, and Wells Fargo, N.A., as Trustee (incorporated by reference to Exhibit 4.4 to VeraSun Energy Corporation’s annual report on form 10-K for the period ending December 30, 2006). | |
4.6 | Fourth Supplemental Indenture, dated May 17, 2007, between VeraSun Energy Corporation as Issuer, VeraSun Aurora Corporation, VeraSun Fort Dodge, LLC, VeraSun Charles City, LLC, VeraSun Hartley, LLC, VeraSun Marketing, LLC, VeraSun Welcome, LLC, VeraSun Granite City, LLC, VeraSun Reynolds, LLC, and VeraSun Biodiesel, LLC, as subsidiary Guarantors, and Wells Fargo, N.A., as Trustee (incorporated by reference to Exhibit 4.2 to VeraSun Energy Corporation’s current report on Form 8-K filed on May 17, 2007). | |
4.7 | Indenture, dated as of May 16, 2007, between VeraSun Energy Corporation as Issuer, VeraSun Aurora Corporation, VeraSun Fort Dodge, LLC, VeraSun Charles City, LLC, VeraSun Hartley, LLC, VeraSun Marketing, LLC, VeraSun Welcome, LLC, VeraSun Granite City, LLC, VeraSun Reynolds, LLC, and VeraSun Biodiesel, LLC, as subsidiary Guarantors, and Wells Fargo, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to VeraSun Energy Corporation’s current report on Form 8-K filed on May 17, 2007). |
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4.8 | Registration Rights Agreement, dated as of May 16, 2007, between VeraSun Energy Corporation, VeraSun Aurora Corporation, VeraSun Fort Dodge, LLC, VeraSun Charles City, LLC, VeraSun Hartley, LLC, VeraSun Marketing, LLC, VeraSun Welcome, LLC, VeraSun Granite City, LLC, VeraSun Reynolds, LLC, VeraSun Biodiesel, LLC, Lehman Brothers Inc., Morgan Stanley & Co. Incorporated and UBS Securities LLC (incorporated by reference to Exhibit 4.3 to VeraSun Energy Corporation’s current report on Form 8-K filed on May 17, 2007). | |
4.9 | Registration Rights Agreement, dated as of August 17, 2007, among VeraSun Energy Corporation and the Holders of Registrable Securities named therein (incorporated by reference to Exhibit 4.9 to VeraSun Energy Corporation’s quarterly report on Form 10-Q for the period ending September 30, 2007). | |
5.1 | Opinion of Cadwell Sanford Deibert & Garry LLP. | |
23.1 | Consent of McGladrey & Pullen, LLP. | |
23.2 | Consent of KPMG LLP. | |
23.3 | Consent of Cadwell Sanford Deibert & Garry LLP (included in Exhibit 5.1). | |
24.1 | Powers of Attorney (included on signature page). |
* | Incorporated by reference to VeraSun Energy Corporation’s Registration Statement on Form S-1, as amended (file number 333-132861). |