VSE priced at $23; begins trading today.
VeraSun Set for Wall Street Debut
Wednesday June 14, 9:24 am ET
By Dirk Lammers, AP Business Writer
Ethanol Producer VeraSun Energy Set for Wall Street Debut
SIOUX FALLS, S.D. (AP) -- VeraSun Energy Corp., the nation's second largest ethanol producer, is set to lead the renewable fuels charge onto Wall Street after the company priced shares in its initial public offering of stock Wednesday at $23 apiece, a dollar or two above the expected range.
Brookings-based VeraSun will use the estimated $419.75 million raised from the sale of 18.25 million shares and other cash to build two more corn-based ethanol plants and increase its presence in the Upper Midwest.
Two other ethanol companies -- Aventine Renewable Energy Holdings Inc., of Pekin, Ill., and Hawkeye Holdings Inc., of Iowa Falls, Iowa -- also are planning to go public during a time when many politicians are saying the U.S. needs to cut its dependence on foreign oil.
VeraSun's IPO shares represent a 24 percent stake in the company. The shares will trade on the New York Stock Exchange under the symbol VSE. VeraSun's 74.7 million outstanding shares at the set price would give the company a total market capitalization of more than $1.7 billion. The majority of the offered shares, 11 million, come from the company.
The rest are from current investors, including 5.6 million shares from investment funds managed by Bluestem Capital Company of Sioux Falls. The underwriters also have the option to buy an additional 2.74 million shares from Bluestem's funds to cover over-allotments.
VeraSun, which announced its intent to go public in March, operates ethanol plants near Aurora and Fort Dodge, Iowa, producing about 230 million gallons of the renewable fuel each year.
The company has broken ground on a third plant in Charles City, Iowa, and is planning to build facilities in northwestern Iowa and near Welcome, Minn. The goal is to boost annual production to 560 million gallons by the end of the first quarter of 2008, the company said in recent filings with the Securities and Exchange Commission.
VeraSun reported a jump in profits during the first quarter of 2006 to $13.6 million, up from $1.7 million in the first quarter of 2005. Revenues more than doubled during that period from $45 million to $111 million.
The company reported 2005 net income of $253,000 and revenue of $236 million, compared to profits of $14.8 million and revenue of $194 million during 2004.
VeraSun had initially expected to sell 17.25 million shares at $18 to $20 per share. The company increased those numbers on Friday to 18.25 million shares at $21 to $22 a share before bumping them again before the offering.
Donald L. Endres, VeraSun's chief executive officer and director since 2001, is the company's largest single holder with 33.5 million shares, options and warrants, most of which is common stock. Although he is not selling any of his shares for the IPO, his interest in the company will drop from 51.7 percent to 43.4 percent after the offering, according to SEC documents.
Agricultural giant Archer Daniels Midland Co., of Decatur, Ill., produces the most ethanol, but renewable fuels are a relatively small part of that company's portfolio.
Aventine has been the main buyer and marketer of VeraSun's ethanol, but the two companies will end that relationship next year as Aventine prepares for its own IPO. Aventine in SEC filings said it plans to sell 7.75 million shares at $37 and $41 per share for its IPO.
Hawkeye Holdings announced last week that it would like to raise $350 million in its IPO.
VeraSun in its initial filing said the ethanol industry has enjoyed substantial growth over the past few years thanks to attractive performance characteristics, cheaper production costs compared to gasoline and strong legislative and government policy support.
It also cites several risk factors, including the industry's high sensitivity to corn prices, and a gross margin dependent principally on the spread between ethanol and corn prices.
VeraSun recently has signed partnerships with two major U.S. auto companies.
The company is working with Ford Motor Co. on converting existing fuel pumps to E85, an alternative fuel made from a blend of 85 percent ethanol and 15 percent gasoline. VeraSun is also collaborating with General Motors to add 26 ethanol fuel stations in the Chicago area.
biz.yahoo.com |
