US ethanol maker VeraSun's value soars to $2.4 billion on IPO

New York (Platts)--14Jun2006

Shares of newly public South Dakota ethanol maker VeraSun Energy hovered
around $30 at mid-day Wednesday in their first day of trading on the New York
Stock Exchange, up 30% from their IPO price of $23.

That price values VeraSun, with 230 million gal/year of ethanol capacity
at two plants, at more than $2.4 billion including $208 million of long-term
debt. It plans a third plant by August 2007 and a total of five facilities by
early 2008 making up to 560 million gal/year.

Underwriters led by Morgan Stanley and Lehman Brothers had initially
estimated an offering price of $18-$20/share but boosted the pricing in
recent weeks on strong buyer demand. VeraSun sold 11 million new shares and
existing holders led by private equity group Bluestem Funds sold 7.25 million
shares with another 2.74 million shares optioned to the underwriters at the
offering price.

After the offering, CEO Donald Endres owns 41.6% of VeraSun. Bluestem,
headed by former South Dakota Lt. Governor Steve Kirby, owns 19.9%. Eos Funds
has 7.7%.

VeraSun bills itself at the largest US "pure play" ethanol maker,
although it ranks behind agribusiness giant Archer Daniels Midland at more
than 1 billion gal/year, and is the first of several pending ethanol IPOs to
come to market. ADM shares were up about 1% at mid-day to $38.58 and Pacific
Ethanol, which plans a small 35 million gal/year plant at Madera, California,
jumped 8% to $21.76/share but remains down 50% from its peak in early May.

Other ethanol IPOs in the wings include third-ranked producer Hawkeye
Renewables (200 million gal/year) and fourth-ranked Aventine Renewable Energy
Holdings (150 million gal/year).

--James Norman; jim_norman@platts.com

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