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SAN ANTONIO -- Valero Energy Corp. has finalized the purchase of six of the seven ethanol plants it is buying from VeraSun Energy Corp.
The petroleum marketer bid $477 million for the plants, which were sold by the bankruptcy court overseeing the assets' auction in mid-March. Plants in Aurora, S.D. and Charles City, Fort Dodge and Hartley, Iowa, are operational under the Valero name, Bill Day, a Valero spokesperson, told the Associated Press. Plants in Albert City, Iowa, and Welcome, Minn. are not yet back online.
Valero is still working to finalize the purchase of VeraSun's Albion, Neb. plant.
Together, the plants have an annual production capacity of 780 million gallons, Valero noted in a statement. The purchase price of $477 million represented approximately 30 percent of the plants’ replacement cost. The purchase price excludes working capital and inventory currently estimated at approximately $75 million. Credit Suisse advised Valero on the transaction.
As North America’s largest petroleum refining and marketing company, Valero is a leading buyer of ethanol for blending in its gasoline, and its purchase of the plants will give Valero a dedicated supply of ethanol, the AP reported.
The company also purchased a site under development in Reynolds, Ind.
"These are high-quality, relatively new assets in good locations for buying feedstocks," said Valero Chairman and CEO Bill Klesse. "We expect increases in the Renewable Fuels Standard to continue. We are also pleased to have such quality people join Valero."
This marks Valero’s initial entry into ethanol production, but it has made investments in other alternative energy companies in recent months. Valero completed the first phase of a wind farm near its McKee Refinery in the Texas Panhandle that when complete will generate 50 megawatts of electricity.
In 2008, Valero established an Alternative Energy and Project Development Group to explore opportunities in alternative and renewable energy sources.
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