Say hello to our new corporate neighbor, Valero Energy Corporation. They just bought out bankrupt ethanol maker VeraSun.
"Investing in Excellence: Focused on the Future" toots their homepage slogan. Evidently that focus on the future doesn't recognize any excellence in the contracts VeraSun had with local farmers: San Antonio-based Valero says it won't honor the contracts VeraSun had with local farmers to pay prices negotiated when the corn market was a little better before VeraSun's bankruptcy. "We bought hardware, not contracts," says a Valero spokesperson. Clever devils.
Valero does at least promise to run the Aurora ethanol plant at full capacity. But farmers who thought they had their books balanced for the year will have the pleasure of renegotiating with a new batch of corporate sharks from Texas.
Forgive me if I don't send a basket of fruit to welcome Valero to town.
The farmers could have no one to buy their corn if Valero didn't step in...
ReplyDeleteIf any farmer thought they were going to get those prices after Verasun filed for chapter 11 they were living in a dream-world. I know it's terrible and it would have been nice if Valero would have honored them, but they didn't need to. I will say that they should have for a PR standpoint. They would have gotten a lot of great press had they said "yeah, we're going to honor them." But here is the deal as well, what about all of the stock? Valero didn't buy the company, just the plants. This means that they get all of the plants but don't have to pay for the stock of the company, which means people are going to be out a lot of money...so it doesn't surprise me that they also didn't want to honor the contracts...
ReplyDeleteCleverer. For Valero its win-win-win. They pay about $477 million for about 440 million gallons per year of production. The petroleum blenders' tax credit of $0.45 per gallon then gives Valero a $198 million dollar per year tax credit. So the tax credits alone pay for plants in a little over two years. Plus they receive an unimpeded supply of oxidizing agent.
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