VeraSun Energy Corporation fka VSUNQ

[Picassa]

VSE management was rated "to be sharp in a difficult operating environment" because they had overbought corn and decided to sell the surplus at a high price. The very next quarter, they stand to loose 3-5X what they had earned before. Does it not feel like betting at a casino?

Like you, I had judged their 'operating' skills in merging two companies, building bulk supply to be able to optimize distribution thru unit trains, and becoming efficient with low volume production (355 million gallons per quarter).

Hopefully, they will step away from the casino table, rather than raising the ante by more bets- by their own filings, 4Q will also be similar impacted.

It will take sometime to work thru this as they have just added $.70/gallon to the cost of their plants( $100M lost over 1.4B gallon production). At 10% interest, this is a 7c cost to every gallon of ethanol that they sell until they can repay this debt.

I think that they have just made themselves a take-over candidate. May be someone will value their plants at $2.50 per gallon? ADM, or an oil company like BP to the rescue?