Mar. 19--JANESVILLE -- The never-opened Janesville ethanol plant is now in the hands of AgStar and other lenders who funded construction of that and other plants that fell into bankruptcy. The plants will remain idled for an estimated two months while they are sold to new buyers.

Several plants owned by VeraSun, which filed for Chapter 11, were auctioned Tuesday. A Delaware bankruptcy court gave approval of the sales Wednesday.

A group of lenders led by Mankato-based AgStar submitted what are called credit bids for several plants -- effectively bidding the amount they had loaned for the plants.

The Janesville plant, which was completed last year and mothballed before it opened, is capable of producing 100 million gallons a year. AgStar's credit bid for the plant was $55 million.

AgStar lending groups' credit bid of $324 million for six of the seven VeraSun Energy plants they financed. The remaining plant in Albert City, Iowa, was

bought by Valero Energy Corp. for $72 million.

Along with the Janesville plant, the AgStar group got the biorefineries in Central City, Neb.; Ord, Neb.; Dyersville, Iowa; Hankinson, N.D.; and Woodbury, Mich.

The six plants are capable of producing 470 million gallons of ethanol annually. Paul DeBriyn, president and CEO of AgStar, said the purchase protects AgStar stockholders and fellow creditors in the lending group.

" That's what this credit bid accomplishes. Basically, we've taken the necessary steps to ensure these plants will be sold for fair market value. These facilities, and the people working at them, are highly valued assets," DeBriyn said.

He said they received ample interest in the plants from potential buyers. "Even during the auction process, we were fielding inquiries from companies interested in purchasing one or more of these six plants. Ethanol has experienced recent volatility but remains a viable industry.

"Our goal is to have these plants sold as quickly as possible."

Valero Energy Corp., a traditional oil refiner, will acquire seven ethanol plants and one development site from VeraSun after a successful auction bid of $477 million.

Valero's bid is for plants in Welcome, Minn.; Aurora, S. D.; Charles City, Fort Dodge, and Hartley, Iowa; Albion, Neb.; and a development site in Reynolds, Ind.

Valero has said previously it would group the plants under a subsidiary, Valero Renewable Fuels, and use staff already in place.

Agribusiness giant Archer Daniels Midland Co. participated in the process but did not acquire any assets, ADM spokesman Roman Blahoski told the Argus Leader newspaper of Sioux Falls.

Dougherty Funding LLC submitted a credit bid of $93 million for a plant in Marion, S.D., and a group of lenders led by West LB AG successfully bid $ 99 million for plants in Bloomingburg, Ohio and Linden, Ind., obtained in its purchase of Dallas- based ASAlliances Biofuels.

The ethanol industry has been hammered during the past year by volatile commodities and shrinking profit margins.

Those market conditions pummeled the stocks of many smaller publicly traded companies and landed Sioux Falls, S. D.-based VeraSun, the nation's second largest producer, in bankruptcy protection.

VeraSun owned 16 biorefineries with the total capacity to produce 1.4 billion gallons of ethanol annually, or about 13 percent of the country's total capacity.

This story contains information from The Associated Press.

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