Thursday, November 6, 2008

VeraSun is a major owner-operator of ethanol plants in the upper Midwest, headquartered in Sioux Falls, South Dakota.

AgStar led a group of 16 other lenders in providing this interim financing, which was approved as temporary relief by the Bankruptcy Court on November 3, 2008. This accounts for a small portion of the commitments for DIP financing VeraSun has reported to date.

The AgStar-led finance group collectively financed the U.S. BioEnergy ethanol plants over the past three years, which were acquired by VeraSun through a merger earlier this year. Further, potential AgStar losses from this situation are not expected to be material and any losses sustained should not impact AgStar`s overall financial soundness.

The lenders group has provided DIP financing to its borrower in order to maintain ongoing operations at six plants, keep jobs in rural communities, and preserve the operational value of the facilities and our borrowers. AgStar, of course, is also working to protect the interests of AgStar stockholders and the other creditors in the lending group.

An experienced senior leadership team, internal industry and financial experts, as well as outside legal counsel are actively managing the VeraSun matter. Various news stories have reported that VeraSun recently incurred operating losses and experienced financial challenges in a volatile market situation. AgStar believes that while the ethanol industry has been experiencing short-term volatility, the industry outlook will improve over time.

AgStar clients and stockholders can be assured AgStar is financially sound and their business relationship will not be negatively affected by the VeraSun bankruptcy. The company`s capital base exceeds regulatory requirements, overall credit quality remains well within acceptable levels, and access to funding for new loans is ample.


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