Report posted Aug. 11, 2009, at 5:20 p.m. CST

River Valley Energy LLC is purchasing the former VeraSun Energy Corp. Dyersville, Iowa, ethanol production facility. AgStar Financial Services' lending group acquired the plant through VeraSun's bankruptcy in March and announced its sale to River Valley Energy on Aug. 5. The sale between AgStar and River Valley Energy, a wholly owned subsidiary of Beaver Dam, Wis.-based United Cooperative, is expected to close by Sept. 1.

A binding purchase agreement has been signed, but River Valley Energy said details are not being disclosed at this time.

"We are very excited to acquire the Dyersville, Iowa, facility," said David Cramer, president and CEO of River Valley Energy. "We look forward to a long and prosperous relationship with the community of Dyersville, local producers, area grain elevators, and of course, AgStar Financial Services."

The facility has a nameplate production capacity of 100 MMgy, but is permitted to produce up to 120 MMgy, Cramer said. River Valley Energy expects to convert approximately 39 million bushels of corn annually.

United Co-op has history in the ethanol industry, said Dori Lichty, communications, media, and public relations manager for River Valley Energy. The company is the managing member of United Ethanol LLC, a corn-based ethanol production facility in Milton, Wis., which has an annual production capacity of approximately 42 MMgy. Lichty said the co-op is also an active investor in an ethanol production facility in Michigan.

"We really feel that there is a great future in the ethanol industry helping to reduce our dependence on foreign oil, making the air we breathe cleaner and of course, most importantly, supporting the American farmer," Lichty said. "Iowa in particular has a phenomenal infrastructure for corn ethanol production. On account of the large amount of corn that is grown there, we really felt that the Dyersville facility itself had a nice surrounding to make this an appropriate investment."

AgStar will lead a group of lenders in financing the Dyersville facility. In early August, the lending group sold another ethanol plant in Janesville, Minn., to Guardian Energy LLC. "Ethanol has encountered continued volatility but recent conditions have shown signs of stabilization," said Paul DeBriyn, president and CEO of AgStar. "We're excited to know these plants will soon be operational, creating jobs in rural areas, purchasing corn, [and] producing ethanol and dried distillers grains for livestock producers."

An AgStar official said it continues to have ongoing discussions with qualified buyers regarding the sale of the remaining VeraSun ethanol plant in Hankinson, N.D., which was purchased at auction.