Thursday, June 15, 2006

Corn "POPS" On Wall Street, With Confidence

A company looking to cash in on the groundswell interest in renewable energy resources brought about by high oil prices and the desire to become less dependent on Islamic resourced products might just offer up an IPO (initial public offering of stock in a company) and see where it goes.

Building new and converting old distilleries may become big business in the processing of corn and other organic matter into Ethanol.

We know that Wall Street is famous for hopping on to, and hyping the next big thing, only to see the rush turn to bust.

So here we go again, from "Dot-Com's" to "Pop-Con's"

This from the New York Post -

IPO HITS THE ETHANOL: VERASUN JUMPS 30%
By PAUL THARP

June 15, 2006 -- Ethanol has hit Wall Street in a wild ride that could create quick billions - or sudden wrecks.

VeraSun Energy Corp., the first big ethanol maker to go public, soared as much as 34 percent in its first day of trading yesterday, closing at $30, up $7, for a 30 percent gain.

The sale created a market value of $2.24 billion - nearly one thousand times higher than its meager first-quarter profits of $2.7 million for the South Dakota corn-mash refinery.

Analysts expect a flood of other stock offerings and debt deals to build the nation's new ethanol refinery system for meeting the huge demand of the pollution-lowering fuel.

Shares of some new ethanol outfits, however, have already hit big bumps, such as Colusa Biomass, whose 6-cent stock is down 94 percent this year, and Headwaters Inc., whose $24.25 stock is off 32 percent this year.

"Ethanol is very hot and could get hotter," said Daniel Welt of Standard & Poor's.

"But it's also very volatile and could be hurt if gasoline prices go down, or there's overbuilding of refineries or a loss of political will for ethanol."

The nation's corn belt is already dotted with more than 100 refineries distilling corn mash into grain alcohol, which is spiked with foul-tasting compounds to prevent if from being taxed as a drinkable liquor.

The booze version sells for upwards of $50 a gallon, compared to the few dollars a gallon it fetches as a fuel additive.

Welt expects heavy consolidation and a rush of private debt to build more refineries - basically giant moonshine stills - in order to meet the national mandate of 4 billion gallons this year, rising to 7.5 billion gallons by 2012.

Even an old Miller beer brewery outside Syracuse, N.Y, is being retrofitted into a refinery to cook upstate corn mash into ethanol.

One gallon of ethanol is blended with 10 gallons of gasoline for the clean-burning fuel.
Also fueling corn's gold rush is the government's 51-cent tax break to distillers for each gallon of ethanol they make.

Link Here>>

No comments: