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Ethanol co. VeraSun shares fall on stock offering announcement

SIOUX FALLS, S.D. (AP) - Shares of VeraSun Energy Corp. on Thursday gave back their bump from this week's positive earnings report after the ethanol producer announced a $750 million offering which may be used to repay debt.

Brookings-based VeraSun, in a filing with the Securities and Exchange Commission, said it will use the money for working capital and other general corporate purposes, which may include the repayment or refinancing of debt.

The company in its filing said it could sell common stock, preferred stock, depositary shares representing shares of preferred stock, debt securities, warrants, subscription rights, purchase contracts or purchase units.

VeraSun shares, which have traded in a 52-week range of $3.75 to $17.75, jumped 72 cents on Tuesday after the company reported a 58-percent jump in second-quarter profit on higher production volume and an increase in average per-gallon prices. The result beat analyst estimates.

VeraSun during the quarter also benefited from higher average prices for its distillers grains, an ethanol byproduct used as a livestock feed, and lower-than-expected corn costs. The company was able to reduce its average corn price to $5.37 per bushel during the quarter by generating about $26.5 million of revenue from the sale of excess corn.

Mark Miller, an analyst at William Blair & Co., said the corn ethanol industry received two pieces of good news this week. The U.S. Environmental Protection Agency denied a request from Texas Gov. Rick Perry to cut the federal ethanol mandate in half for a year, and the U.S. Department of Agriculture sharply raised its estimate of corn production.

"Combined with the expected reduction in new ethanol supply coming on line during the second half of 2008 and most of 2009, these developments should help support ethanol refining margins," Miller said in a research note.

VeraSun shares were down 89 cents, or 10.9 percent, to close Thursday at $7.27.