17 September 2008 23:57 [Source: ICIS news]
HOUSTON (ICIS news)--The share price of VeraSun fell 73% on Wednesday after analyst downgrades and estimating a quarterly net loss of $63m-103m (€45m-73m) after making a series of bad gambles on corn prices.
The company’s shares lost $3.81, or 72.99%, to close at $1.41, after an Oppenheimer analyst downgraded the company from “outperform” to “perform". Moody’s downgraded the company from B2 to B3.
On Tuesday, VeraSun filed a document with the US Securities and Exchange Commission (SEC) explaining a series of losses relating to recent volatility in corn prices.
Up until July, the company had put options - also known as selling short - on corn futures, betting the price would fall, company said.
As corn skyrocketed towards its peak near $8/bushel in July, VeraSun cut its losses by getting rid of its short options and buying physical corn futures - this time betting that prices would rise, the company said.
Since then, the price of corn futures has fallen to around $5.50/bushel, resulting in another loss for VeraSun, the company said.
($1 = €0.71)
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