Valero gobbles up VeraSun’s stake in Qteros

San Antonio, Texas-based Valero Energy (NYSE:VLO) takes VeraSun Energy’s stake today as an investor in Marlborough, Mass.-based Qteros.

Valero established the investment, for an undisclosed amount, through the acquisition of assets of VeraSun, which ceased operations after it filed for bankruptcy last year (see VeraSun reportedly near bankruptcy).

Qteros, formerly known as SunEthanol, developed technology that turns biomass into cellulosic ethanol. Last year, Qteros raised $25 million in a round in which previous investor VeraSun was notably absent (see Qteros claims 15-fold improvements in cellulosic ethanol yield).

"Investment from established energy companies like Valero enables us to continue developing and scaling-up our technology," said Bill Frey, CEO of Qteros and former head of Dupont's biofuels division, in a news release. "Qteros is moving ahead with our plans to open a pilot plant this year as we continue preparations to expand to commercial scale production."

Qteros also said today it has received $2 million in U.S. government appropriations for a pilot plant expected to open this summer in Springfield, Mass. Qteros investors include Venrock, Battery Ventures, BP, and Soros Fund Management. 

In March, Valero won a bankruptcy auction to buy seven corn-based ethanol plants from South Dakota-based VeraSun for $477 million, plus additional working capital. The seven plants have a combined production capacity of 780 million gallons of ethanol per year (see Valero eyes cellulosic ethanol with $477M VeraSun buy).

There were three bidders for the remaining plants: Dougherty Funding bid $93 million for a facility in South Dakota; a group of lenders led by AgStar Financial Services bid $324 million for six facilities in Nebraska, Iowa, North Dakota, Minnesota and Michigan; and a group of lenders led by West LB bid $99 million for two production facilities in Ohio and Indiana.