Tuesday, March 20, 2007

Ethanol Czars Run for the Exits

For all the promise ethanol is purported to offer investors, two key individuals have already folded their hands. Last week Verasun Energy (VSE: NYSE) announced the resignation of Bruce Jamerson, who had been president since 2003. Jamerson is moving on to another senior position with a technology company. It hardly seems like Jamerson’s time with the ethanol industry pioneer had been fulfilled. During Jamerson’s tenure the company went into production at both its Fort Dodge, Iowa plant Aurora, South Dakota plant. Verasun also staged its initial public offering. Jamerson owned approximately 1.5 million shares or 2% of Verasun.

Jamerson is not the only ethanol czar to get itchy feet. Brian Thome, president of U.S. Bioenergy (USBE: Nasdaq) resigned his position last week as well. No word on where he is going. Thome had been a director of U.S. Bioenergy since 2004 before his appointment as president in March 2006. Thome’s background is in finance and he had been a commercial banker before becoming involved with the operational side of the biofuels industry.

So why would these two senior officers leave when it seems the party is just getting started for both ethanol producers. U.S. Bioenergy just completed its initial public offering in December 2006. Granted the USBE stock price is off 22% from the IPO price of $14.00 and it has yet to turn a profit. Verasun is trading at $18.00, off 28% from its IPO price as Wall Street has begun to question the ethanol equation even in the face of Verasun’s 14% net profit margin. Nonetheless, it seems like senior management of all public ethanol operations, if they really believed in the ethanol promise, would want to stick around to see it fulfilled.

Neither the author of the Small Cap Copy web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

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