The clock is ticking for bio-isobutanol producer Gevo, and it needs to prove as soon as possible that its 18m gal/year Luverne, Minnesota, facility can successfully fully operate. The company needed an influx of cash very quickly and has announced this week a public offering of 18.53 million common shares at $1.35 each. The stock offering is expected to close on or about December 16. Funds raised by the offering at around $25 million in gross proceeds will be used to fully operate its isobutanol production at its facility in Luverne, Minnesota, and repay $5.1 million in long-term debt.
Gevo ended the third quarter with cash and cash equivalents of $25.7 million. With the cash raise of $25 million, the company’s cash on hand will be enough for 2-3 quarters worth of current cash burn (according to financial experts).
The company said it has been producing isobutanol since June in a single production train, and has ramped up with its second million liter fermenter. Two additional fermenters are expected to be brought online before the end of tyear, and steady production is expected to start in the first quarter of 2014. Gevo’s current production of isobutanol is intended to be sold into the specialty chemicals market (e.g. solvents) with Sasol, for specialty fuels market (gasoline blend), and converted into bio-jet fuel for the US military.
Since October, Gevo switched to using corn mash (liquified corn) which is cheaper compared to the previously used feedstock dextrose. Gevo also recently signed its first letter of intent to commercially license its processing technology called GIFT® systems with IGPC ethanol, a farmer-owned co-op with a 150 million liter/year ethanol plant in Ontario, Canada. Gevo’s processing technology has the flexibility of producing quantities of isobutanol and ethanol depending on demand. IGPC is interested in incorporating isobutanol production at its ethanol facility.
Gevo’s stock woes has been exacerbated this year when the company halted production of isobutanol in Luverne in Sept. 2012 after contamination issues prompted an adjustment of its manufacturing process. Gevo has also been battling with Butamax on several patent infringement allegations. Butamax has more money to burn on court litigations having DuPont and BP as its parent companies.
I guess a good sign for Gevo is that, as of the writing of this article, Khosla Ventures — who holds about 40% of Gevo share, has just bought
1,111,111 2,222,222 of the offered shares at $1.85 $1.35 a piece.
While the financial market this year is brutal to renewable chemical and (or) advanced biofuel companies such as Gevo, Amyris, Codexis, Metabolix and Solazyme, there are hopes for a big turnaround next year as long these companies can prove commercial production can soon take place with no further hiccups.