Biofuel Maker Kior Raises $150 Million in Initial Share Sale
Kior Inc., the biofuels developer backed by billionaire Vinod Khosla, raised $150 million in a U.S. initial public offering, pricing its shares below the forecast range.
The Pasadena, Texas-based company sold 10 million shares at $15 each after offering them at $19 to $21 apiece, it said today in a statement. Proceeds will partially fund the company’s second commercial plant in Newton, Mississippi, according to its filing with the U.S. Securities and Exchange Commission.
Kior, which originally filed to raise as much as $100 million in April, processes wood and non-food agricultural biomass into a renewable crude oil that can be converted using standard refining equipment into substitutes for gasoline and diesel fuel.
The technology combines proprietary catalyst systems with “well-established fluid catalytic cracking, or FCC, processes that have been used in crude oil refineries to produce gasoline for over 60 years,” Kior said in its IPO prospectus.
Its first plant, a $190 million facility in Columbus, Mississippi, is currently under construction and expected to produce 11 million gallons of biofuel per year after beginning production in the second half of 2012. Successive facilities may be larger, Chief Executive Officer Fred Cannon told Bloomberg in August.
Kior, which sold all of the shares in the offering, has posted net losses totaling about $66 million since 2008, according to data compiled by Bloomberg.
Loan Guarantee
Credit Suisse Group AG (CSGN), UBS AG (UBSN) and Goldman Sachs Group Inc. (GS) led the offering. Underwriters have a 30-day option to purchase an additional 1.5 million shares to cover any overallotments, according to the filing. The shares will start trading tomorrow on the Nasdaq Global Select Market under the ticker KIOR.
The company plans to build larger production facilities, including the Newton plant, beginning in the third quarter of 2012 that may cost $350 million each, according to its filing. Those will be designed to process about 1,500 tons of feedstock per day, about three times as much as the Columbus plant, and will be located in Mississippi, Georgia and Texas.
In February, Kior said it received a term sheet for a loan guarantee from the U.S. Energy Department to support a $1 billion project to build four bio-refineries that together would produce about 250 million gallons of fuel a year.
Venture Backers
The initial Columbus plant will have built-in capability to convert crude oil to transportation fuels, though as Kior adds production capacity it plans to build plants in clusters around centralized refining stations. That strategy will enable the company to “more effectively allocate our fixed costs and stage our capital program to reduce the capital intensity of our commercial expansion,” it said in its filing.
Kior is funding the Columbus plant with existing cash and a $75 million interest-free loan from the Mississippi Development Authority. The company raised more than $180 million in venture capital before the IPO, according to data compiled by Bloomberg New Energy Finance.
Kior’s backers included Khosla Ventures, the Menlo Park, California-based investment company founded by Khosla, Artis Capital Management LP, Alberta Investment Corp., and Dutch company Bioecon BV, which originally developed the biofuel conversion process.
Before the offering, Khosla Ventures owned 32.5 percent of Kior’s Class A stock and 74.8 percent of its Class B stock, which together represented 73 percent of total voting power. That is not expected to change significantly for the foreseeable future, Kior said in its filing.
Catchlight, Chevron
The offering included Class A shares only. Each Class A share is entitled to one vote, and each Class B shares is entitled to 10 votes. Holders of Class B shares can convert them at will into Class A shares on a 1-to-1 basis. They will automatically convert under certain circumstances, Kior said in its prospectus.
Catchlight Energy LLC, a joint venture of Chevron Corp. (CVX) and Weyerhaeuser Co. (WY), will provide forestry waste that Kior will use at the Columbus plant. In April, Catchlight agreed to buy fuel from that facility, and Hunt Refining Co. agreed to a similar deal in March.
Kior said June 22 that former U.S. Secretary of State Condoleezza Rice will join the company’s board starting in July.
To contact the reporter on this story: Andrew Herndon in San Francisco at aherndon2@bloomberg.net
To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net
Rate this Page