Fulcrum BioEnergy Gets U.S. Guarantee to Make Ethanol From Trash

Fulcrum BioEnergy Inc. (FLCM), a U.S. biofuel company that’s planning an initial public offering, received a $105 million conditional U.S. loan guarantee for its first commercial facility.

Fulcrum’s Sierra BioFuels Plant will be 20 miles (32 kilometers) east of Reno, Nevada, and may produce as much as 10 million gallons (38 million liters) of ethanol a year from household garbage, according to a statement today.

The guarantee from the U.S. Department of Agriculture is part of an effort to fund the development of advanced biofuels produced from renewable sources, according to the statement. The agency has funded seven other projects seeking to develop systems to produce fuel from non-food feedstocks, including agricultural residue, wood biomass, trash and algae,

Fulcrum, based in Pleasanton, California, registered Sept. 22 to raise as much as $115 million in an IPO to partially fund the $180 million Sierra plant.

The IPO is one of several funding options the company is considering, Rick Barraza, the company’s vice president of administration, said today in an interview. “We’re still looking to raise equity capital either through an IPO or private sources,” he said. “We’re going to look at all avenues, whether it’s private or public capital.”

Construction may begin next year after the company completes the loan guarantee and arranges bank financing, Barraza said.

The loan guarantee “allows us to secure private bank financing at reasonable prices and with favorable terms,” Fulcrum Chief Executive Officer James Macias said in the statement. The offer would guarantee 80 percent of the $105 million loan, USDA said.

Waste Management Inc. (WM) and Waste Connections Inc. (WCN) will supply the trash that the plant will process, and Tenaska Biofuels LLC will purchase all of the fuel it produces for three years, according to a June 13 Fulcrum filing.

Fulcrum’s biofuel will help refiners meet a U.S. Environmental Protection program that requires them to blend 36 billion gallons of biofuels a year with their products by 2022.

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