EBOOM CAPITAL: Biofuel Companies File IPOs Despite Sector Tax Uncertainties

So what’s up with the biofuels sector? Two biofuels companies last week filed unpriced initial public offerings (IPOs) with the Securities and Exchange Commission and a third did the same earlier this summer. A fourth biofuels company completed an IPO in April 2010. 

All this with the sector in an uproar. The federal government funding for ethanol and biodiesel companies will expire at the end of 2010 and share prices of most of these companies have already headed south for the winter.

The two companies which filed last week are:

• Gevo, Inc. of Englewood, Colorado, which filed a Form S-1 Thursday and is understood to be targeting about US$150 million.
  

• PetroAlgae, Inc. (OTC: PALG), of Melbourne, Florida, which filed a Form S-1 last Wednesday and is seeking to raise about US$200 million. 

The other biofuel company on the IPO track is Amyris, Inc. of Emeryville, California, which filed its latest unpriced Form S-1A July 6th. 

The last biofuel company to complete an IPO was Codexis, Inc. (NASDAQ: CDXS), whose shares have fallen 41 percent to $7.78 from since its IPO April 22 raised $78 million, well short of its target of $100 million.

• During Q2 2010, the company had a net loss of $3.9 million on revenue of $24.5 million, compared with Q2 2009’s net loss of $2.8 million on revenue of $4.2 million. For 2010, Codexis says its annual revenue will be $94 million to $98 million, up 13 percent to 18 percent compared to 2009. The company affirms its expectation that adjusted EBITDA will be positive for full year 2010, but leaves observers to read between the lines regarding profitability.

Gevo, Inc. produces a petroleum substitute that can be used for fuels or a variety of industrial chemicals. The company says its catalysts transform waste and feedstocks into isobutanol, an alcohol compound that can be used as fuel in existing gas tanks, as a fuel blend with gasoline like ethanol, or as a component in plastics and other polymers. 

• Gevo announced August 9 that is was acquiring Agri-Energy’s ethanol production facility in Luverne, Minnesota. Gevo has developed a proprietary process designed to fit into current ethanol production facilities. The process also enables the production of isobutanol from numerous renewable feedstocks including corn, wheat, sorghum, barley, sugar cane and cellulosic feedstocks when biomass conversion becomes commercially available. 

• For 2009, Gevo generated revenue of $660,000 and lost $19.89 million. As of March 31, 2010, Geva says it had accumulated a deficit of $50.3 million and had $32.43 million in cash.

• UBS Investment Bank and Goldman, Sachs & Co. will be acting as joint bookrunning managers, with Piper Jaffray acting as a co-manager for the offering. 

• Gevo’s investors include Burrill & Company, Khosla Ventures, Malaysian Life Sciences Capital Fund, Osage University Partners, Total Energy Ventures and Virgin Green Fund.

PetroAlgae, Inc. is all a bit strange. The company has a market cap of $2.14 billion, but its financial results show a business going nowhere. 

• When most listed companies were filing their Q2 financials, PetroAlgae filed its Q1 2010 amended financial statements with the SEC August 5.  The filing shows total assets of $4.65 million, total liabilities of $50 million, $190,000 in cash, no revenue, and a net operating loss of $7.2 million. Furthermore, the company has accumulated operating losses of $67 million and burned through $50 million since September 2006.

• According to the convoluted language in the S-1, the company is 94 percent owned by Cayman Island-based affiliates of New York firms Laurus Capital Management and Valens Capital Management. The company says Goldman, Sachs & Co., UBS Investment Bank, and Citi, are acting as joint book-running managers, and Baird, Cowen and Company and Piper Jaffray are acting as co-managers for the proposed offering.

• PetroAlgae claims its proprietary technology, consisting of light and environmental management systems, allows its customer licensees to grow aquatic microorganisms at a rate that consistently exceeds four times the natural growth rates. “The high productivity afforded by PetroAlgae's technology leads to low cost fuel feedstock which should increase the profitability of the refineries without the requirement for any government subsidies,” says the company.

• The company’s shares trade seldom and erratically. Mostly the stock trades a few hundred shares per day and last traded August 9 at $19.99, down from $26 a month earlier. The stock hit a weird patch in June, diving to $6.10 before moving up to $15 for most of the month, then jumping to $26. 

Amyris, Inc. says its first commercial products will be renewable specialty chemicals and transportation fuels produced in Brasil using sugarcane as feedstock beginning in 2011.

• The company’s investors include Kleiner Perkins Caufield & Byers, Khosla Ventures, TPG Biotechnology, Votorantim Novos Negocios, Advanced Equities Inc., DAG Ventures, Grupo Cornélio Brennand, Naxos Capital Partners, The Westly Group, Stratus Group, and Temasek Holdings.

• In its S-1A, Amyris discloses a Q1 2010 net loss of $16.35 million on revenue of $13.65 million, compared with Q1 2009’s net loss of $12 million on revenue of $2 million. In 2009, the company had a net loss of $64.4 million on revenue of $64.4 million. At March 31, 2010, the company had a strong balance sheet: cash of $105 million, working capital of $85 million, total assets of $158 million and total indebtedness of $20 million.

DISCLOSURE: The writer has no positions in, or professional connections with, these companies.

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