Biofuel Producer Warns of Default, Bankruptcy

- by Christo­pher Mar­tin, March 18, 2014. Source: Bloomberg Busi­ness­week

[Read more about Khosla: Cel­lu­losic Ethanol: A Bio-Fool’s Errand ‑Ed.]

Kior Inc. (KIOR:US), the Vin­od Khosla-backed oper­a­tor of the first U.S. com­mer­cial-scale cel­lu­losic bio­fu­el plant, fell the most on record after man­age­ment told reg­u­la­tors they have seri­ous doubts about stay­ing in business.

Kior declined 41 per­cent to 63 cents at 10:23 a.m. in New York, the most intra­day since its June 2011 ini­tial pub­lic offer­ing at $15.

The com­pa­ny needs addi­tion­al cap­i­tal by April 1 and its only poten­tial source of near-term financ­ing is a March 16 com­mit­ment let­ter from bil­lion­aire investor Khosla, accord­ing to a fil­ing with the Secu­ri­ties and Exchange Com­mis­sion yesterday.

The com­mit­ment for as much as $25 mil­lion is con­tin­gent upon meet­ing cer­tain mile­stones. The com­pa­ny shut down its Colum­bus, Mis­sis­sip­pi, bio­fu­el plant in Jan­u­ary to upgrade the man­u­fac­tur­ing process, and “until we restart the Colum­bus facil­i­ty, we expect to have no pro­duc­tion or rev­enue from that facil­i­ty,” accord­ing to the filing.

If the com­pa­ny doesn’t receive addi­tion­al financ­ing, it will “like­ly” default on its debts and may file for bank­rupt­cy. “We have sub­stan­tial doubts about our abil­i­ty to con­tin­ue as a going con­cern,” the Pasade­na, Texas-based com­pa­ny said in the filing.

Kior in Octo­ber received $100 mil­lion from Khosla Ven­tures LLC and Gates Ven­tures LLC to expand pro­duc­tion at the Colum­bus plant. The com­pa­ny makes trans­porta­tion fuels from wood waste and non-food crops.