By Julie Wernau
Tribune reporter
3:27 p.m. CDT, July 20, 2012
Warrenville-based biofuel
company Coskata Inc. has shelved a $100 million planned initial public
offering, saying it will put off plans to build a commercial scale plant
that converts wood waste to ethanol and instead look to feed the plant
with cheap, abundant natural gas.
The move to natural gas, said Coskata Chief Executive Bill Roe, means the company is likely to find that capital needed for commercialization from private investors, who he said have expressed "great interest" in the technology.
In December, the company, which has piloted its technology in Warrenville and has a demonstration-level project operating in Pennsylvania, filed documents with the Securities and Exchange Commission in anticipation of a public offering in the first or second quarter of 2012. The move followed the success of several IPOs in the biofuels space.
But it was short-lived and most, if not all, biofuel makers who've gone public in the last one to two years have seen their stock prices drop below that of initial offerings. More recent IPOs in the biofuels space have dropped below their initial valuations and several have been pulled.
"It seems to be very consistent that the companies come out at a pretty high value and it drops to an extreme low shortly thereafter," said Heather Youngs, senior analysis fellow at the Energy Biosciences Institute at the University of California at Berkeley. "Processes that work at one scale, sometimes you have to do some adjustments to get them up to a higher scale. Everybody's become a little disillusioned because it's always been five years away, five years away to commercial scale and it hasn't quite happened yet."
The microorganisms produced by Coskata ingest so-called synthesis gas (a mix of hydrogen, carbon monoxide and carbon dioxide) to produce ethanol. Through a gasification process, the company can convert a variety of materials, including wood chips, wood waste and municipal solid waste into gas for ingestion by the microorganisms. The company planned to use the money raised in the IPO to build a commercial-scale facility in Alabama that would convert wood waste into ethanol.
In the natural-gas only process, the gas, which is made up primarily of methane, is partially oxidized through a process called "reforming" to create synthesis gas. Gasification is not necessary.
With natural gas prices at historic lows, Roe said, the company decided to redirect its commercialization strategy.
"There was real interest from private investors in this; so, it was a natural move," he said.
The company is back by venture capitalist Vinod Khosla, as well as Blackstone Group LP, Total SA and General Motors.
jwernau@tribune.com | Twitter @littlewern
The move to natural gas, said Coskata Chief Executive Bill Roe, means the company is likely to find that capital needed for commercialization from private investors, who he said have expressed "great interest" in the technology.
In December, the company, which has piloted its technology in Warrenville and has a demonstration-level project operating in Pennsylvania, filed documents with the Securities and Exchange Commission in anticipation of a public offering in the first or second quarter of 2012. The move followed the success of several IPOs in the biofuels space.
But it was short-lived and most, if not all, biofuel makers who've gone public in the last one to two years have seen their stock prices drop below that of initial offerings. More recent IPOs in the biofuels space have dropped below their initial valuations and several have been pulled.
"It seems to be very consistent that the companies come out at a pretty high value and it drops to an extreme low shortly thereafter," said Heather Youngs, senior analysis fellow at the Energy Biosciences Institute at the University of California at Berkeley. "Processes that work at one scale, sometimes you have to do some adjustments to get them up to a higher scale. Everybody's become a little disillusioned because it's always been five years away, five years away to commercial scale and it hasn't quite happened yet."
The microorganisms produced by Coskata ingest so-called synthesis gas (a mix of hydrogen, carbon monoxide and carbon dioxide) to produce ethanol. Through a gasification process, the company can convert a variety of materials, including wood chips, wood waste and municipal solid waste into gas for ingestion by the microorganisms. The company planned to use the money raised in the IPO to build a commercial-scale facility in Alabama that would convert wood waste into ethanol.
In the natural-gas only process, the gas, which is made up primarily of methane, is partially oxidized through a process called "reforming" to create synthesis gas. Gasification is not necessary.
With natural gas prices at historic lows, Roe said, the company decided to redirect its commercialization strategy.
"There was real interest from private investors in this; so, it was a natural move," he said.
The company is back by venture capitalist Vinod Khosla, as well as Blackstone Group LP, Total SA and General Motors.
jwernau@tribune.com | Twitter @littlewern
Copyright © 2012, Chicago Tribune
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