KiOR plans initial public offering of Class A common stock

By Erin Voegele | April 18, 2011

Texas-based KiOR Inc. is moving forward with plans for an initial public offering (IPO). On April 11 the company announced it filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission for a proposed initial public offering of shares of the company’s Class A common stock.

According to information released by KiOR, Credit Suisse Securities (USA) LLC, UBS Securities LLC and Goldman, Sachs & Co. will act as joint book-running managers for the offering, with Piper Jaffray & Co., Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. acting as co-managers. The number of shares to be sold in the proposed offering and the offering price has not yet been determined, said KiOR.

Information included in the S-1 filing notes that KiOR has developed a proprietary technology that converts biomass feedstock into hydrocarbon-based oil. “We process our renewable crude oil using standard refinery equipment into gasoline and diesel blendstocks that can be transported using the existing fuels distribution system for use in vehicles on the road today,” said the company in its filing. “Our gasoline and diesel blendstocks are projected to reduce direct lifecycle greenhouse gas emissions by over 80 percent compared to the petroleum-based fuels they displace.”

According to information published in the SEC filing, KiOR believes that—based on milestones reached to date—once it is able to commence production at its initial commercial-scale facility, the company will be able to produce gasoline and diesel blendstocks that are cost competitive with comparable fossil-based fuels without government subsidies. The first facility is expected to use Southern Yellow Pine whole tree chips as its primary feedstock.

“Our proprietary catalyst systems, reactor design and refining processes have achieved yields of renewable fuel products of approximately 67 gallons per bone dry ton of biomass (BDT)…in our demonstration unit that we believe would allow us to produce gasoline and diesel blendstocks today at a per-unit unsubsidized production cost below $1.80 per gallon, if produced in a standard commercial production facility with a feedstock processing capacity of 1,500 BDT per day,” said Kior in its S-1 filing. “This per-unit cost assumes a price of $72.30 per BDT for Sothern Yellow Pine clean chip mill chips and anticipated operating expenses at the increased scale and excludes cost of financing and facility depreciation. Over time, we expect to improve our overall process yield by enhancing our technology and to significantly reduce our feedstock costs by using lower grade chips, logging residues, branches and bark and lower our operating expenses through various initiatives.”

During the first quarter of 2011, KiOR began construction of its initial commercial-scale production facility in Columbus, Miss. The facility is designed to process 500 BDT per day. The company also has plans to construct four larger commercial production facilities in Mississippi, Texas and Georgia. The development of those plants is planned for two stages, beginning during the second half of 2011. Each of the four facilities will be capable of processing 1,500 BDT per day.