Poised for primetime: Enerkem Inc. files for proposed IPO

By Bryan Sims | February 06, 2012

Montreal-based waste-to-fuels and biochemical firm Enerkem Inc. has filed a registration statement on form F-1 with the U.S. Securities and Exchange Commission and a preliminary prospectus with securities regulatory authorities in each of the provinces and territories of Canada, relating to a proposed initial public offering of its common shares in the United States and in Canada. Goldman, Sachs & Co., Credit Suisse Securities and BMO Capital Markets were named as underwriters for the IPO. The filing did not reveal a specific number of shares Enerkem planned to sell or an expected value of public offering per share.

Founded in 2000, Enerkem has focused on gasifying heterogeneous waste feedstock, everything from mixed plastics and textiles to agricultural residues and wood, into chemical-grade syngas, which can then be converted into cellulosic ethanol and other high-value chemicals through well-established catalytic reactions.

“We believe that our technology platform provides a key competitive advantage as compared to other thermochemical technologies because it utilizes a low-severity gasification process that significantly reduces operating and capital costs due to lower temperature, pressure and energy requirements to break down heterogeneous waste feedstock,” the company stated in the filing.

Since 2003, Enerkem has been operating a pilot-scale production facility in Sherbrooke that’s capable of processing 4.8 metric tons per day of feedstock, according to its filing. The company stated it has scaled up feedstock throughput capacity tenfold to 48 metric tons per day at its commercial demonstration facility in Westbury, which has an annual production rate of 1.3 MMgy. Enerkem is working to bring online a 10 MMgy commercial-scale production facility in Edmonton, currently under construction. The company has secured a 25-year MSW feedstock supply arrangement with the city of Edmonton for the facility, which is expected to begin producing methanol by first quarter 2013 and cellulosic ethanol by second half 2013.

“We believe this scale-up is the lowest to full commercial capacity to date by any cellulosic ethanol producer,” Enerkem stated in its filing. “We also believe the Edmonton facility is the first collaboration between a waste-to-biofuels company and a metropolitan center to address its waste disposal challenges.”

In addition to its Edmonton facility, Enerkem is also currently developing two similar-sized biorefinery projects in Pontotoc, Miss. and Varennes, Canada. Enerkem secured a conditional commitment for an $80 million loan guarantee from the USDA in January 2011 to help fund the development of the project in Pontotoc, adding that the majority of the proceeds from the IPO will be used to help complete construction on the Edmonton project and the plant in Pontotoc, the company said.

“Beyond these active projects, we have prioritized additional potential sites in the United States for development,” the company stated in the filing.

Enerkem has established strategic partnerships with waste aggregator Waste Management of Canada Corp., an affiliate of Waste Management Inc., and Valero Energy Corp. “We believe that these strategic relationships will enable us to capitalize on the growing demand for our waste-based biofuel solutions and accelerate our market penetration,” Enerkem stated in its filing.

Rho Ventures, Braemer Energy Ventures and the Westly Group round out Enerkem’s investor base.