Coskata shelves cellulosic ethanol, IPO plans
Coskata Inc. is shelving its plans to convert biomass into ethanol and complete an initial public offering (IPO) at this time. Regarding the IPO, the company will not be withdrawing the registration statement filed with the U.S. Securities and Exchange Commission in late 2011, leaving the opportunity open to go public once market conditions improve.
“The public markets are all about timing…and timing has been poor,” said Coskata CEO Bill Roe. “We have our S-1 on file with the SEC, but we do not want the public markets to dictate our commercialization timeline.” According to Roe, there is no specific timeline for the completion of the IPO, but his company will consider completing a public offering in the future, depending on market conditions.
Roe also stresses that the decision to shelve the IPO will have no impact on Coskata’s development plans. “There is a lot of excitement with our current investors for this private equity placement,” he said. “We will utilize this placement to fund our first commercial plant, as well as new product development and corporate operations.”
However, those commercialization plans will proceed with some significant changes. Specifically, the first commercial operation will utilize natural gas as the primary feedstock, rather than biomass. “We made this decision because we see an enormous opportunity to upgrade natural gas into higher value transportation fuel,” Roe said. “Natural gas is a huge opportunity owing to its abundant supply and historically low price, and we are uniquely positioned to take advantage of it with our syngas fermentation technology. In addition, natural gas conversion offers lower risk and lower production and capital costs than biomass. Also, but utilizing natural gas as a feedstock, not only can we produce transportation fuels at a price that creates value for consumers, we can also build much larger plants because we will not be limited by availability of biomass within a specific radius. By producing at industrial scale, we can have a material impact on transportation fuel supply in this country.”
That said, Roe noted that Coskata isn’t entirely abandoning the potential use of biomass feedstock in the future. “We still intend to build a biomass facility in the future if the economic and regulatory conditions are right,” he said. “While our initial focus is on natural gas, our platform technology enables nearly unlimited feedstock diversification, including woody biomass, crop residues, energy crops, coal and even garbage. We plan to build facilities that create ethanol from the most advantaged feedstocks in a chosen geography at any given time; right now that is North American natural gas.”