Cellulosic ethanol maker warns it may file for bankruptcy

Source: by Christopher Doering, Des Moines Register • Posted: Wednesday, March 19, 2014

KiOR, a commercial producer of cellulosic ethanol, warned investors the company could have trouble obtaining the necessary financing to stay in business and may be forced to file for bankruptcy.

The renewable fuels producer, which makes ethanol from wood and other plant waste, said in a recent filing that the company shuttered its Columbus, Miss., biofuel plant in January to make upgrades to the facility. The Texas-based company said until it restarts production, it will not generate any revenue from the plant but will continue to face significant operating costs and expenses.

“We have substantial doubts about our ability to continue as a going concern,” KiOR said in a filing with the SEC. “To continue as a going concern, we must secure additional capital to provide us with additional liquidity.”

The Columbus facility, which began shipping cellulosic fuels in early 2013, is designed to process 500 bone dry tons of sustainably harvested woody biomass per day. KiOR says on its website the location can produce more than 13 million gallons of gasoline, diesel, and fuel oil blend stocks annually.

Shares of KiOR, which went public in June 2011, fell 43 cents, or 40 percent, to $0.64 cents in trading on the NASDAQ Tuesday.

The troubles plaguing KiOR come as the fledgling cellulosic industry finally shows signs of blossoming after years of delays. A facility being constructed in Emmetsburg, Iowa, by Poet-DSM, will join plants in Hugoton, Kan., and Nevada, Iowa, as the three large-scale U.S. cellulosic plants that will open this year.

Still, the future of the next-generation fuel is far from certain. The Environmental Protection Agency, which oversees how much ethanol must be blended into the country’s gasoline supply each year, has proposed cutting the level for this year. Supporters of cellulosic fuel warn a drop in the Renewable Fuel Standard could choke future investments in cellulosic in the United States and push growth overseas where production incentives are more favorable.