Ethanol Producers to Go Public in $200M Worth of Offerings
31 March 2006
Ethanol producers VeraSun Energy Corporation and Aventine Renewable Energy plan to go public in offerings that could raise $200 million or more. The companies have filed their S-1 registration statements with the SEC.
VeraSun, which recently has closed deals with Ford and GM to expand E85 fueling stations in several states, filed the larger of the two, expecting to raise $150 million. Aventine expects to raise $50 million.
VeraSun is the second-largest ethanol producer in the US, and has two operational production facilities in Aurora, South Dakota and Fort Dodge, Iowa and is constructing a third facility in Charles City, Iowa. The company intends to use the net proceeds from the offering, together with cash generated from operations, to finance construction of two additional ethanol production facilities in the upper Midwest.
VeraSun reported net income of $253,000 on revenue of $236 million in 2005, compared to net income of $14.8 million on revenue of $194 million in the prior year.
Aventine produced and distributed 529.8 million gallons of ethanol in 2005 (13.4% of the total), and has a capacity of 150 million gallons per year from its own two facilities.
The company reported total net income of $32 million on revenue of $935 million in 2005, up from net income of $29 million and revenue of $859 million in 2004. On Dec. 30, the company raised $256 million in a private offering of 21 million shares at $13 a share. Those shares, combined with the new shares issued, could give the company a market capitalization of around $450 million.
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Looks like Ethanol is clearly a sweeter alternative to gasolene. From Australia to Thailand to Brazil to USA, everywhere Ethanol refineries are sprouting up.
Some day a genetically engineered sugarcane could be grown even in colder climates of USA, Canada, Russia, etc.
And in tropical countries like Brazil, India, Australia, etc, it could be engineered to grow from 12 feet (4 meters) height to 20 feet (6 meters) height.
After all their main fuel will be SUN.
Posted by: Max Reid | 31 March 2006 at 02:23 PM
Max -
ethanol is indeed a good fuel but producing it from food crops is expensive (in terms of land quality) and seen by many as unethical in the face of famine in Africa and elsewhere.
The stated objective is to switch to feedstocks composed of agricultural waste streams like corn stover and/or hardy plants like switchgrass that can grow on land poorly suited to food crops.
Long-term, we will probably have to harvest the incident sunlight on the world's oceans as well, using controlled blooms of appropriate algae strains.
However, the sheer scale on which all this will have to operate means the genetics and ecological impact of all these feedstock organisms must be carefully managed. The US public has accepted genetic engineering but others - especially Europeans - remain prediminantly hostile to it on safety grounds (real or imagined).
Posted by: Rafael Seidl | 31 March 2006 at 02:58 PM
It would be more efficient to use OTEC to generate ammonia (NH3). Ammonia can be used as fuel as well as a nitrogen fertiliser. It has been safely produced, distributed, and used for decades. It is carbon and sulphur free.
Posted by: tom deplume | 31 March 2006 at 04:39 PM
So how does one get in on an IPO of one of these two companies?
Posted by: stomv | 31 March 2006 at 04:39 PM
Good writing Rafael
But think about this.
With 3.2 million sq. km. of land area. India could produce food for 1.1 billion people.
But Brazil has 8.2 million sq. km. of land and only 0.18 billion people. So they have lot of free land to grow Sugarcane.
Africa is very large continent and certainly they should have some land to grow cane.
Thinking about famine is good thing, but if the Diesel prices go up, the price of rice, wheat, vegetables & fruits will go up, putting the millions of people in 3rd
world countries in trouble and hunger.
Ethanol, Bio-diesel could do some help in this regard. If Ethanol does not come in, it will be dirty coal which will grab the market share. Already coal is replacing oil in many power plants, heating systems, etc.
Hope you accept it.
Posted by: Max Reid | 31 March 2006 at 07:04 PM
One of the ways of solving two problems at the same time, would be to use cellulose ethanol to make fuel and food in Africa. It would attract capital and feed that continent.
Posted by: Paul | 31 March 2006 at 10:40 PM
Max -
note that much of Brazil is still covered by virgin rainforest, which ought not be sacrificed to farming for biodiversity reasons. Already, an area equal to Belgium is clear-cut every year. Much of it is used to grow soy for export to Europe, where it is used as cattle feed rather than for biofuel production. A very few Brazilian soy magnates are making a killing while most of their compatriots are dirt-poor. Planting sugar cane instead would not change that picture one iota.
As for diesel prices driving up food prices in the 3rd world, I think that may be a little far-fetched. Billions (not millions!) of people in the third world are already exposed to war, oppression and famine every day.
The EU - and to a lesser extent, other industrialized nations - is dumping its highly subsidized excess produce on African markets, destroying the livelihoods of local farmers. It took a lot of arm-twisting for Brussels to at least stop paying export subsidies for this dumping practice as well. Up to a point, higher produce prices will therfore actually help Africa, not hurt it.
If that benighted continent didn't have such god-awful politicians, I'm sure it could be a significant exporter of biofuel or at least its feedstocks. South Africa is one of the few exceptions, but it has too little fresh water to become a major feedstock producer.
Posted by: Rafael Seidl | 01 April 2006 at 08:42 AM