Gevo, Inc., a leading renewable technology, chemical products, and next generation biofuels company, has closed a private debt financing with Whitebox Advisors LLC consisting of a senior secured term loan exchangeable into senior secured convertible debentures.
The aggregate proceeds from the loan are $25.9 million with an option for Gevo to draw an additional $5.2 million if certain conditions are met. The term loan includes a first priority lien on all of the company’s assets and carries a 15% coupon, of which 5% is payable in cash and 10% is payable in kind and capitalized to the principal amount of the term loan. The term loan is exchangeable into convertible debentures within 90 days of the closing of the financing, subject to certain ownership limitations.
The convertible debentures can be converted into common stock at a price equal to the lesser of $1.49 or a 15% premium to the 5-day forward looking volume weighted average price following closing of the financing. The convertible debentures carry a 10% coupon, of which 5% is payable in cash and 5% is payable in kind and capitalized to the principal amount of the convertible debentures. Under certain conditions, the 10% coupon is payable entirely in cash at the election of Whitebox.
Whitebox may invest up to an additional $32.0 million in convertible debentures within 90 days of closing of the Financing.
Gevo used a portion of the proceeds from the financing to repay approximately $9.3 million in outstanding long-term debt obligations. Gevo intends to use the remaining proceeds from the financing to ramp up production and sales at its Luverne, MN, plant and may also use a portion of the proceeds from the financing to fund working capital and for other general corporate purposes.
Gevo’s underlying technology uses a combination of synthetic biology, metabolic engineering, chemistry and chemical engineering to focus primarily on the production and sale of isobutanol, as well as related products from renewable feedstocks.
Gevo’s strategy is to commercialize biobased alternatives to petroleum-based products to allow for the optimization of fermentation facilities’ assets, with the ultimate goal of maximizing cash flows from the operation of those assets. Gevo produces isobutanol, ethanol and high-value animal feed at its first fermentation plant in Luverne, MN. Gevo has also developed technology to produce hydrocarbon products from renewable alcohols.
Gevo currently operates its first biorefinery in Silsbee, TX, to produce renewable jet fuel, octane, and ingredients for plastics like polyester.