Gevo Signs Definitive Supply Agreement with HCS Holding for Commercial Supply of Renewable Isooctane
May 04 2017 - 9:00AM
Gevo, Inc. (NASDAQ:GEVO), announced today that it has entered
into a Supply Agreement with HCS Holding GmbH (HCS) to supply
renewable isooctane under a five-year offtake agreement. HCS is a
leading global supplier of high-quality hydrocarbon specialty
products. Haltermann Carless, a subsidiary of HCS and one of the
oldest companies in the world of chemistry, is expected to be the
direct customer with Gevo under the Supply Agreement.
The Supply Agreement is consistent with the Letter of Intent
with HCS that Gevo announced earlier this year.
The Supply Agreement has two phases:
- In the first phase, HCS will purchase isooctane produced at
Gevo’s demonstration hydrocarbon plant located in Silsbee,
Texas. This first phase commences in May 2017 and would
continue until completion of Gevo’s first large-scale commercial
hydrocarbon plant. Gevo estimates that this could generate up to
$2-3 million of gross revenue per year.
- In the second phase, HCS has agreed to purchase 300,000 gallons
of isooctane per year with an option to purchase an additional
100,000 gallons of isooctane per year, under a five-year offtake
agreement. The Supply Agreement contains a selling price that is
expected to allow for an appropriate level of return on the capital
required to build out Gevo’s existing production facility
in Luverne, Minnesota. Gevo would supply this isooctane from
its first commercial hydrocarbon facility, which is expected to be
built at Gevo’s existing isobutanol production facility located in
Luverne, Minnesota (the “Expanded Luverne Plant”). Based on Gevo’s
current estimates, this Supply Agreement would represent
approximately 10-15% of the isooctane production from the Expanded
Luverne Plant.
Gevo’s primary market development target in 2017 is to enter
into binding supply contracts for its renewable isobutanol,
isooctane, and alcohol-to-jet fuel (“ATJ”) that represents the
majority of the production volume to be produced at the Expanded
Luverne Plant. Gevo believes that such contracts would underpin the
economics of the expansion, which should facilitate the raising of
the capital necessary to finance the Expanded Luverne Plant,
potentially at a lower cost of capital than what it has
historically achieved through the issuance of common stock and
warrants in underwritten public offerings.
“We are very pleased to work with Gevo to further develop the
renewable isooctane market,” says Henrik Krüpper, HCS Chief
Commercial Officer and member of HCS Executive Committee. He adds:
“Sustainability is a key element of our business strategy. With
Gevo we have found the ideal partner to further expand our advanced
ecological-sound portfolio for our customers. Gevo has created a
unique product with very large potential that fits well into our
long-term strategy. As our relationship with Gevo builds, we look
forward to marketing other bio-based materials.”
It continues to be the intent of Gevo and HCS to establish
further offtake arrangements for other products such as Gevo’s ATJ
and isobutanol.
“The agreement with HCS is a key milestone for Gevo and
represents our first definitive purchase agreement for long-term
supply from our first commercial scale hydrocarbon site. As we
communicated during our last conference call, one of our critical
strategic objectives is to secure binding supply contracts for a
combination of isobutanol and related hydrocarbon products
representing at least 50% of the capacity at the expanded Luverne
plant. This is exactly the type of deal I was referencing and we
are excited to get the first one on the books,” said Dr. Patrick
Gruber, Gevo’s Chief Executive Officer.
Mr. Gruber continued, “I believe the combination of our
restructured balance sheet and the agreement with HCS bodes well
for our ability to pursue additional agreements going forward. We
are reaching a critical commercial inflection point and excited to
work with marque customers like HCS. We are making good progress
towards the goals we set out at the beginning of the year and are
actively pursuing additional agreements.”
About Gevo
Gevo is a renewable technology, chemical products, and next
generation biofuels company. Gevo has developed proprietary
technology that uses a combination of synthetic biology, metabolic
engineering, chemistry and chemical engineering to focus primarily
on the production of isobutanol, as well as related products from
renewable feedstocks. Gevo’s strategy is to commercialize bio-based
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
fermentation plant in Luverne, Minnesota. Gevo has also developed
technology to produce hydrocarbon products from renewable alcohols.
Gevo currently operates a biorefinery in Silsbee, Texas, in
collaboration with South Hampton Resources Inc., to produce
renewable jet fuel, octane, and ingredients for plastics like
polyester. Gevo has a marquee list of partners including The
Coca-Cola Company, Toray Industries Inc. and Total SA, among
others. Gevo is committed to a sustainable bio-based economy that
meets society’s needs for plentiful food and clean air and
water.
About HCS Holding and Haltermann CarlessHCS
Holding is one of the leading manufacturers of high-quality
hydrocarbons and specialty chemicals. The company employs about 500
people worldwide. The products are sold worldwide through the
traditional brands Haltermann Carless, ETS Racing and EOS. HCS
belongs to H.I.G. Europe, a subsidiary of the US private equity
investment company, H.I.G. Capital.
Haltermann Carless's tradition-steeped history is rooted in two
of the oldest chemical companies worldwide and combines the
creative power of two exceptional chemists – Johann Haltermann and
Eugene Carless. As an expert on solvents and other
hydrocarbon-based products, companies from all over the world and
from numerous industries rely on innovative solutions from
Haltermann Carless. The company operates a network of
state-of-the-art facilities for refining, processing and blending
to produce a wide variety of specialty products in key business
areas: Automotive, Middle Distillates, Oil & Gas, Pentanes,
Performance Fuels, Performance Solvents and Special Aromatics.
For more information visit: http://www.h-c-s-group.com;
www.haltermann-carless.com;
Forward-Looking Statements
Certain statements in this press release may constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements, which include statements relating to Gevo’s ability to
finance, construct and operate the Expanded Luverne Plant to
produce the isooctane to be sold to HCS Holding pursuant to the
Supply Agreement and whether HCS Holding will purchase the
isooctane contemplated in the Supply Agreement, are made on the
basis of the current beliefs, expectations and assumptions of the
management of Gevo and are subject to significant risks and
uncertainty. Investors are cautioned not to place undue reliance on
any such forward-looking statements. All such forward-looking
statements speak only as of the date they are made, and Gevo
undertakes no obligation to update or revise these statements,
whether as a result of new information, future events or otherwise.
Although Gevo believes that the expectations reflected in these
forward-looking statements are reasonable, these statements involve
many risks and uncertainties that may cause actual results to
differ materially from what may be expressed or implied in these
forward-looking statements. For a further discussion of risks and
uncertainties that could cause actual results to differ from those
expressed in these forward-looking statements, as well as risks
relating to the business of Gevo in general, see the risk
disclosures in the Annual Report on Form 10-K of Gevo for the year
ended December 31, 2016, and in subsequent reports on Forms 10-Q
and 8-K and other filings made with the U.S. Securities and
Exchange Commission by Gevo.
Media Contact
David Rodewald
The David James Agency, LLC
+1 805-494-9508
gevo@davidjamesagency.com
Investor Contact
Shawn M. Severson
EnergyTech Investor, LLC
+1 415-233-7094
gevo@energytechinvestor.com
@ShawnEnergyTech
www.energytechinvestor.com
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