Gevo Completes $210M Acquisition of Red Trail Energy

By Tamara Parker • Monday, February 03 10:15 • Permanent Link

Gevo, Inc. (NASDAQ: GEVO) has completed the acquisition of Red Trail Energy, LLC's ethanol production plant, carbon capture and sequestration assets, and pore space in Richardton, North Dakota for an aggregate purchase price of $210 million. This acquisition is expected to contribute $30 million to $60 million of adjusted EBITDA to Gevo annually.

Gevo CEO, Patrick Gruber, stated that the acquisition is a key step in the company's path to becoming self-sustaining and profitable, in advance of their NZ1 project coming online. The company funded the transaction with a combination of Gevo equity capital and a $105 million senior secured term loan facility from Orion Infrastructure Capital (OIC), a U.S. based private investment firm. OIC has also indicated interest in providing up to an additional $100 million for future growth projects at Net-Zero North.

Chris Ryan, President and COO of Gevo, highlighted that the Net-Zero North plant is projected to achieve a carbon intensity ("CI") score in the low 20s, which is approximately 30 CI points lower than the best plants that are not connected to CCS. British Columbia previously scored the Net-Zero North plant at a CI of 19.

Gevo also announced that Ocean Park Securities, LLC acted as the exclusive financial advisor and sole lead arranger on the debt financing for the acquisition.

Gevo will hold a conference call on February 3, 2025, at 10:00 am ET to discuss the acquisition. Further information regarding the acquisition and accompanying debt financing will be included in the current report on Form 8-K, which Gevo will file with the U.S. Securities and Exchange Commission (SEC).

Gevo is a next-generation diversified energy company committed to fueling America's future with cost-effective, drop-in fuels. The company owns and operates one of the largest dairy-based renewable natural gas ("RNG") facilities in the United States and operates an ethanol plant with an adjacent CCS facility.

OIC, the financing partner for this acquisition, is an investment firm with approximately $5 billion in assets under management, focusing on cultivating creative credit, equity, and growth capital solutions for middle market businesses in various sectors including renewable fuels and sustainable infrastructure.

It's important to note that the figures mentioned in the press release are as follows: The acquisition cost Gevo $210 million The acquisition is expected to contribute $30 million to $60 million of adjusted EBITDA annually OIC provided a $105 million senior secured term loan facility OIC has indicated interest in providing up to an additional $100 million for future growth projects at Net-Zero North As a result of these announcements, the company's shares have moved -4.8% on the market, and are now trading at a price of $1.68. For the full picture, make sure to review Gevo's 8-K report.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.