Biofuel company Coskata files for a $100M IPO

Coskata: So Close, Yet So Far for the Cellulosic Ethanol Biz

Biofuel companies, many without revenues or commercial products, continue to shoot for IPOs. Late on Friday, Coskata, which has no revenues and hasn’t built its first commercial plant yet, filed an S-1 for an IPO that could raise up to $100 million.

Coskata is a five-year-old company that launched with a goal to produce commercial-scale ethanol for under $1 per gallon, made from either biomass (like energy crops switch grass), municipal solid waste or other recycled materials. The company has received backing from venture firms Khosla Ventures, Advanced Technology Ventures, Great Point Ventures and General Motors.

But over the past couple of years of the recession the company has struggled and had to put off building its first commercial plant. Back in early 2009, Coskata execs told me that the company was hoping to break ground on its first commercial plant — expected to produce 50-100 million gallons of ethanol annually — that year, with a plan to complete the factory in late 2010 or early 2011.

That didn’t happen and in Coskata’s S-1 it says “in 2012 we expect to begin constructing our first commercial-scale cellulosic ethanol production facility.” Coskata now plans to build its first commercial facility in Boligee, Alabama, with an initial production capacity of 16 million gallons of ethanol per year, rising to 78 million gallons of ethanol per year over time. At that facility Coskata says it will be able to make cellulosic ethanol for a cost of less than $1.50 per gallon.

Given Coskata hasn’t built its first commercial plant, it has no revenues coming in. At all (there’s a line through the revenues portions for every year). For nine months ending September 30, 2011, Coskata had a net loss of $23.3 million, and had a similar net loss for 2010. As of September 30, 2011, Coskata had an accumulated deficit of $88.2 million.

Coskata says it will pay for the first phase of construction of its first plant with funds from the IPO as well as $87.9 million of debt financing that was raised with a loan guarantee (for 90 percent of the loan) from the USDA based on its 9003 Biorefinery Assistance Program. Coskata says it hasn’t yet lined up financing for building the second phase of the plant.

The funding for the first phase of the plant isn’t a done deal yet — the $87.9 million of debt financing is via a Memorandum of Understanding, the USDA loan is a conditional commitment that will only go through if certain terms are met, and clearly the IPO fund raise hasn’t happened yet.

Khosla Ventures owns 27.7 percent of Coskata’s shares before the offering, Blackstone owns 20.4 percent, Advanced Technology Ventures owns 17.68 percent, and Great Point Ventures owns 15.64 percent. Coskata raised $20 million in a Series D round with existing investors in August 2011.

Mascoma is another company that has a planned IPO in the works. In recent months, biofuel and biochemical makers Amyris, Gevo, KiOR, and Solazyme have all gone public, and most saw their shares take a dive after the IPO.


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