Trash-to-biofuel developer Enerkem files for an IPO

Enerkem

Enerkem, which develops technology that turns waste into biofuel and has won federal government backing, on Friday filed for an IPO that could raise up to $125 million.

The Canadian company, founded in 2000, counts giant trash hauler Waste Management and oil refiner Valero among a list of investors. Other investors include Rho Ventures, Braemer Energy Ventures and the Westly Group.

Enerkem gasifies various forms of waste — everything from old telephone poles to mixed municipal garbage — and then turns that syngas into various fuels including methanol and ethanol. Enerkem has inked non-binding agreements with Waste Management and Valero to sell its equipment. The deals give Enerkem the option to co-own refineries with Waste Management and Valero.

Valero is on one side of Enerkem’s supply chain, and could work with Enerkem on commercial relationships to process and sell the fuels. Waste Management is on the other side of Enerkem’s supply chain, and we could envision Enerkem working with Waste Management’s trash supply.

Since 2008, Enerkem has been running a pilot plant in Sherbrooks, Canada, that can process 4.8 metric tons of feedstock a day, the company said in its SEC filing. Its demonstration plant, in Westbury, Canada, was built to produce 1.3 million gallons of fuels per year. The company is now building a commercial refinery, located in Edmonton, Canada, that will be able to make 10 million gallons per year. It expects to get ready for producing methanol at the Edmonton facility in the first quarter of 2013; ethanol production should follow in the second half of 2013.

Enerkem has secured a conditional commitment for an $80 million loan guarantee from the U.S. Department of Agriculture to help build a refinery in Pontotoc in Mississippi.

Some of the proceeds from the IPO will be used to build the Edmonton and Pontotoc plants, the company said.

The company hasn’t generated much revenues and has posted losses every year, according to its SEC filing. It posted no revenue for the first nine months of 2011 and C19.1 million in losses for the same period. In 2010, it reported C11.9 million in losses on C443,000 in revenues. It posted C3.7 million in losses on C691,000 in revenue in 2009.

Enerkem’s intent to make a public market debut follows several U.S. biofuel companies that have done that over the past year and the half or those that are on deck to go public, such as Coskata.

Photo courtesy of Enerkem

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