Zinger Key Points
- Gevo acquires Red Trail Energy’s ethanol plant and CCS assets for $210M.
- Renames acquired assets "Net-Zero North," targeting $30M–$60M annual Adjusted EBITDA.
- Get Pro-Level Earnings Insights Before the Market Moves
Gevo, Inc. GEVO shares are trading lower on Monday. The company acquired Red Trail Energy’s ethanol production plant and carbon capture and sequestration (CCS) assets for $210 million.
The acquisition includes the plant, pore space, and operational personnel, providing a strategic option for sustainable aviation fuel (SAF) production.
The acquired assets, now renamed “Net-Zero North,” are expected to contribute $30 million to $60 million in annual Adjusted EBITDA for Gevo.
Gevo financed the buyout through a mix of Gevo’s equity capital and a $105 million senior secured term loan from Orion Infrastructure Capital (OIC).
OIC has also expressed interest in providing up to an additional $100 million in debt for future mutually agreed-upon projects at Net-Zero North.
Additionally, OIC is investing $5 million in equity at Net-Zero North, complementing Gevo’s equity contribution.
Gevo Chief Executive Officer, Patrick Gruber said, “The proven CCS site will allow us to permanently sequester biogenic carbon dioxide to produce US products with the highest quantity and quality of carbon abatement to address a growing global market demand.”
“Net-Zero North is a key step on our path to becoming self-sustaining and profitable as a company in advance of our NZ1 project coming online.”
Chris Ryan, President and Chief Operating Officer, added, “Net-Zero North, with its efficient operating profile and CCS, is projected to achieve a carbon intensity (“CI”) score in the low 20s (not including improved agricultural results that farmers can achieve using regenerative agriculture practices) using the variation of the GREET model proposed in the Section 45Z rule.”
“We believe that is about 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. This is a great starting point to expand Gevo’s business.”
Investors can gain exposure to the stock via Invesco Wilderhill Clean Energy ETF PBW and Invesco Global Clean Energy ETF PBD.
Price Action: GEVO shares are down 3.13% at $1.705 at the last check Monday.
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