Shares of BioFuel Energy (BIOF +132.4%) more than double after the company received a $275M buyout proposal late Friday from Greenlight Capital and James Brickman of JBGL Funds for the 64.5% of the company they don't already own.
Greenlight's David Einhorn and Brickman said the proposal provides an opportunity to acquire an interest in a business with long-term equity potential and an attractive portfolio of assets.
BIOF said its board will establish a special committee of independent directors to evaluate the transaction, as well as alternatives for the company.
The move is providing a lift for most other alternative energy companies: KIOR +39.7%, GPRE +3.7%, REGI +4.4%, SYNM +5.9%, REX +0.1%, PEIX -1.9%, GEVO flat.
Gevo (GEVO +5.9%) shares are strong on news earlier that Argentina ethanol producer Porta Hnos signed a letter of intent to become the exclusive licensee of Gevo's GIFT technology in the country to produce renewable isobutanol.
Porta also has designed and built two 250 m3/day ethanol plants for others and is working on two more ethanol plants for 2014; half of all current ethanol plants in Argentina were designed by Porta.
Butamax Advanced Biofuel, funded by DuPont (DD) and BP, is retrofitting an ethanol plant in Minnesota to begin making butanol in commercial volumes in 2015, and Gevo, backed by Total (TOT) and billionaire Richard Branson, already runs a distillery in the state; both groups say they’ve lined up clients for large-scale deliveries.
“With ethanol dominant as a gasoline additive, the U.S. fuel industry simply hasn’t had much reason for adoption of butanol, [but] that may be starting to change now that ethanol is hitting a blend wall," says Raymond James analyst Pavel Molchanov.
Funds raised by the offering will be used to restart biofuel production at its facility in Luverne, Minn., and repay $5.1M in long-term debt; Gevo halted production of isobutanol in Luverne in Sept. 2012 after contamination issues prompted an adjustment of its manufacturing process.
Gevo cancels plans to issue convertible senior notes.
Archer Daniels Midland (ADM) complained it had invested in renewable fuel projects "on the basis of firm legislative commitments" and across two presidential administrations.
Green Plains (GPRE) CEO Todd Becker calls the prospect of the U.S. turning away from a cheap and domestically produced fuel source "disgraceful."
Although "disappointed," Renewable Energy (REGI) CEO Daniel Oh says the company's scale would "allow us to continue to succeed."
"While we still think a large U.S. corn crop in 2013 will benefit other ADM businesses, we see the renewable fuel proposal as adding risk to the shares," says S&P Capital IQ's Tom Graves, who downgraded ADM shares to Sell from Hold after the announcement.
Gevo's (GEVO +10.1%) strong gains are sparked by news that Ford (F) and Coca-Cola (KO) plan to turn bottles into car parts using Gevo's PlantBottle technology, which is made up of 30% plant-based materials.
Ford's Fusion Energi plug-in hybrid vehicle will use PlantBottle interior fabric surfaces covering seat cushions, seat backs, head restraints, door panel inserts and headliners; the research vehicle marks the first time PlantBottle technology is applied beyond packaging.
PlantBottle essentially uses ethanol derived from sugar cane to create a modified PET which replaces regular petroleum-based PET.
Obama administration officials, under pressure from producers of advanced biofuels, reportedly have told industry reps that they’re considering raising the quota for their product next year above what was contained in an August draft plan.
EPA officials are said to have indicated plans to offer a range for the mandate that would allow it to increase from the 2.21B gallons set in the leaked draft plan, but the range could still leave the final quota below the 3.75B gallons set by the 2007 legislation establishing the program.