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In California, Aemetis (AMTX)
will acquire all of Edeniq’s outstanding shares in a stock plus
cash merger transaction.
In 2015, Edeniq generated approximately $20 million in revenue
and $6 million in positive EBITDA. Headquartered in Visalia,
California, Edeniq has 30 employees working at advanced research
and development facilities, as well as pilot plants funded through
grants from the DOE and the California Energy Commission.
Under the terms of the agreement, Aemetis expects to issue
between one and two million shares of its common stock (depending
on whether Edeniq stockholders elect to receive part of their
consideration in cash or stock) plus cash to be paid over the next
5 years in an amount of up to $20 million (up to $18 million if
Edeniq stockholders elect all stock consideration) in exchange for
all of the issued and outstanding shares of Edeniq.
Upon completion of the transaction, Edeniq will operate as a
wholly-owned subsidiary of Aemetis. The closing of the transaction
is expected to occur during the second quarter, and is subject to
customary closing conditions and approvals, including the approval
of Edeniq’s shareholders and the closing of financing by Aemetis
to refinance certain liabilities of Edeniq that exist prior to
Reaction from the stakeholders
“The acquisition of Edeniq will further Aemetis’ plan to lead the
deployment of technology to transition traditional biofuels plants
into the production of valuable advanced biofuels, upgrading the
existing infrastructure found at the 210 ethanol production
facilities operating throughout the United States,” said Eric
McAfee, Chairman and CEO of Aemetis, Inc. “Edeniq has commercially
deployed its patented cellulosic ethanol technology at a number of
leading US ethanol companies, and coupled with Aemetis’ extensive
biorefinery operating expertise, we expect to enhance this
technology to expand cellulosic feedstocks and to increase yields.
We believe Edeniq’s technology offers compelling advantages to
existing ethanol operators to increase profitability without
purchasing additional feedstock,” added McAfee.
“We believe that joining with Aemetis will enable Edeniq to
accelerate the deployment of the Pathway technology to the ethanol
industry,” said Brian Thome, President and CEO of Edeniq. “The
Edeniq team is also excited to be able to work day-to-day
alongside the Aemetis team to enhance our technology through
optimization and innovation at the Aemetis ethanol plant.”
The Digest’s Take
Well, Aemetis clearly is seeing the same opportunities we saw in
our profile earlier this week “How to make $250M in cellulosic biofuels with an
investment under $6M“.
We’ll see how the market looks at the deal tomorrow — to some
extent, depends how much debt is on Edeniq’s balance sheet, and
what their cash position was. But no doubt about it, Edeniq has
been on a customer roll of late, and for Aemetis to pick up $6M in
positive EBITDA for $23M, of which the cash is paid out over 5
years and is performance-based — well, in normal business
conditions, that’s a complete home run for Aemetis shareholders.
The deal, on the surface, self-finances.
Note the caveat that Aemetis has to “refinance certain
liabilities of Edeniq that exist prior to closing”. Looks like
Aemetis CEO Eric McAfee will need to hustle a whole stack of EB-5
investments in the near future.
In turn, Edeniq picks up a stronger capital structure for its
expansion, and locks in a commercial-scale customer. Already,
Flint Hills, Pacific Ethanol have also licensed the tech. We like
the deal, an awful lot.
The True Hollywood Backstory
We profiled Edeniq’s technology earlier this
week in this
Digest’s 5-Minute Guide.
Digest’s 5-Minute Guide
Jim Lane is editor and publisher of Biofuels Digest where this
was originally published.
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