The following related files and links are available.
March 18, 2014 10:35:44 AM
KiOR may be done in Columbus.
The Texas-based alternative fuel company shut down operations at its local biomass conversion facility in December. In January, Fred Cannon, the company's president and CEO, said the plan was to spend the first three months of 2014 implementing improvements at the $225 million plant, which sits on 30 acres on The Island.
On Monday, however, the company filed its end-of-the-year financials with the Securities and Exchange Commission. The 257-page report paints a bleak picture of the company's future.
"We have substantial doubts about our ability to continue," the company states in the filing.
KiOR officials said the company needs to secure additional capital to continue operating. Until that happens the plant will remain in a "safe, idle state," KiOR officials said.
Last week, Vinod Khosla, an investor from California, committed up to $25 million to the company. That commitment will be made in monthly installments of no more than $5 million each month "and will be conditioned on the achievement of certain performance milestones to be mutually agreed between Mr. Khosla and us," the filing states.
But the investment is not finalized and if it does not become so by April 1 the company cannot fund operations. Other than Khosla's potential investment, the company has no financing in place. It does not expect other sources to materialize, according to the filing.
"This will likely cause us to default under our existing debt and we could be forced to seek relief under the U.S. Bankruptcy Code," the company states.
The company has $279.5 million worth of debt.
KiOR began converting wood chips to fuel in Columbus early last year. It ultimately produced 894,000 gallons of gasoline, diesel and fuel oil. While the 500-ton per day facility increased production steadily throughout the year, it failed to reach what the company calls "steady state" operations. The failure, KiOR says in Monday's filing, was due to "structural bottlenecks, reliability and mechanical issues, and catalyst performance."
The company has 183 employees. Roughly 100 work at the Columbus facility. In January, when Cannon announced that the plant had shutdown for improvements, he said those workers would remain in place. Monday's filing with the SEC does not spell out what the future of those jobs could be.
Last August, the company announced plans to build a second facility in Columbus while work continued on another plant in Adams County.
The company now says the second Columbus plant will not occur until 2015 -- if at all.
Last summer, a class-action lawsuit was filed against KiOR in federal court in Texas. The plaintiffs in that suit complain about the company's inability to meet projected production targets.
"We deny any allegations of wrongdoing and intend to vigorously defend against these lawsuits," the company states in Monday's filing.
The company also states that it is in danger of defaulting on a $75 million interest free loan it received from the Mississippi Development Authority. Under the terms of the deal, KiOR, by 2016, must make specific investments in the state totaling $500 million. The company spent $218 million on its plant and equipment through the end of 2013, according to the SEC filing.
In December 2012, the company began making semi-annual payments of $1.9 million to the state on its MDA loan. If it does not raise capital, however, the company will be unable to make its June 30 payment, according to the SEC filing.
"We will therefore be in default under the terms of that agreement," the filing states.
The company owes the state $69.4 million.
If Khosla's potential $25 million happens, KiOR expects to fund operations and meet its obligations through August. Additional funds, however, will be needed to continue operations after that, according to the SEC filing.
The Associated Press contributed to this article.
William Browning was managing editor for The Dispatch until June 2016.
1. Y accepting sealed bids for Camp Pratt COLUMBUS & LOWNDES COUNTY
2. Trotter shooting suspect arrested COLUMBUS & LOWNDES COUNTY
5. Ex-circuit clerk arrested for slapping woman STARKVILLE & OKTIBBEHA COUNTY