June 18, 2014 10:50:29 AM
KiOR laid off approximately 18 employees at its Columbus facility Tuesday and that is likely only the beginning.
The Texas-based alternative fuel maker built a $218 million facility on The Island in 2011. The plant converts wood chips to fuel, but has not operated in more than six months as the company has struggled to perfect its first-of-its-kind process.
Fred Cannon, the company's CEO, said KiOR would spend the first three months of 2014 focusing on research and development and technical improvements at the plant. The company, though, is running out of money.
"Given the company's limited cash flow, we do anticipate additional layoffs," the company said in a statement to The Dispatch on Tuesday. "This will occur as required over the next one to two months."
Fifty-five employees remain at the facility today, according to KiOR.
Last month, the company, in a Securities and Exchange Commission filing, stated that it did not believe it could restart the Columbus facility "on an economically viable basis at this time."
Company officials have stated that if more financing does not materialize by the end of August, bankruptcy is likely. KiOR has $279.5 million of debt.
More than $69 million of that debt is owed to the Mississippi Development Authority, which loaned the company $75 million. MDA is aware of the round of layoffs KiOR had Tuesday, according to Jeff Rent, spokesperson with MDA.
Rent said KiOR has made three payments of $1.875 million on its loan and each payment has been on time. The next payment is due in less than two weeks.
"The state will take all possible steps to recover tax dollars if the company fails to meet the terms of (its agreement)," Rent said. "MDA will remain in regular contact with the company as they work through these challenges."
The state is the first lien holder on the equipment at the KiOR plant in Columbus.
In late March, the company entered into a deal worth $25 million with a company controlled by Vinod Khosla, a billionaire California investor. The company stated at the time that the deal would keep KiOR out of bankruptcy through August.
Joe Max Higgins, the CEO of the Golden Triangle Development LINK, said that while there is always hope that the company can turn its operation around and make it work in Columbus, the fact that employees are being laid off says a lot.
"They value their workforce," Higgins said. "I know that for a fact."
Higgins, who learned of the layoffs Tuesday morning, added that the employees being let go are highly-skilled and will hopefully be able to land another a job quickly.
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