Gevo recently completed the acquisition of Red Trail Energy’s ethanol production plant and carbon capture and sequestration assets (CCS) in North Dakota for $210 million.
The newly acquired assets include the plant and pore space in Richardton, North Dakota; and Gevo also is bringing on the operation’s personnel, the company said. In addition to creating another strategic option for economic and competitively advantaged sustainable aviation fuel (SAF) facilities, this acquisition is expected to contribute $30 million to $60 million of Adjusted EBITDA annually.
The acquired assets will be renamed Net-Zero North.
“This transformational acquisition marks the start of Net-Zero North,” Gevo CEO Patrick Gruber said in a news release. “Looking forward, this is a great site to expand the plant to produce SAF, along with other additional co-located projects. We like the potential annual Adjusted EBITDA of $30 million to $60 million, synergies with the existing Gevo platform of assets, and having CCS assets in the Gevo portfolio as a risk mitigation tool for carbon sequestration for our Net-Zero 1 [NZ1] plant under development in South Dakota. The proven CCS site will allow us to permanently sequester biogenic carbon dioxide to produce U.S. 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.”
See also: Gevo to acquire ethanol plant for $210M
The transaction was funded with a combination of Gevo equity capital and a $105 million senior secured term loan facility from Orion Infrastructure Capital (OIC), a U.S.-based private investment firm. OIC also indicated interest in providing up to an additional $100 million in debt for future growth projects at Net-Zero North that are mutually agreed upon, Gevo reported. In addition, OIC is investing $5 million in equity at Net-Zero North, which is in addition to the equity contributed by Gevo.
The investment comes from OIC’s Infrastructure Credit Strategy, which provides non-dilutive and flexible capital to middle market infrastructure businesses in North America. The strategy seeks to capitalize on the growing need for investment and innovation in sustainable Infrastructure in North America.
“We are thrilled to partner with the Gevo team on this acquisition,” said Ethan Shoemaker, investment partner and head of infrastructure credit at OIC. “The Net-Zero North assets bring together operating carbon sequestration, a strong track record of profitability, near-term upside from their industry-leading carbon intensity score, a strong operating team, and room to grow. We are also excited about the potential synergies and incremental value that the Gevo team and platform of assets brings to the Net-Zero North business.”