Cleantech-focused investment firm Khosla Ventures and Bill Gates are to provide $100m in committed equity-related financing for Texas-based biofuel manufacturer Kior in a show of continued support for the company.
Last month Vinod Khosla and his firm were said to be providing a combined $50m to kickstart a fund for Kior to construct an additional biofuel factory, after missing production targets by 75 per cent in August.
Now Kior has upped that to $100m in committed equity related financing in two seperate placement transactions to support its recently announced expansion of production capacity in Columbus, Mississippi – the Columbus II project, which aims to achieve positive cash flow for the company.
The financing is comprised of $85m in convertible notes and future equity commitments by various Khosla entities, in addition to a $15m stock purchase and future equity commitment from a ‘Bill Gates affiliate’, according to a statement from Kior.
The first placement of $85m – from Khosla Ventures III and other Khosla entities – consists of the immediate issuance of $42.5m of senior secured mandatorily convertible notes, plus the conversion of $53,197,308 of the company’s existing senior debt held by the Khosla entities.
Those notes will convert into Class A common stock at a price of $2.897 per share, representing a 25 per ecnt premium to the average 20-day daily volume weighted average price of the stock up to 17 October 2013.
In addition, the company received commitments to purchase up to an additional $42.5m of Class A common stock. The conversion of the notes are dependent on the company fully funding the Columbus II project – which it expects to complete through a debt offering.
The second tranche of financing, $15m, comes from new investor Gates Ventures, an affiliate of Bill Gates. That equity financing consists of the immediate purchase of $7.5m of Class A common stock and the commitment to purchase a further $7.5m of Class A common stock. Similar to the agreement of the other funding, the future commitment is also contingent on the company’s full funding of Columbus II.
‘This equity financing completes what we currently believe will be the last equity portion of the Columbus II Project, which we believe, will facilitate the ability, with the remainder of our currently anticipated project financing requirements, to achieve positive cash flow from operations sometime in 2015,’ said Fred Cannon, Kior’s CEO.
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