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Bankruptcy For KiOR

Cleantech: Troubled advanced biofuels maker defaulted on loan from Mississippi

by Melody M. Bomgardner
November 13, 2014 | A version of this story appeared in Volume 92, Issue 46

A worker makes an adjustment at KiOR’s cellulosic biofuels facility in Columbus, Miss.
Credit: KiOR
A worker making an adjustment at KiOR’s cellulosic biofuels facility last year.

Continuing a decline that began last year, the advanced biofuels maker KiOR filed for Chapter 11 bankruptcy protection on Nov. 9.

The move follows the firm’s Oct. 31 default on a $78.6 million debt repayment to the state of Mississippi, according to filings with the Securities & Exchange Commission (SEC). The default triggered an early-repayment requirement from other debt holders, including the province of Alberta, for an additional $234 million.

KiOR, which sought to convert wood into biofuels using a catalytic cracking process, has been in dire financial straits since late 2013. Despite significant financial backing from marquee investors Vinod Khosla and Bill Gates, it had been unable to produce promised volumes of biofuels from its commercial-scale facility in Columbus, Miss.

In January 2014, the company temporarily shut down the plant to improve output and the reliability of its pyrolysis and catalyst technology. But by the end of March, the plant had not produced any fuels, and the firm warned that it would run out of funds. Around the same time, SEC began an investigation of KiOR. Also, a group of investors sued the company for allegedly making misleading statements about expected production levels.

Many of KiOR’s private loans came from venture funds controlled by Khosla. Indeed, Khosla has made a bid for the firm’s assets, not including the Columbus facility, which is owned by a KiOR subsidiary and not included in the bankruptcy filing. Khosla also agreed to provide $15 million in financing to the bankrupt firm.

The state of Mississippi has its eye on the Columbus facility and would like to find a buyer. The state loaned KiOR money in 2010 expecting it to invest $500 million and create 1,000 jobs. Mississippi Development Authority spokeswoman Marlo Dorsey points out that KiOR had previously demonstrated its technology at a test facility in Pasadena, Texas. “The Columbus plant and company failures reveal the technical and economic complications cleantech companies have faced when attempting to scale fuel production to meet commercial market demands,” she observes.

In a statement about the bankruptcy filing, KiOR says it has refocused its efforts on R&D.



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