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The resignation of a KiOR board member has exposed allegations that the publicly traded advanced biofuels firm likely knew in the spring of 2012 that its facility in Columbus, Miss., would not reach production targets but didn’t tell investors.
KiOR started up the facility in November 2012. It was intended to have an annual capacity of 13 million gal of diesel and gasoline made from woody biomass using pyrolysis and catalysts. During 2013, the firm’s executives said the technology was working and projected quarterly outputs of several hundred thousand gallons. The facility, however, never achieved even that level of production.
The allegations appear in a heavily redacted letter filed by KiOR with the Securities & Exchange Commission (SEC). The former director, Paul O’Connor, says he attended a board meeting in the spring of 2012 in which KiOR’s R&D director admitted that the firm “should not expect to reach the [redacted] at Columbus, but possibly at the next commercial plant including further reactor modifications.” O’Connor also claims that data he received showed very little progress in yields at the firm’s demonstration plant between 2009 and 2011.
O’Connor was one of the inventors of the technology that KiOR purchased for the Columbus plant. He served as the firm’s chief technology officer in 2008–09, was a member of the board of directors until 2011, and attended board meetings in 2012. He also served as a board member and technical adviser during 2014 to help address issues with technology at the plant.
KiOR’s filing makes counterclaims that O’Connor was forced to resign from the board because of his own actions. The board alleges that he withheld a third-party technology report from the company and failed to comply with its insider trading policy. KiOR also denies O’Connor’s claims and says it may pursue legal action against him.
SEC began an investigation of KiOR earlier this year and has issued two subpoenas for documents about progress at the Columbus facility, its projected biofuel production levels, and the status of its technology. A group of investors who bought stock in KiOR between August 2012 and August 2013 are suing the company for allegedly misleading them about the timing of projected production levels. During the period, KiOR’s stock price sank to $4.76 from $6.86 per share. It is now trading at 11 cents.
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