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York Times Business (January 7, 2008) A
Silver Lining Behind Imperium’s Aborted I.P.O.? The announcement last week by Imperium Renewables, a biodiesel producer, that it had withdrawn its plan to go public, amounted to an admission that Imperium was overly ambitious in gauging investor demand for alternative energy stocks, The Deal.com’s Tech Confidential blog argued. It also dashed the hopes of investors for a quick turnaround on Imperium’s massive $113 million Series B investment round last February. Inability to flip the company to the public early in its development exhibits the perils of financing large alternative energy projects using equity investment and could deter venture investors from similar capital-intensive bets on emerging clean technologies, the blog said. Still, it may be good news for the sector in general, it argued, saying that may be a sign that the alternative energy market is not heading for a bubble. Techconfidential.com (January 4, 2008) Imperium IPO bust pops incipient alt-energy bubble Hopes of investors for a quick turnaround on biodiesel developer Imperium Renewables Inc.'s massive $113 million Series B investment round last February were dashed Thursday when the Seattle company announced that it was withdrawing a plan to go public. Although the move may be a setback for Imperium, advocates of new and more flexible types of financing for alternative energy projects could wind up cheering the news as a way of avoiding a bubble in the sector. The announcement is not too surprising, and it takes some pressure off the company as it moves forward with development plans using what is still a large war chest from its private investors. But it is an admission that Imperium was overly ambitious in gauging investor demand for alternative energy stocks. Inability to flip the company to the public early in its development exhibits the perils of financing large alternative energy projects using equity investment and could deter venture investors from similar capital-intensive bets on emerging clean technologies. But in the long run, avoiding a bubble in alternative energy equity investment could be a boon for an emerging market of asset-based debt and new types of financing for the sector. A recent report by London's New Energy Finance Ltd. showed that investment in clean energy worldwide was up 40% to $117.2 billion in 2007. But the research also highlighted the dominant role of asset financing in attaining that record number, accounting for more than half of the total. While the report showed that venture capital and private equity investment in the sector grew 27% to $8.5 billion, it noted that investors are retreating from later-stage deals to focus on earlier technology-based investments. Imperium took advantage of growing interest in biodiesel as the environmental and financial downside of ethanol production drew increased attention. Imperium founder John Plaza, who regained his CEO spot in late December with the resignation of Martin Tobias, told me at the time that the company essentially decided to go with equity financing for its initial large plant in Grey's Harbor, Wash., simply because it could. But he also said Imperium would seek asset-based debt financing for additional plants in Hawaii, Argentina and an additional unnamed location. The bulk of asset financing in clean energy in 2007 went to wind energy projects, which with the help of regulation in Europe has a relatively stable economic future. Wind accounted for nearly half of all asset-based deals, at $24.6 billion, but biofuels drew $14.5 billion, and biomass and waste projects drew another $7.1 billion. While Imperium's cancellation of its initial public offering certainly casts greater doubt on the biodiesel sector as a whole (and doubts about the company's sourcing and management instability certainly don't help), the decision could ultimately mean a better return for investors. If the company can complete new projects with leveraged asset financing and keep equity dilution to a minimum, Series B investors Ardsley Partners, Attractor Investment Management Inc. , BlackRock Investment Management Ltd., Capricorn Management LLC , Ecofin Ltd., Robeco, Silver Point Capital, Southport Energy Alternatives, Stark Biodiesel Investments Ltd. and Treaty Oak Capital Management, and particularly longtime backers Technology Partners, Nth Power and Vulcan Capital, could see a home run once the company goes to the public markets. - Clifford Carlsen RoguePundit: Musings from Southern Oregon (January 06, 2008) The Biodiesel Boom...and Bust Back in the summer of 2006... Imperium Renewables, a 2-year-old Seattle company backed by billionaire Paul Allen, plans to control 40 percent of the growing U.S. market for diesel fuel made from vegetable oil by 2009. Imperium said last month that it will build a plant in Grays Harbor that will be the largest biodiesel refinery in the U.S. The plant, set to open a year from now, will make 100 million gallons a year. Three more of that size are planned by the end of 2008, Imperium Chief Executive Martin Tobias said Monday. The U.S. last year produced about 75 million gallons of biodiesel, which is made mostly from soybeans, according to the National Biodiesel Board, a trade group in Jefferson City, Mo. Output will reach 1 billion gallons a year by 2009, Tobias said. The $78 million plant, which opened in August, is "feedstock agnostic," giving Imperium considerable flexibility when it comes to finding the best deals on renewable oils. But, the Northwest doesn't have the canola production to fill much of the plant's capacity, and the price of soybeans has spiked in recent years. Thus right now, most (if not all) of the feedstock is Canadian canola oil and Malaysian palm oil. We're reducing our dependency upon foreign oil by increasing our dependency upon edible foreign oils...which are also getting more expensive. Biodiesel producers are helped by a range of government subsidies and incentives, plus an increasing number of mandates driving the use of biodiesel. Tobias used to say that biodiesel production would be profitable so long as the price of a barrel of oil remained above $50 dollars. But now at almost twice that price... Two weeks after its chief executive officer quit, biodiesel producer Imperium Renewables said Thursday that it would officially postpone an initial public offering because of "unfavorable market conditions" and that cutbacks or layoffs are possible. ... Imperium filed for the IPO--which was expected to raise $345 million--in May. The company said it would use about $220 million from the stock sale to open 100-million-gallon refineries in Hawaii, Argentina and Philadelphia. It is unclear whether the company will now continue with those plans. Spokesman John Williams said cutbacks or layoffs at the 107-employee company could occur because of the cancellation of the IPO, but he could not comment on the fate of the planned refineries, stating only that it was "logical to assume that building three more plants requires more capital." |
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Hawaiian Electric Company (HECO)
proposed to use biofuel for its proposed 2009 Campbell Industrial Plant
HECO decides to sign a contract with Imperium Renewables LLC The Hawaii Public Utilities Commission opened a regulatory docket (2007-0346) to examine the fuel contract between Hawaiian Electric and Imperium Renewables. (On October 18, 2007) Most of the contract is redacted to prevernt public review. HECO has failed to update the PUC on the status of the proposed contract. (As of January 7, 2008) Imperium Renewable is using foreign oil to power their Seattle Plant: the feedstock is Canadian canola oil and Malaysian palm oil |