Gevo Completes $210MM Red Trail Assets Deal for Ethanol Plant
Gevo Inc. has completed its deal to buy Red Trail Energy LLC’s ethanol production plant and carbon capture and sequestration assets for $210 million.
The deal’s assets include the plant and pore space and will be renamed “Net-Zero North,” according to Gevo’s Feb. 3 press release.
Gevo plans to expand the plant’s capabilities to produce sustainable aviation fuel and permanently sequester biogenic CO2 to produce low-carbon products. It is expected to contribute up to $60 million of adjusted EBITDA to Gevo, and the company plans to capitalize on the ethanol plant’s eligibility for the 45Z tax credit.
“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,” Gevo CEO Patrick Gruber said in the announcement.
Gevo said it funded the transaction with a combination of Gevo equity capital and a $105 million senior secured term loan facility from private-investment firm Orion Infrastructure Capital. Orion will also be investing $5 million in equity into Net-Zero North, with the plan to provide another $100 million in debt for mutually agreed upon future growth projects.