Whitebox agrees $26m financing

US investment firm Whitebox Advisors has provided a $25.9 million term loan to renewable technology company Gevo, the latter said in a statement.

Financing consists of a senior secured term loan exchangeable into senior secured convertible debentures. Aggregate proceeds from the term loan are $25.9 million with an option for Gevo to draw an additional $5.2 million, subject to certain ownership limitations.

Whitebox may invest up to an additional $32 million in convertible debentures within 90 days of the closing of the financing, the statement said.

Some of the proceeds have been used to repay approximately $9.3 million in outstanding long-term debt obligations. Gevo intends to use the remainder to ramp up production and sales at its Luverne plant in Minnesota. It might also use a portion to fund working capital and other general corporate purposes.

The term loan includes a first priority lien on all of Gevo’s assets and carries a 15 percent coupon, of which 5 percent is payable in cash and 10 percent is payable in kind and capitalised to the principal amount of the term loan. The term loan is exchangeable into convertible debentures within 90 days of closing.

The convertible debentures can be converted into common stock of Gevo at a price equal to the lesser of $1.49 or a 15 percent premium to the five day forward looking volume weighted average price following closing of the financing.

They carry a 10 percent coupon of which 5 percent is payable in cash and 5 percent is payable in kind and capitalised to the principal amount of the convertible debentures. Under certain conditions the 10 percent coupon is payable entirely in cash at the discretion of Whitebox.

Gevo’s strategy is to commercialise bio-based alternatives to petroleum-based products. The firm produces isobutanol, ethanol and high-value animal feed at its first fermentation plant in Luverne.