In California, Aemetis (AMTX) will acquire all of Edeniq’s outstanding shares in a stock plus cash merger transaction.
In 2015, Edeniq generated approximately $20 million in revenue and $6 million in positive EBITDA. Headquartered in Visalia, California, Edeniq has 30 employees working at advanced research and development facilities, as well as pilot plants funded through grants from the DOE and the California Energy Commission.
Under the terms of the agreement, Aemetis expects to issue between one and two million shares of its common stock (depending on whether Edeniq stockholders elect to receive part of their consideration in cash or stock) plus cash to be paid over the next 5 years in an amount of up to $20 million (up to $18 million if Edeniq stockholders elect all stock consideration) in exchange for all of the issued and outstanding shares of Edeniq.
Upon completion of the transaction, Edeniq will operate as a wholly-owned subsidiary of Aemetis. The closing of the transaction is expected to occur during the second quarter, and is subject to customary closing conditions and approvals, including the approval of Edeniq’s shareholders and the closing of financing by Aemetis to refinance certain liabilities of Edeniq that exist prior to closing.
Reaction from the stakeholders
“The acquisition of Edeniq will further Aemetis’ plan to lead the deployment of technology to transition traditional biofuels plants into the production of valuable advanced biofuels, upgrading the existing infrastructure found at the 210 ethanol production facilities operating throughout the United States,” said Eric McAfee, Chairman and CEO of Aemetis, Inc. “Edeniq has commercially deployed its patented cellulosic ethanol technology at a number of leading US ethanol companies, and coupled with Aemetis’ extensive biorefinery operating expertise, we expect to enhance this technology to expand cellulosic feedstocks and to increase yields. We believe Edeniq’s technology offers compelling advantages to existing ethanol operators to increase profitability without purchasing additional feedstock,” added McAfee.
“We believe that joining with Aemetis will enable Edeniq to accelerate the deployment of the Pathway technology to the ethanol industry,” said Brian Thome, President and CEO of Edeniq. “The Edeniq team is also excited to be able to work day-to-day alongside the Aemetis team to enhance our technology through optimization and innovation at the Aemetis ethanol plant.”
The Digest’s Take
Well, Aemetis clearly is seeing the same opportunities we saw in our profile earlier this week “How to make $250M in cellulosic biofuels with an investment under $6M“.
We’ll see how the market looks at the deal tomorrow to some extent, depends how much debt is on Edeniq’s balance sheet, and what their cash position was. But no doubt about it, Edeniq has been on a customer roll of late, and for Aemetis to pick up $6M in positive EBITDA for $23M, of which the cash is paid out over 5 years and is performance-based well, in normal business conditions, that’s a complete home run for Aemetis shareholders. The deal, on the surface, self-finances.
Note the caveat that Aemetis has to “refinance certain liabilities of Edeniq that exist prior to closing”. Looks like Aemetis CEO Eric McAfee will need to hustle a whole stack of EB-5 investments in the near future.
In turn, Edeniq picks up a stronger capital structure for its expansion, and locks in a commercial-scale customer. Already, Flint Hills, Pacific Ethanol have also licensed the tech. We like the deal, an awful lot.
The True Hollywood Backstory
We profiled Edeniq’s technology earlier this week in this Multi-Slide Guide.
Edeniq: The Digest’s 5-Minute Guide.
Aemetis: The Digest’s 5-Minute Guide