Biofuel Energy plans to fund ethanol endeavors with IPO
A Denver biofuel company that’s partnering with agribusiness giant Cargill plans a $300 million public offering to fund its ethanol efforts.
The stock sale by Biofuel Energy Corp. – less than two years after its founding – is more evidence of the movement to cash in on the growing ethanol industry.
The nation’s ethanol production has nearly doubled in the past four years to about 4.6 billion gallons a year and could double again by 2010.
“It is a good time, we think, to raise money for a renewable-energy company, particularly ethanol,” said Chief Executive Officer Scott Pearce, a mechanical engineer who’s worked at other energy companies. “It’s an efficient way to grow our business.”
Six Colorado companies have gone public this year: Chipotle, Crocs, Ascent Solar Technologies, Replidyne, Venoco and Smart Move. Biofuel Energy Corp. is one of five with a pending IPO, along with DCT Industrial Trust, National CineMedia, Ellora Energy and Local Matters.
Biofuel Energy Corp. has former Patina Oil & Gas CEO Thomas Edelman serving as its chairman. Before its 2005 sale to Noble Energy, Patina was one of the best-performing energy stocks in the United States. From 1999 to 2004, the company’s stock rose 1,295.8 percent.
“Tom is a very well-established energy executive and investor, and he provides the benefit of his strategic vision,” Pearce said.
Biofuel Energy Corp. has plants under construction in Wood River, Neb., and Fairmont, Minn., in hopes of opening them in the first quarter of 2008. The company picked out sites in Alta, Iowa, Gilman, Ill., and Atchison, Kan., for its third, fourth and fifth plants. A sixth site in Litchfield, Ill., will serve as either a backup site or location No. 6.
All the plants are planned close to the operations of Minneapolis-based Cargill, America’s second-largest private company, with nearly $70 billion in revenue, according to Forbes magazine. Cargill will obtain the corn for Biofuel Energy Corp. and will also lease grain-storage space to the company.
