COLUMBUS, Mississippi — Alternative fuel manufacturer KiOR Inc. is putting its $225 million plant in Lowndes County in “idle” state until it can raise financing for more research and plant improvements.
The disclosure came in the company’s end-of-the-year financial filing with the U.S. Securities and Exchange Commission.
KiOR said idling the Columbus facility will “enable us to restart the facility upon the achievement of additional research and development milestones, consisting of process improvements and catalyst design, financing and completion of the optimization work. Unless and until we restart the Columbus facility, we expect to have no production or revenue from that facility.”
In that filing, KiOR also said an earlier announced second operation for Lowndes County will not occur until late 2015 — if at all.
The next-generation alternative fuels plant that started operating 18 months ago but has been plagued by operational and financial difficulties. The plant stopped production in December.
In January, the company announced it planned to stop operations during the first three months of this year for modifications to improve efficiency and output. At the time, company president Fred Cannon said the company needed to raise $10 million to pay for the upgrades and more than $20 million for additional research.
Last week, Vinod Khosla, an investor from California, committed up to $25 million to the company. That commitment will be made in monthly installments of no more than $5 million each month “and will be conditioned on the achievement of certain performance milestones to be mutually agreed between Mr. Khosla and us,” the filing states.
But the investment is not finalized and if it does not become so by April 1 the company cannot fund operations. Other than Khosla’s potential investment, the company has no financing in place. It does not expect other sources to materialize, according to the filing.
“This will likely cause us to default under our existing debt and we could be forced to seek relief under the U.S. Bankruptcy Code,” the Pasadena, Texas-based company said.
The filing gives no timetable for any plant restart or what may happen to its 100 employees. Last month, company President Fred Cannon said those workers would remain.
In January, KiOR paid Columbus and Lowndes County about $1 million in taxes but the future of those payments next year now is in doubt, which could cause a significant loss to city and city school finances.
In addition, KiOR said construction of its Natchez plant depends on its success of raising money and making improvements for the Lowndes plant.
“Because all of our production operations currently exist in a single facility in Columbus, significant and prolonged disruptions at the facility would have a material adverse effect on our business, financial condition and results of operations. We are pursuing steady state operations at this first-of-kind facility, and have had only limited sales of our cellulose fuel in 2013.
“During 2013, we experienced a number of disruptions and delays, and we expect that we will experience such events for some period following the Columbus optimization projects and upgrades and restarting the facility. We do not know when or if we will achieve stable operations at Columbus and this largely depends on our obtaining financing to fund our ongoing operations, to fund the completion of our optimization projects and upgrades, and to restart the facility,” the company said.
As of February 28, 2014, KiOR said it had aggregate debt of $279.5 million. KiOR said it owed $107.6 million to lenders, $95.7 million under a October 2013 Note Purchase Agreement; and $69.4 million under a loan with the Mississippi Development Authority.