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ENGLEWOOD, Colo. - Gevo, Inc. (NASDAQ:GEVO) has completed the sale of its subsidiary Agri-Energy, LLC to A.E. Innovation, LLC, according to a press release statement issued Tuesday. The renewable fuels company, currently valued at approximately $531 million, has seen its stock price rise 114% over the past six months.
The transaction includes an 18-million-gallon-per-year ethanol production facility and a portion of adjacent land in Luverne, Minnesota. Gevo received $2 million in upfront cash and will receive $5 million in future installments. This cash infusion could provide some relief as InvestingPro data shows the company has been quickly burning through cash with a negative free cash flow yield of -17% over the last twelve months.
The company retained ownership of most isobutanol production assets at the site and approximately 30 acres of land. The divestiture is expected to save Gevo approximately $3 million annually in idling costs, as the facility has been inactive since March 2020. Despite operational challenges, Gevo maintains a healthy liquidity position with a current ratio of 2.33, indicating its liquid assets exceed short-term obligations.
A.E. Innovation, an agriculture-oriented buyer group from Minnesota, plans to restart ethanol production at the plant. The new owner also intends to make the site available for other companies to scale up new technologies as an innovation center.
Gevo's retained assets at the location have the capacity to produce 1 million gallons per year of low-carbon isobutanol, which can be used in chemicals markets and as feedstock for racing fuels, gasoline, and jet fuel.
The Minnesota facility had been part of Gevo's operations as the company focuses on developing renewable fuels and products. Gevo describes itself as a next-generation energy company that produces sustainable aviation fuel (SAF), motor fuels, and chemicals through its proprietary technology.
In other recent news, Gevo, Inc. announced the delivery of its first certified carbon dioxide removal credits to Biorecro North America, marking the start of a multi-year agreement expected to generate approximately $26 million in revenue over five years. The company has also received an extension on a $1.46 billion conditional loan commitment from the U.S. Department of Energy for its synthetic aviation fuel project in South Dakota, which will remain effective until April 16, 2026. Additionally, Gevo has partnered with Frontier Infrastructure Holdings to launch North America's first fully integrated carbon management platform for ethanol producers, incorporating rail transportation and digital carbon tracking. In the realm of analyst perspectives, H.C. Wainwright reiterated its Buy rating and $14.00 price target for Gevo, following the extension of the Department of Energy's loan commitment. The partnership with Frontier includes the integration of Frontier's Sweetwater Carbon Storage Hub and Gevo's bioenergy carbon capture expertise, along with Union Pacific Railroad's CO₂ transportation services. These developments highlight Gevo's ongoing efforts in renewable energy and carbon management.
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