Biofuels maker Kior gets critical $50 million in funding from Khosla
LOS ANGELES (Reuters) - Shares in Kior Inc (KIOR.O) soared 56 percent on Thursday after the biofuels maker received a critical $50 million pledge from its biggest investor, venture capitalist Vinod Khosla, that will help it to meet its liquidity needs and fund an expansion of its production capacity.
Kior's stock was up $1.02 at $2.85 in afternoon trade on the Nasdaq. The company went public at $15 a share a little more than two years ago, but has struggled to meet production targets for its cellulosic fuel that can replace gasoline and diesel in vehicles.
Last month, Kior said in a filing with the U.S. Securities and Exchange Commission that its lack of committed financing sources raised doubts about its ability to continue as a going concern, spooking investors.
But on Thursday, Kior said Khosla and his firm, Khosla Ventures, made a joint funding commitment of up to $50 million. Khosla, a long-time champion of biofuels, said in the statement that "Kior's unique, direct biomass-to-hydrocarbon fuel production process holds the most near-term promise of being competitive and gaining market acceptance."
In a note to clients, Raymond James analyst Pavel Molchanov said "Khosla guaranteed Kior's financial security for at least six more months, which should set jittery investors' minds at ease."
Kior plans to double production capacity at its Columbus, Mississippi facility at a cost of about $225 million. Once completed, the company will be able to achieve cash flow profitability in 2015, it said. The company must raise the equity and debt capital to fund the project, which will take 18 months to construct.
Kior also said it plans to break ground on a second facility in Natchez, Mississippi next year.
(Reporting by Nichola Groom; Editing by Marguerita Choy)
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