Imperium Renewables, the Seattle-based biodiesel company building a large refinery in Grays Harbor, wants to raise up to $345 million from...
Imperium Renewables, the Seattle-based biodiesel company building a large refinery in Grays Harbor, wants to raise up to $345 million from a public stock offering to finance a major expansion into the fast-growing alternative-energy market.
The company Wednesday filed for an initial public offering with the Securities and Exchange Commission. It has not set a price or date for the offering, which, if successful, would rank among the five largest IPOs in state history.
Biodiesel producers like Imperium could be attractive to investors who have soured on ethanol companies, which use increasingly expensive corn and other grains to make a gasoline substitute.
“The appetite for biodiesel is stronger,” said Rafael Coven, managing partner with Cleantech Indices, which tracks publicly traded renewable-energy companies. This IPO “will get close scrutiny because of people who have not necessarily been thrilled with the performance of grain-based ethanol companies,” he said.
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Imperium, which has been producing small quantities of biodiesel in Seattle since April 2005, plans to complete in July a $73 million refinery at the Port of Grays Harbor that is capable of producing 100 million gallons annually.
The plant’s raw material, or feedstocks, will include soybean oil from the Midwest and palm oil from Malaysia.
Imperium will use most of the IPO’s proceeds to build three more 100-million-gallon plants in Oahu, Hawaii; Ramallo, Argentina; and Philadelphia, according to the filing.
The plants, in the development stage, are targeted for completion at the end of 2008.
Coven said that while Imperium’s projects may sound grand, “these plants that they’re talking about building are tiny relative to the needs.”
By comparison, the Shell Oil refinery in Anacortes — which ranks 50th in the U.S. in capacity — can refine 2.2 billion gallons of oil a year, according to the federal Energy Information Administration.
U.S. demand for biodiesel has grown 102 percent a year since 2002, hitting an estimated 250 million gallons last year. That’s still less than 1 percent of U.S. diesel use.
Major local biodiesel users include King County Metro buses, city of Seattle vehicles and some freight movers at the Port of Seattle.
Imperium reported $1.9 million in first-quarter sales, but its net loss was $2.8 million.
Imperium has secured a five-year contract with an unidentified industrial fuel user for 18 million gallons of biodiesel a year, it said in its filing, adding that it is the single-largest contract of its kind in the U.S.
Coven was unimpressed. “The demand doesn’t mean that much, because people can sell all the biodiesel they can make,” he said.
The bigger question is the supply of feedstocks, the most costly component of biodiesel.
Securing and transporting the large quantities of soybean and palm oil needed to make the fuel is a top concern. Another, spelled out in the filing, is price volatility of feedstocks.
To mitigate this risk, Imperium is designing plants that can use a variety of feedstocks, including canola oil, mustard and jatropha, a succulent whose seeds are used for biodiesel production in India.
Volatility in crude-oil prices is also a major risk factor, because it affects the competitiveness of biodiesel.
The competition is stiff. Imperium’s filing notes there are more than 100 U.S. biodiesel production plants, but nearly two-thirds can produce only 10 million gallons a year or less.
Major competitors include other startups, fuel refiners and agribusiness giants such as Archer Daniels Midland and Cargill, two of the companies that sell feedstock to Imperium.
Despite the challenges, venture capitalists are “abuzz with an appetite for alternative fuels,” said Michael Cohen, director of research at Pacific American Securities, who follows ethanol companies.
“It reminds me of the late ’90s [dot-com boom], and they found another area that they think is hot,” he said.
Venture investors gave Imperium $113 million in a second funding round this year.
The public markets are providing opportunities for early investors to cash out: No fewer than a dozen alternative-energy companies have gone public in the last year.
Imperium’s current ownership includes:
• John Plaza, company president, through Odyssey Biofuels, controls 24 percent of shares prior to offering;
• Technology Partners, whose members include Imperium board member Ira Ehrenpreis, holds 12.6 percent;
• Nth Power, whose directors include Imperium board member Nancy Floyd, holds 9.4 percent.
• Tacoma’s IOA has 9 percent.
• BlackRock Natural Resources Fund in London, with a fund affiliated with Merrill Lynch, owns 8.5 percent.
• Chairman and CEO Martin Tobias holds 7.7 percent.
Benjamin J. Romano: 206-464-2149 or firstname.lastname@example.org
Seattle Times business reporter Drew DeSilver contributed to this report.
The biggest IPOs
in Washington state since 2000
|Imperium’s IPO would rank fourth on the list if the company raises the maximum amount anticipated.|
|Company||Headquarters||IPO date||Gross proceeds|
|AT&T Wireless||Redmond||April 26, 2000||$10.6 billion|
|Clearwire||Kirkland||March 7, 2007||$600 million|
|Nextel Partners||Kirkland||Feb. 23, 2000||$470 million|
|HomeGrocer.com||Kirkland||March 10, 2000||$264 million|
|Onvia.com||Seattle||March 1, 2000||$168 million|