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$50 MILLION JOINTLY COMMITTED TO PROJECT BY VINOD KHOSLA AND KHOSLA VENTURES
ENABLES LONG-TERM BUSINESS PLAN OF LARGER STANDARD SCALE COMMERCIAL FACILITIES
PASADENA, Texas, Sept. 26, 2013 (GLOBE NEWSWIRE) -- KiOR, Inc. (Nasdaq:KIOR) announced today that it is pursuing plans to double production capacity at its Columbus, Mississippi, cellulosic fuels facility through construction of a second facility incorporating KiOR's commercially proven technology. KiOR estimates that the project – Columbus II – will cost approximately $225 million, will break ground within 90 days of the Company raising sufficient equity and debt capital to commence the project, and will take approximately 18 months to construct and start up. Once completed with its latest technology improvements, KiOR expects that the Columbus II project will allow each Columbus facility to achieve greater yields, production capacity and feedstock flexibility than the original design basis for the existing Columbus facility, enabling KiOR to more quickly make progress towards its long-term goal of 92 gallons per bone dry ton of biomass.
KiOR also announced that it has received commitments, subject only to negotiation and execution of final documentation, from Khosla Ventures and Vinod Khosla for an aggregate commitment of up to $50 million as the cornerstone investor for the Columbus II project and to meet the Company's ongoing liquidity needs. Khosla Ventures and Mr. Khosla have advised that they are prepared to fund these commitments either as part of a broader debt and/or equity financing structure, in connection with a note that would convert at a premium to the current price of the Company's Common Stock or on alternative terms if requested by the Company, and mutually agreed by the parties, as in the best interest of the Company and its stockholders.
Fred Cannon, KiOR's President and CEO, stated, "The Columbus II project marks an important step in the execution of the long-term business plan of KiOR for several reasons:
First, we believe that this project will enable us to achieve cash flow profitability in 2015 at a lower capital cost with decreased execution and start-up risk.
Second, we expect that construction timing and cost are more certain for the Columbus II project, as it is essentially a duplicate of our existing Columbus facility that can be leveraged to reduce construction risk.
Third, through the Columbus II project we plan to achieve significant operational and technological synergies between the two Columbus facilities, as we expect to incorporate our most recent technology developments into both the new Columbus II facility and retroactively to the existing Columbus facility, thereby improving facility economics for both Columbus I and II.
Fourth, we expect a shorter startup period for the Columbus II facility as a result of sharing personnel, infrastructure and operational knowledge with the existing Columbus I facility. This expansion of Columbus has been partially enabled by significant improvements to our technology that we expect will facilitate our use of a wider range of less expensive feedstocks such as railroad ties.
"We believe that the Columbus II project also enables KiOR to continue to execute on our long-term business plan consisting of larger, standard scale commercial production facilities," continued Cannon. "In parallel with the Columbus II project, we plan to accelerate our efforts to refine the design, based on the newest technology improvements, of our next standard scale commercial production facility, currently planned for groundbreaking in the second half of 2014 in Natchez, Mississippi. As a result of these additional efforts, we would expect to improve both the capital and operating cost profiles of the planned Natchez facility against the estimates outlined in our last earnings call. We believe these improvements to both capital and operating costs will enable us to attain financing for the planned Natchez facility on terms more favorable to KiOR and less dilutive to its shareholders. We are pleased that Khosla Ventures, our founding investor, and Vinod Khosla continue to show their confidence in both our progress to date and our future business through these commitments."