Gevo acquires Red Trail Energy’s ethanol, CCS assets
Net-zero hydrocarbon fuels and chemicals developer Gevo announced that it has entered into a definitive agreement to acquire the ethanol production plant and carbon capture and sequestration (CCS) assets of Red Trail Energy for $210m.
The acquisition is expected to accelerate Gevo’s mission to transform renewable carbon into sustainable aviation fuel (SAF), hydrocarbons, and chemicals while reducing carbon emissions.
“We accomplish several things with this investment. It immediately puts us on a path to becoming self-sustaining and profitable as a company in advance of our Net-Zero 1 project’s commercial operation. Not only are we securing an excellent site for additional SAF asset deployment, but we also mitigate risk around carbon sequestration regarding our Net-Zero 1 plant site in South Dakota,” said Dr. Patrick Gruber, CEO, Gevo.
The Red Trail Energy assets, located in North Dakota, include a 65m gallon per year ethanol facility and an operating CCS site with a capacity of 1m metric tons per year.
“We are proud of what we have accomplished at Red Trail Energy and are excited about the future under Gevo’s leadership. Gevo’s vision for a sustainable future aligns with our philosophy of ‘our farms, our fuel, our future.’ We are confident this acquisition will drive positive change in the renewable energy sector,” said Jodi Johnson, CEO, Red Trail Energy.
The company said the acquisition will provide Gevo with an ideal site for future SAF production, leveraging the low-carbon ethanol and CCS capabilities.
Moreover, it said the acquisition will complement Gevo’s Net-Zero 1 SAF project in Lake Preston, South Dakota, by providing access to a wholly owned CCS site and additional low-carbon ethanol supply.
Beyond the future benefits from the acquisition, the company said the deal is expected to make Gevo’s adjusted EBITDA positive in 2025, providing a boost to its financial performance.
Gevo expects to close the transaction by the first quarter of 2025, subject to regulatory approvals and other customary closing conditions. The company plans to finance the acquisition with a combination of asset level debt and cash from its balance sheet.
Ocean Park Securities acted as exclusive financial advisor to Gevo and Faegre Drinker Biddle & Reath LLP as legal advisor.