US Gevo stock resumes decline after going concern warning

16 April 2014 16:38 Source:ICIS News

HOUSTON (ICIS)--Stock prices for US-based isobutanol producer Gevo continued falling sharply on Wednesday after the company issued a warning about its ability to continue as a going concern.

Gevo's stock was down by nearly 9% in morning trading, reaching nearly 77 cents/share. The selloff followed an even steeper decline earlier in the week.

When trading started on Tuesday, Gevo stock was still slightly above $1.00. By the end of the day, it fell to about 85 cents.

On that day, Gevo warned that as of the end of 2013, the company did not have enough working capital to fund its planned operations through the end of 2014. It will have to find more sources of cash.

"These conditions raise substantial doubt about our ability to continue as a going concern," Gevo said in its annual report.

For 2013, the company had a net loss of $66.8m. Its accumulated deficit reached $262.2m.

Cash totalled $24.6m at the end of 2013, Gevo said. The company is spending the money on corporate operations, including research and development (R&D) and on the startup of its Agri-Energy plant in Luverne, Minnesota.

In mid-February, the company was in the midst of commissioning the plant.

In March, the company announced it would produce both isobutanol and ethanol at the plant.

Gevo is also spending the cash on servicing debt, on improving its isobutanol technology, litigation and on improving its isobutanol plant, the company said.

Gevo warned that it will likely continue to report losses because of product development and commercialisation costs.

"We may never achieve profitability or generate positive cash flows, and unless and until we do, we will continue to need to raise additional cash," Gevo said.

The company intends to do this by issuing more debt or shares, it said.

The company could also raise more money through strategic partners or from other sources, it said. Gevo may also restructure its secured debt with TriplePoint.

By Al Greenwood