03-02-2025

Gevo completes acquisition of Red Trail Energy assets in North Dakota

Gevo Inc, a leading developer of hydrocarbon fuels and chemicals with net-zero greenhouse gas emissions, is pleased to announce that it has acquired the ethanol production plant and carbon capture and sequestration assets of Red Trail Energy, LLC for an aggregate purchase price of $210 million, subject to customary adjustments, including a working capital adjustment. The acquired assets include the plant, pore space, and we are bringing on their experienced operational personnel. In addition to creating another strategic option for economic and competitively advantaged sustainable aviation fuel facilities, this acquisition is expected to contribute $30 million to $60 million of Adjusted EBITDA to Gevo annually. The acquired assets are being renamed “Net-Zero North.”

“This transformational acquisition marks the start of Net-Zero North,” said Gevo Chief Executive Officer, Patrick Gruber. “Looking forward, this is a great site to expand the plant to produce SAF, along with other additional co-located projects. We like the potential annual Adjusted EBITDA of $30 million to $60 million, synergies with the existing Gevo platform of assets, and having CCS assets in the Gevo portfolio as a risk mitigation tool for carbon sequestration for our Net-Zero 1 (“NZ1”) plant under development in South Dakota. The proven CCS site will allow us to permanently sequester biogenic carbon dioxide to produce US products with the highest quantity and quality of carbon abatement to address a growing global market demand. Net-Zero North is a key step on our path to becoming self-sustaining and profitable as a company in advance of our NZ1 project coming online.”

The transaction was funded with a combination of Gevo equity capital and a $105 million senior secured term loan facility from Orion Infrastructure Capital (“OIC”), a U.S.-based private investment firm. OIC has also indicated interest in providing up to an additional $100 million in debt for future growth projects at Net-Zero North that are mutually agreed upon. In addition, OIC is investing $5 million in equity at Net-Zero North, which is in addition to the equity contributed by Gevo. The investment comes from OIC’s Infrastructure Credit Strategy, which provides non-dilutive and flexible capital to middle market infrastructure businesses in North America. The strategy seeks to capitalize on the growing need for investment and innovation in sustainable Infrastructure in North America.

“We are thrilled to partner with the Gevo team on this acquisition,” said Ethan Shoemaker, Investment Partner and Head of Infrastructure Credit at OIC. “The Net-Zero North assets bring together operating carbon sequestration, a strong track record of profitability, near-term upside from their industry-leading carbon intensity score, a strong operating team, and room to grow. We are also excited about the potential synergies and incremental value that the Gevo team and platform of assets brings to the Net-Zero North business.”

“North Dakota is a state that understands both energy and agriculture, and that they are synergistic,” Gruber said. “We expect to continue to partner with the community to grow the business as they’re a resource that understands how oil and gas, pipelines, carbon capture, and regenerative agriculture all fit together. Net-Zero North provides the fundamental pieces of the puzzle towards cost-effective energy production, such as SAF, while addressing the market demand for cost effective, lower-carbon-footprint products.”

“We’re taking on a first-class operation from the previous owners, with an exemplary safety record and excellent people to back it up,” said Chris Ryan, President and Chief Operating Officer of Gevo. “The operations team have done a great job, and we’re excited they’re continuing on with us. We are already in engineering development for a Net-Zero alcohol-to-jet (“ATJ”) SAF plant to be built at the site.”

“Net-Zero North is one of a select few ethanol plants in the U.S., of which we are aware, that are expected to maximize value from carbon abatement, including under Section 45Z,” explained Ryan. “Net-Zero North, with its efficient operating profile and CCS, is projected to achieve a carbon intensity (“CI”) score in the low 20s (not including improved agricultural results that farmers can achieve using regenerative agriculture practices) using the variation of the GREET model proposed in the Section 45Z rule. We believe that is about 30 CI points lower than the best plants that are not connected to CCS. British Columbia previously scored the Net-Zero North plant at a CI of 19. This is a great starting point to expand Gevo’s business.”