Gevo Acquires Red Trail Energy's Ethanol Plant for $210 Million

Gevo Expands with Acquisition of Ethanol Plant and CCS Assets from Red Trail Energy

Gevo, Inc. has taken a significant step in enhancing its portfolio by purchasing an ethanol plant and carbon capture and sequestration (CCS) assets from Red Trail Energy, LLC. The $210 million deal, subject to customary adjustments, brings operational staff and vital infrastructure into Gevo's fold and is expected to boost the company's annual Adjusted EBITDA by $30 million to $60 million.

The acquired assets, now rechristened as "Net-Zero North," are poised to play a pivotal role in Gevo's strategy for sustainable aviation fuel (SAF) production. Patrick Gruber, Gevo's CEO, stated, "This transformational acquisition marks the start of Net-Zero North. We like the potential annual Adjusted EBITDA and synergies with the existing Gevo platform of assets."

Net-Zero North integrates a robust operational team, existing CCS operations, and space for expansion. The move is anticipated to provide significant benefits, including carbon sequestration capabilities, which align with Gevo's broader sustainability ambitions. Additionally, the site offers strategic advantages by enhancing Gevo's portfolio and serving as a risk mitigation tool for its Net-Zero 1 (NZ1) project in development in South Dakota.

Commenting on the acquisition, Ethan Shoemaker from OIC highlighted the potential synergies, saying, "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."

Gevo's focus on integrating the acquired assets with their existing operations is expected to lead to significant carbon abatement value, especially with a low carbon intensity score forecasted using the GREET model under Section 45Z. "Net-Zero North is one of a select few ethanol plants in the U.S. that are expected to maximize value from carbon abatement," explained Chris Ryan, President and COO of Gevo.

The acquisition underscores North Dakota's synergistic approach to energy and agriculture, which Gruber acknowledges as a crucial factor. He expressed optimism about partnering with the local community to advance the growth of cost-effective, lower-carbon-footprint energy products like SAF.

To discuss this strategic acquisition further, Gevo will hold a conference call on February 3, 2025, at 10:00am ET. Interested parties can register here to participate in the live call. For those who prefer listening, an audio-only registration is available here. A replay will later be accessible in the Investor Relations section of Gevo's website at www.gevo.com.

Ocean Park Securities, LLC served as the exclusive financial advisor and debt financing arranger for this acquisition. Further details on the transaction can be found in Gevo's report to be filed with the SEC.