Gevo (GEVO) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of Red Trail Energy's ethanol, carbon capture, and sequestration assets is described as transformational, supporting a net-zero emissions strategy and positioning for profitability and positive EBITDA in 2025.

• The acquired plant is among the lowest carbon ethanol producers in the U.S., supporting leadership in low-carbon fuels and carbon abatement markets.

• Provides a strategic site for future sustainable aviation fuel (SAF) production and other co-located projects, with engineering development for a Net-Zero alcohol-to-jet SAF plant underway.

• Enhances ability to address global demand for low-carbon products and strengthens self-sufficiency ahead of the Net-Zero 1 project.

• The deal provides significant optionality for monetizing carbon credits.

Financial terms and conditions

• Purchase price was $210 million, funded by a mix of cash, Gevo equity, and a $105 million, five-year senior secured term loan from Orion Infrastructure Capital (OIC), plus $5 million equity from OIC.

• OIC becomes a minority equity partner and may provide up to $100 million more in debt for future projects at the site.

• Aggregate purchase price is subject to customary adjustments.

Synergies and expected cost savings

• The acquisition is expected to generate $30–$60 million in adjusted EBITDA run rate, driven by base ethanol operations, carbon capture tax credits, and low-carbon fuel markets.

• Synergies anticipated with existing asset platform, including risk mitigation for carbon sequestration at Net-Zero 1.

• Efficient operating profile and CCS assets projected to achieve a carbon intensity score in the low 20s, about 30 points lower than non-CCS plants.

• The site’s existing infrastructure and team enable immediate operations and future expansion with minimal additional capital.