JACKSON, Miss. (AP) — Struggling biofuel maker KiOR, deeply in debt to the state of Mississippi and others, has hired an investment bank to try to sell or restructure the company.
KiOR, based in Pasadena, Texas, announced it had hired Guggenheim Partners in a Wednesday stock filing. The company said it expected Guggenheim to complete a sale or restructuring process, "or make substantial progress," by Oct. 31.
That's the same time that KiOR's forbearance agreement with Mississippi runs out. Under it, KiOR paid $250,000 to the Mississippi Development Authority and MDA allowed KiOR to delay a $1.9 million payment on KiOR's $69.4 million debt to the state. If MDA hadn't signed the agreement, the state could have moved to seize KiOR's plant in Columbus as repayment for what was originally a $75 million no-interest loan.
The company had warned that if it defaulted on the debt to MDA, other lenders would have demanded immediate repayment of the remainder of the $287 million that the company owes, likely sparking bankruptcy.
KiOR could not immediately be reached for further comment Thursday.
Mississippi loaned the money to KiOR, which aimed to take wood chips and cook them at high temperature and pressure into synthetic crude oil, using chemical catalysts. The Columbus refinery hasn't worked as designed, and while KiOR has said it has designed improvements, it idled the plant after stopping production in December. It's gradually laying off its 100 workers to save cash. KiOR also employed some contractors.
KiOR, by the end of 2015, was supposed to invest $500 million in plants in Mississippi and spend $85 million on wages, wood and other local purchases.
KiOR's cash level is unclear, but the company borrowed $250,000 on July 3 from KFT Trust, controlled by billionaire backer Vinod Khosla. That's the same day it paid $250,000 to Mississippi.
It's unclear if Khosla is willing to lend more. In the same Wednesday filing, KiOR said a $25 million line of credit with KFT Trust has been cut to $10 million already borrowed, although an amendment created a new class of loans including the $250,000.
KiOR spokeswoman Starr Million Baker said last week that KFT had "not yet" refused to loan the additional $15 million. In its May 12 quarterly financial report, KiOR said it hadn't met milestones required to borrow the rest of the $25 million, even though KFT loaned $5 million after that date.
Khosla Ventures, the financier's Menlo Park, California, investment firm, controls 88.5 percent of KiOR stock.
KiOR is under investigation by the Securities and Exchange Commission, and faces two federal lawsuits in Texas claiming the company made false or misleading statements about its progress.
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