Shares of Gevo Inc., the U.S. biotechnology company backed by the French oil company Total SA and the specialty chemicals maker Lanxess AG, fell the most on record after the company announced plans to raise more capital to retrofit a plant in South Dakota.
Gevo fell 22 percent to $6.80 at Wednesday's close in New York, the most since going public in February 2011.
The company plans to raise about $90 million to $100 million through a secondary offering of shares and with convertible senior notes due in 2022, Chief Operating Officer Christopher Ryan said in an e-mail today.
Gevo, based in Englewood, Colorado, will use the proceeds to partially fund the retrofit of a Redfield Energy LLC plant in South Dakota, repay debt and pay for its Luverne, Minn., plant, according to a statement today. The number of shares offered will depend on demand.
Investors may be selling after the shares rose 48 percent in the last week through yesterday, Pavel Molchanov, an analyst at Raymond James & Associates Inc. in Houston, said in an interview Wednesday.
“It’s been up so much in the last six or seven trading sessions that on this kind of news there’s going to be profit taking,” Molchanov said.
Gevo gained 31 percent on June 20 after a federal judge ruled it probably didn’t infringe on a patent held by Butamax Advanced Biofuels LLC, a joint venture of DuPont Co. and BP Plc.
The company announced plans to “access the capital markets in the near future” during its May 1 earnings conference call, Molchanov said. “I’m surprised it’s down as much as it is.”
Gevo makes isobutanol from corn and non-food crops. Isobutanol may be blended with gasoline or refined into jet fuel, specialty chemicals or other products that are typically derived from petroleum.
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