KiOR closes 4-year term loan with Khosla, AlMCo

In Texas, KiOR announced that it has closed a $75 million four-year term loan with a lender group comprised of an affiliate of Vinod Khosla and two Canadian corporations owned by certain pension fund clients of Alberta Investment Management Corporation (AIMCo). Khosla is loaning $25 million while the rest is funded by Alberta.

“This follow-on investment in KiOR reaffirms the continued long-term commitment of two of North America’s most knowledgeable renewable energy investors in light of KiOR’s on-time and on-budget execution of its first commercial facility in Columbus, Mississippi; KiOR’s continued progress toward yield improvements in its R&D program; and prospects for KiOR’s larger, second facility in Mississippi planned to break ground after our Columbus facility is fully operational,” commented Fred Cannon, Chief Executive Officer.

The Digest notes that KiOR’s high-cost finance – 16 percent, plus warrants – is more like the cost of equity than a cost of debt; plus, in this case, the lenders gets seniority for their funds.

Our take? This is table stakes for financing first-plant construction in this environment – its not untypical of the kind of costs that technologies are looking at for plant #1 – note the number of projects that have, like POET and Mascoma, headed for the all-equity route,

Following completion of the first plant, the presumption is that projects would be able to access financing at far lower rates.