Ethanol News:
Ethanol maker Altra gets funding, sets growth plans
Wednesday April 5, 10:31 pm ET
By Bernie Woodall
LOS ANGELES (Reuters) - A small Los Angeles company on Wednesday announced ambitious plans to become a major ethanol producer with backing from five private investment firms.
Altra Inc. of Los Angeles began two years ago as an investment firm called Malibu Capital Partners with a portfolio centering on renewable energy projects. On Wednesday, it announced the new name and completed the switch to investing in its own ethanol projects, said its Chief Executive Officer, Larry Gross.
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As oil prices hover near record highs, renewable fuels such as ethanol are in increasing demand.
Three private equity firms and two private equity funds will be the main backers of Altra, Gross said.
Among the investors are Silicon Valley venture capitalist Vinod Khosla, one of the most influential investors in ethanol.
Gross did not say how much the investors have chipped in to support Altra's expansion plans, but said "it's significant capital" and did not dispute reports of it being more than $50 million.
"We're looking to build a national footprint of ethanol plants across the country from the West Coast to the East Coast and places in between," Gross said in a telephone interview.
Gross said he hopes that Altra in a few years will be able to produce "several hundred million gallons" of ethanol each year.
Ethanol, or ethyl alcohol, is made mainly from corn.
Ethanol is mixed with gasoline to help it burn cleaner, and its use is on the rise as half of the 50 U.S. states have banned the gasoline additive MTBE, a carcinogen that has seeped into some groundwater.
The U.S. Environmental Protection Agency repeals on May 5 the federal oxygenate requirement for reformulated gasoline, which is expected to cause every major oil refiner to switch to ethanol from MTBE.
Altra has permits in hand and in June will begin construction of a grass-roots ethanol refinery in Coshocton, Ohio between Columbus, Ohio and Pittsburgh. That plant will be able to make about 70 million gallons per year of ethanol from corn.
Gross said Altra now has less than a dozen employees. That figure will certainly grow once Altra begins running ethanol plants, Gross said.
Altra expects to finish the purchase of an existing ethanol refinery in Goshen, California, which now makes about 25 million gallons per year from corn. Gross said his company will expand that to about 35 million gallons annually.
Current U.S. ethanol production at 97 ethanol refineries is about 4.5 billion gallons per year, with another 2 billion gallons per year to be produced by plants now under construction, according to the industry group Renewable Fuels Association.
The same group shows that the biggest producer by far in the United States is Archer Daniels Midland (NYSE:ADM - News) which makes about 1.07 billion gallons a year at seven Midwestern refineries.
Second in production is VeraSun Energy Corp., which makes about 230 million gallons at refineries in Iowa and South Dakota.
According to published reports Khosla also is helping to bankroll a ballot initiative to tax oil production in California to help fund a range of alternative energy efforts, which could include ethanol.
Altra said its leading investors are private equity firms Kleiner Perkins Caufield & Byers, Omninet Private Equity, LLC and Sage Capital Partners, L.P. along with private equity funds focused on high growth companies in the energy sector - Angeleno Group, LLC and Khosla Ventures.
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