8-K/A
Gevo, Inc. (GEVO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to
Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 31, 2025
Gevo, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-35073 | 87-0747704 |
|---|---|---|
| (State or other jurisdiction | (Commission File Number) | (IRS Employer |
| of incorporation) | Identification No.) | |
| 345 Inverness Drive South**, Building C** , Suite 310 Englewood , CO 80112 | ||
| --- | ||
| (Address of principal<br> executive offices) (Zip Code) |
Registrant’s telephone number, including area code:
(303) 858-8358
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol | Name of exchange on which registered |
|---|---|---|
| Common Stock, par value $0.01 per share | GEVO | Nasdaq<br> Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Explanatory Note
On February 3, 2025, Gevo, Inc. (the “Company”) filed a Current Report on Form 8-K (the “Initial Form 8-K”) to report the completion of its acquisition (the “Red Trail Energy Acquisition”) on January 31, 2025, of substantially all of the assets, and certain assumed liabilities, of Red Trail Energy, LLC (“Red Trail Energy”), pursuant to an Asset Purchase Agreement by and among the Company and its wholly owned subsidiaries Richardton CCS, LLC (“R-CCS”) and Net-Zero Richardton, LLC (“NZ-R” and together with R-CCS, the “Buyers”), and Red Trail Energy. Upon completion of the Red Trail Energy Acquisition, the acquired assets and assumed liabilities were owned by the Buyers. The Company is filing this Amendment No. 1 to the Initial Form 8-K to include the historical financial statements of Red Trail Energy and pro forma condensed combined financial information required to be filed under Item 9.01 of Form 8-K. The disclosure included in the Initial Form 8-K otherwise remains unchanged.
| Item 9.01. | Financial Statements and Exhibits. |
|---|
**(**a) Financial Statementsof Business Acquired
The audited financial statements of Red Trail Energy, LLC as of September 30, 2024 and 2023 and for each of the three years ended September 30, 2024 are attached as Exhibit 99.1 to this Current Report on Form 8-K/A and are incorporated by reference herein.
(b) Pro Forma Financial Information
The unaudited pro forma condensed combined financial statements and related notes as of and for the period ended December 30, 2024, giving effect to the Red Trail Energy Acquisition, are attached as Exhibit 99.2 to this Current Report Form 8-K/A and are incorporated by reference herein.
(d) Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| GEVO, INC. | ||
|---|---|---|
| Dated: April 16, 2025 | By: | /s/ E. Cabell Massey |
| E. Cabell Massey | ||
| Vice President, Legal and Corporate Secretary |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTINGFIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (File No. 333-172771, File No. 333-195264, File No. 333-207172, File No. 333-212391, File No. 333-226689, File No. 333-232267, File No. 333-239275, File No. 333-257971, and File No. 333-272380) and Form S-3 (File No. 333-276515, File No. 333-252229, and File No. 333-226686) of Gevo, Inc., of our report dated January 14, 2025 relating to the financial statements of Red Trail Energy, LLC, which is incorporated by reference in this Current Report on Form 8-K/A.
/s/ Eide Bailly LLP
Denver, Colorado
April 16, 2025
Exhibit 99.2
GEVO, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIALINFORMATION
On January 31, 2025, Gevo Inc. (“Gevo” or the “Company”) acquired substantially all of the assets, and assumed certain liabilities of Red Trail Energy, LLC, a North Dakota limited liability company (“Red Trail Energy” or the “Seller”), for cash consideration in the amount of $210 million (or $208.4 million after certain customary adjustments), pursuant to the certain Asset Purchase Agreement (the “Purchase Agreement”) by and among the Company and its wholly owned subsidiaries Richardton CCS, LLC and Net-Zero Richardton, LLC (together, the “Buyers”), and Red Trail Energy (the “Red Trail Energy Acquisition”). Upon completion of the Red Trail Energy Acquisition, the acquired assets and assumed liabilities were owned by the Buyers.
The Red Trail Energy Acquisition was determined to constitute a business combination in accordance with Accounting Standards Codification 805, Business Combinations (“ASC 805”) under generally accepted accounting principles in the United States (“U.S. GAAP”).
The unaudited pro forma condensed combined financial statements have been prepared in accordance with Article 11 of Regulation S-X under the Securities Act of 1933, as amended by the final rule, Release No.33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses,” and have been adjusted to include estimated transaction accounting adjustments which give effect to the Red Trail Energy Acquisition and the application of the acquisition method of accounting under U.S. GAAP. Under the acquisition method of accounting, the preliminary purchase price is allocated to the underlying tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with any excess purchase price allocated to goodwill. The pro forma adjustments are based on preliminary estimates and currently available information and assumptions that Gevo’s management believes are reasonable. The notes to the unaudited pro forma condensed combined financial statements provide a discussion of how such adjustments were derived and presented in the unaudited pro forma condensed combined financial statements. Changes in facts and circumstances or discovery of new information may result in revised estimates. Actual results and valuations may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined financial statements and related notes as of and for the year ended December 31, 2024, have been derived from, and should be read in conjunction with:
| (i) | the historical audited consolidated financial statements of Gevo and accompanying notes included in Gevo’s<br>Annual Report on Form 10-K for the year ended December 31, 2024; and |
|---|---|
| (ii) | the historical audited financial statements of Red Trail Energy and accompanying notes included in Red<br>Trail Energy’s Annual Report on Form 10-K for the year ended September 30, 2024. |
| --- | --- |
The accompanying unaudited pro forma condensed combined statements of operations for the year ended December 31, 2024, combine the historical consolidated statements of operations for Gevo for the year ended December 31, 2024, and the historical consolidated statements of operations for Red Trail Energy for the year ended September 30, 2024.
The unaudited pro forma condensed combined balance sheet as of December 31, 2024, gives effect to the Red Trail Energy Acquisition as if it occurred on December 31, 2024.
The unaudited pro forma condensed combined financial statements are for illustrative and informational purposes only and are not intended to represent what Gevo’s results of operations or financial position would have been had the Red Trail Energy Acquisition occurred on the dates indicated, or what they will be for any future periods. The unaudited pro forma condensed combined financial statements do not reflect the realization of any expected cost savings, other synergies as a result of the acquisition, or integration costs. Although the Company believes that certain cost savings may result from the Red Trail Energy Acquisition, there can be no assurance that these cost savings will be achieved. The allocation of the purchase price for the Red Trail Energy Acquisition is preliminary and will likely change in future periods as fair value estimates of the assets acquired and liabilities assumed are refined and finalized during the allowable one-year measurement period and such changes could be material.
1
GEVO, INC.
Unaudited Pro Forma Condensed Combined Balance Sheet
As of December 31, 2024
(Inthousands, except per share data)
| Red Trail Energy<br> (Adjusted Historical)<br> (Note 3) | Transaction<br><br> Accounting<br><br> Adjustments<br> (Note 4) | Note | Pro Forma | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | 189,389 | $ | - | $ | (103,721 | ) | 4(a) | $ | 85,668 | |||
| Restricted cash | 1,489 | - | - | 1,489 | ||||||||
| Trade accounts receivable, net | 2,411 | 4,030 | - | 6,441 | ||||||||
| Inventories | 4,502 | 9,913 | 14,415 | |||||||||
| Prepaid expenses and other current assets | 5,920 | 220 | - | 6,140 | ||||||||
| Total current assets | 203,711 | 14,163 | (103,721 | ) | 114,153 | |||||||
| Property, plant and equipment, net | 221,642 | 72,821 | 39,103 | 4(b) | 333,566 | |||||||
| Restricted cash | 68,155 | - | - | 68,155 | ||||||||
| Operating right-of-use assets | 1,064 | 1,747 | - | 2,811 | ||||||||
| Finance right-of-use assets | 1,877 | - | - | 1,877 | ||||||||
| Intangible assets, net | 8,129 | - | 46,300 | 4(c) | 54,429 | |||||||
| Goodwill | 3,740 | - | 41,771 | 4(d) | 45,511 | |||||||
| Deposits and other assets | 75,623 | 40 | - | 75,663 | ||||||||
| Total assets | 583,941 | $ | 88,771 | $ | 23,453 | $ | 696,165 | |||||
| Liabilities | ||||||||||||
| Current liabilities | ||||||||||||
| Accounts payable and accrued liabilities | 22,006 | $ | 4,825 | $ | 4,403 | 4(e) | $ | 31,234 | ||||
| Operating lease liabilities, current | 333 | 382 | - | 715 | ||||||||
| Finance lease liabilities | 2,001 | - | - | 2,001 | ||||||||
| Loans payable | 21 | - | - | 21 | ||||||||
| 2021 Bonds payable, net | - | - | - | - | ||||||||
| Total current liabilities | 24,361 | 5,207 | 4,403 | 33,971 | ||||||||
| 2021 Bonds payable, net | 67,109 | - | - | 67,109 | ||||||||
| Loans payable | - | - | 99,650 | 4(f) | 99,650 | |||||||
| Operating lease liabilities | 966 | 1,365 | - | 2,331 | ||||||||
| Finance lease liabilities | 187 | - | - | 187 | ||||||||
| Other long-term liabilities | 1,830 | 1,002 | - | 2,832 | ||||||||
| Total liabilities | 94,453 | 7,574 | 104,053 | 206,080 | ||||||||
| Commitments and Contingencies | - | - | - | - | ||||||||
| Stockholder's Equity | ||||||||||||
| Common stock, 0.01 par value per share; 500,000,000 shares authorized; 239,176,293 shares issued and outstanding at December 31, 2024. | 2,392 | - | - | 2,392 | ||||||||
| Additional paid-in capital | 1,287,333 | 76 | (76 | ) | 4(g) | 1,287,333 | ||||||
| Accumulated deficit | (800,237 | ) | 81,121 | (85,524 | ) | 4(h) | (804,640 | ) | ||||
| Total Gevo stockholder's equity | 489,488 | 81,197 | (85,600 | ) | 485,085 | |||||||
| Noncontrolling interest | - | - | 5,000 | 4(i) | 5,000 | |||||||
| Total stockholder's equity | 489,488 | 81,197 | (80,600 | ) | 490,085 | |||||||
| Total liabilities, noncontrolling interest and stockholders' equity | 583,941 | $ | 88,771 | $ | 23,453 | $ | 696,165 |
All values are in US Dollars.
See accompanying notes to the unaudited condensed combined pro forma financial information.
2
GEVO, INC.
Unaudited Pro Forma Condensed Combined Statement of Operations
Year Ended December 31, 2024
(In thousands, except per share data)
| Gevo<br> (Historical) | Red Trail Energy <br> (Adjusted Historical)<br> (Note 3) | Transaction<br><br> Accounting<br><br> Adjustments<br> (Note 5) | Note | Pro Forma | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total operating revenues | $ | 16,915 | $ | 149,863 | $ | - | $ | 166,778 | ||||||
| Operating expenses: | - | |||||||||||||
| Cost of production | 12,002 | 139,657 | - | 151,659 | ||||||||||
| Depreciation and amortization | 18,298 | 5,950 | 14,360 | 5(a) | 38,609 | |||||||||
| Research and development expense | 5,576 | - | - | 5,576 | ||||||||||
| General and administrative expenses | 45,798 | 5,072 | - | 50,870 | ||||||||||
| Project development costs | 18,166 | - | - | 18,166 | ||||||||||
| Acquisition related costs | 4,932 | - | 4,403 | 5(b) | 9,335 | |||||||||
| Facility idling costs | 2,967 | - | - | 2,967 | ||||||||||
| Total operating expenses | 107,739 | 150,680 | 18,763 | 277,182 | ||||||||||
| Loss from operations | (90,824 | ) | (817 | ) | (18,763 | ) | (110,404 | ) | ||||||
| Other income (expense) | ||||||||||||||
| Interest (expense) | (3,879 | ) | - | (13,145 | ) | 5(c) | (17,024 | ) | ||||||
| Interest and investment income | 15,740 | - | - | 15,740 | ||||||||||
| Other income (expense), net | 323 | 510 | - | 833 | ||||||||||
| Total other income (expense), net | 12,184 | 510 | (13,145 | ) | (451 | ) | ||||||||
| Net loss from continuing operations before noncontrolling interest | (78,640 | ) | (307 | ) | (31,908 | ) | (110,855 | ) | ||||||
| Net loss from continuing operations attributable to noncontrolling interest | - | - | 596 | 5(d) | 596 | |||||||||
| Net loss from continuing operations attributable to Gevo | $ | (78,640 | ) | $ | (307 | ) | $ | (32,504 | ) | $ | (111,451 | ) | ||
| Net loss per share - basic and diluted | $ | (0.34 | ) | $ | (0.48 | ) | ||||||||
| Weighted average number of common shares outstanding, basic and diluted | 231,674,716 | 231,674,716 |
See accompanying notes to the unaudited condensed combined pro forma financial information.
3
GEVO, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINEDFINANCIAL INFORMATION
Note 1 – Description of the Red TrailEnergy Acquisition
On January 31, 2025, Gevo Inc. (“Gevo” or the “Company”), acquired substantially all of the assets, and assumed certain liabilities of Red Trail Energy, LLC, a North Dakota limited liability company (“Red Trail Energy” or the “Seller”) for cash consideration in the amount of $210 million (or $208.4 million after certain customary adjustments), pursuant to the certain Asset Purchase Agreement (the “Purchase Agreement”) by and among the Company and its wholly owned subsidiaries Richardton CCS, LLC and Net-Zero Richardton, LLC (together, the “Buyers”), and Red Trail Energy (the “Red Trail Energy Acquisition”). Upon completion of the Red Trail Energy Acquisition, the acquired assets and assumed liabilities were owned by the Buyers.
Credit Agreement
On the Closing Date, Net-Zero North HoldCo, LLC, (the “Borrower”), and certain other subsidiaries of Gevo, entered into a Credit Agreement (the “Credit Agreement”) with OIC Investment Agent, LLC, as administrative agent for the Lenders (in such capacity, the “Administrative Agent”) and as collateral agent for the Secured Parties (in such capacity, the “Collateral Agent”), and the lenders from time to time thereto (“Lenders”).
The Credit Agreement provides for a $105 million senior secured term loan that was funded on the Closing Date (the “Term Loan”) with a maturity of January 31, 2030. The proceeds of the Term Loan were used to partially fund the Transaction and the payment of fees under the Credit Agreement. The Credit Agreement also provides for additional uncommitted term loans in an aggregate amount to be mutually agreed upon by the Borrower, the Guarantors and the Lenders for use for certain future growth opportunities after the Closing Date. Interest on the Term Loan will accrue at a rate of (i) 10.00% per annum if the net leverage ratio as of the last day of the quarter for the measurement period (the “Measurement Period”) consisting of the prior four consecutive fiscal quarters of the Borrower (“Leverage Ratio”) is less than 1.5x, (ii) 10.75% per annum if the Leverage Ratio is equal to or greater than 1.5x, but less than 3.0x, and (iii) 11.50% per annum if the Leverage Ratio is equal to or greater than 3.0x and shall initially be set at 11.50% per annum until the next quarterly adjustment date. The Leverage Ratio is defined as the ratio of the combined indebtedness of the Borrower and the Guarantors (other than any indebtedness pursuant to any permitted working capital facility) less any cash equivalent investments in any collateral accounts to the consolidated EBITDA of the Borrower and Guarantors for the relevant Measurement Period. Interest will be due and payable in cash at the end of each quarter.
4
In connection with the Term Loan, and subject to the other terms under the Credit Agreement, Lenders made an equity investment in Gevo Intermediate HoldCo, LLC (“Holdings”) equal to $5 million on the Closing Date. The organizational documents of Holdings also provide Lenders with the right to appoint two non-voting observers to the board of managers of Holdings.
The Term Loan is secured by a first-lien security interest subject only to reasonable and customary permitted liens and encumbrances, in all the Borrower’s and each Guarantor’s tangible and intangible assets, properties controlled by Borrower and Guarantors, and contracts, including deposit accounts and collateral assignment of material contracts and certain real estate assets to be determined, and includes a pledge of all equity interests in the Borrower and its subsidiaries. The Credit Agreement also contains customary affirmative and negative covenants, events of default, mandatory prepayments (including an excess cash flow sweep), conditions precedent, representations, and warranties.
Note 2 – Basis of Presentation
The Red Trail Energy Acquisition is being accounted for as a business combination using the acquisition method of accounting under generally accepted accounting principles in the United States (“US GAAP”), in accordance with the provisions of ASC 805, Business Combinations, (“ASC 805”) which requires assets acquired and liabilities assumed to be recorded at their acquisition date fair value. ASC 820, Fair Value Measurements, defines the term “fair value” as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Fair value measurements can be highly subjective, and it is possible the application of reasonable judgement could develop different assumptions resulting in a range of alternative estimates using the same facts and circumstances.
Gevo’s and Red Trail Energy’s historical financial statements were prepared in accordance with US GAAP. Based on an analysis of Gevo’s and Red Trail Energy’s significant accounting policies, the Company has not identified any material differences in accounting policies that would have an impact on the unaudited pro forma condensed combined financial statements. As a result, the unaudited pro forma condensed combined financial statements do not assume any differences in accounting policies.
The pro forma adjustments presented in this unaudited pro forma condensed combined financial information represent management’s estimates and assumptions based on information available to management during the preparation of the pro forma financial information and assumptions that management believes are reasonable and supportable. Such estimates and assumptions are subject to revision as further information is obtained. Accordingly, the pro forma adjustments for the Red Trail Energy Acquisition are preliminary and subject to further adjustment as additional information becomes available and the various analyses and other valuations are performed. Any adjustments may have a significant effect on total assets, total liabilities, total equity, operating expenses, and depreciation and amortization expenses, and such results may be significant.
The assumptions underlying the pro forma adjustments are described in the accompanying notes to this unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined financial information may not be indicative of Gevo’s future performance and does not necessarily reflect what Gevo’s financial position and results of operations would have been had these transactions occurred at the beginning of the period presented.
Further, the unaudited pro forma condensed combined financial information does not purport to project the future operating results or financial position of Gevo following the completion of the Red Trail Energy Acquisition. Additionally, the unaudited pro forma condensed combined financial information does not reflect any revenue enhancements, anticipated synergies, operating efficiencies, or cost savings that may be achieved related to the Red Trail Energy Acquisition, nor does it reflect any costs or expenditures that may be required to achieve any possible synergies.
Gevo will finalize the accounting for the acquisition as soon as practicable within the measurement period, but in no event later than one year from January 31, 2025, in accordance with ASC 805.
5
Note 3 – Conforming Presentation Adjustmentsto Red Trail Energy’s Historical Reported Financial Data
In preparing the pro forma condensed combined financial information, the following adjustments were made to Red Trail Energy’s historical financial statements to conform to the presentation of Gevo’s historical financial statements (in thousands):
| Presentation<br> in Historical Financial Statements | Presentation<br> in Unaudited Pro Forma<br><br> Condensed Combined Financial<br><br> Statements | Red<br> Trail Energy <br><br> Before Adjustment | Adjustment | Note | Red<br> Trail Energy<br><br>Adjusted<br><br>Historical | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Cash<br> and cash equivalents | Cash<br> and cash equivalents | $ | 3,390 | $ | (3,390 | ) | (a) | $ | - | |
| Restricted<br> cash - margin account | Restricted<br> cash | 3,715 | (3,715 | ) | (a) | - | ||||
| Accounts<br> receivable, net, primarily related party | Trade<br> accounts receivable, net | 4,030 | - | 4,030 | ||||||
| Inventory | Inventories | 9,913 | - | 9,913 | ||||||
| Prepaid<br> expenses | Prepaid<br> expenses and other current assets | 569 | (350 | ) | (a) | 220 | ||||
| Land | Property,<br> plant and equipment, net | 1,334 | 71,487 | (b) -<br> (f) | 72,821 | |||||
| Land<br> improvements | Property,<br> plant and equipment, net | 18,563 | (18,563 | ) | (b) | - | ||||
| Buildings | Property,<br> plant and equipment, net | 15,334 | (15,334 | ) | (c) | - | ||||
| Plant<br> equipment and railroad | Property,<br> plant and equipment, net | 124,473 | (124,473 | ) | (d) | - | ||||
| Construction<br> in progress | Property,<br> plant and equipment, net | 2,759 | (2,759 | ) | (e) | - | ||||
| Less<br> accumulated depreciation | Property,<br> plant and equipment, net | (89,642 | ) | 89,642 | (f) | - | ||||
| Right<br> of use operating lease assets, net | Operating<br> right-of-use assets | 1,747 | - | 1,747 | ||||||
| Investment<br> in RPMG | Deposits<br> and other assets | 941 | (941 | ) | (a) | - | ||||
| Patronage<br> equity | Deposits<br> and other assets | 7,048 | (7,048 | ) | (a) | - | ||||
| Deposits | Deposits<br> and other assets | 40 | 40 | |||||||
| Accounts<br> payable | Accounts<br> payable and accrued liabilities | 2,528 | 2,297 | (g) -<br> (h) | 4,825 | |||||
| Accrued<br> expenses | Accounts<br> payable and accrued liabilities | 2,271 | (2,271 | ) | (g) | - | ||||
| Commodities<br> derivative instruments, at fair value | Accounts<br> payable and accrued liabilities | 289 | (289 | ) | (a) | - | ||||
| Accrued<br> loss on firm purchase commitments | Accounts<br> payable and accrued liabilities | 50 | (50 | ) | (a) | - | ||||
| Customer<br> deposits | Accounts<br> payable and accrued liabilities | 26 | (26 | ) | (h) | - | ||||
| Current<br> maturities of notes payable | Loans<br> payable | 2,127 | (2,127 | ) | (a) | - | ||||
| Current<br> portion of operating lease liabilities | Operating<br> lease liabilities | 381 | 381 | |||||||
| Notes<br> payable, less current maturities | Loans<br> payable | 18,055 | (18,055 | ) | (a) | - | ||||
| Long-term<br> operating lease liabilities, net of current portion | Operating<br> lease liabilities | 1,365 | 1,365 | |||||||
| Asset<br> retirement obligation | Other<br> long-term liabilities | 1,002 | 1,002 | |||||||
| Members’<br> Equity - Class A Membership Units | Accumulated<br> deficit | 39,045 | (39,045 | ) | (i) | - | ||||
| Additional<br> paid in capital | Additional<br> paid-in capital | 76 | 76 | |||||||
| Accumulated<br> retained earnings | Accumulated<br> deficit | 37,159 | 43,962 | (i) -<br> (j), (k) | 81,121 | |||||
| Treasury<br> units | Accumulated<br> deficit | (160 | ) | 160 | (j) | - |
(a) The Company purchased only certain assets and assumed only certain liabilities of Red Trail Energy as defined in the Purchase Agreement. The Company did not purchase the cash and cash equivalents, restricted cash, investment in RPMG, Inc., patronage equity, commodities derivative instruments, firm purchase commitments or notes payable. These adjustments eliminate the excluded asset and liability balances at their historical amounts from the audited financial statements of Red Trail Energy.
(b) Represents an adjustment to reclassify $18.6 million of Land improvements to Property, plant and equipment, net.
(c) Represents an adjustment to reclassify $15.3 million of Buildings to Property, plant and equipment, net.
(d) Represents an adjustment to reclassify $124.5 million of Plant equipment and railroad to Property, plant and equipment, net.
(e) Represents an adjustment to reclassify $2.8 million of Construction in progress to Property, plant and equipment, net.
(f) Represents an adjustment to reclassify $89.6 million of Less accumulated depreciation to Property, plant and equipment, net.
(g) Represents an adjustment to reclassify $2.3 million of Accrued expenses to Accounts payable and accrued liabilities.
(h) Represents an adjustment to reclassify $0.0 million of Customer deposits to Accounts payable and accrued liabilities.
(i) Represents an adjustment to reclassify $39.0 million of Members' equity - Class A membership units to Accumulated deficit.
(j) Represents an adjustment to reclassify $0.2 million of Treasury units to Accumulated deficit.
(k) Includes a $5.1 million adjustment to Accumulated deficit for the net effect of the elimination of the excluded asset and liability balances described in (a), above.
6
| Presentation in Historical Financial Statements | Presentation in Unaudited Pro Forma<br><br> Condensed Combined Financial<br><br> Statements | Red Trail Energy<br><br>Before Adjustment | Adjustment | Note | Red Trail Energy<br><br>Adjusted<br><br> Historical | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | Total operating revenues | $ | 149,863 | $ | - | $ | 149,863 | |||
| Cost of goods sold | Cost of production | 144,240 | (4,582 | ) | (a)-(b) | 139,657 | ||||
| Loss on firm purchase commitments | Cost of production | 1,368 | (1,368 | ) | (a) | - | ||||
| Depreciation and amortization | 5,950 | (b) | 5,950 | |||||||
| General and administrative expenses | General and administrative expenses | 5,072 | 5,072 | |||||||
| Interest income | Interest and investment income | 278 | (278 | ) | (c) | - | ||||
| Other income | Other income (expense), net | 510 | 510 | |||||||
| Interest expense | Interest (expense) | (1,144 | ) | 1,144 | (c) | - |
(a) Represents an adjustment to reclassify $1.4 million of Loss on firm purchase commitments to Cost of production.
(b) Represents an adjustment to reclassify $5.9 million of depreciation expense from Cost of goods sold to Depreciation and amortization.
(c) The Company purchased only certain assets and assumed only certain liabilities of Red Trail Energy as defined in the acquisition agreement. The Company did not purchase the cash and cash equivalents or notes payable. These adjustments eliminate Interest income and Interest expense associated with the excluded Cash and cash equivalents and Notes payable, respectively.
Note 4 – Red Trail Energy Acquisitionand Acquisition Accounting Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet
Preliminary Purchase Price Allocation
The following preliminary purchase price allocation has been used to prepare pro forma adjustments in the unaudited pro forma condensed combined balance sheet. The final allocation of the purchase price will be determined at a later date and is dependent on a number of factors, including, but not limited to, the final valuation of Red Trail Energy tangible and intangible assets acquired, liabilities assumed and the estimated fair value of contingent consideration. The final valuation of assets acquired and liabilities assumed that may become payable may be materially different from the values assumed for purposes of the estimated purchase price allocation.
| Fair value of consideration transferred: | Amount<br> (in thousands) | ||
|---|---|---|---|
| Cash(1)(2) | $ | 208,371 | |
| Total fair value of consideration transferred | $ | 208,371 | |
| Identifiable assets acquired and liabilities assumed: | |||
| Trade accounts receivable | $ | 4,030 | |
| Inventories | 9,913 | ||
| Prepaid expenses and other current assets | 220 | ||
| Property, plant and equipment(3) | 111,924 | ||
| Operating right-of-use assets | 1,747 | ||
| Intangible assets(4) | 46,300 | ||
| Goodwill(5) | 41,771 | ||
| Deposits and other assets | 40 | ||
| Accounts payable and accrued liabilities | (4,825 | ) | |
| Operating lease liabilities, current | (382 | ) | |
| Operating lease liabilities | (1,365 | ) | |
| Other long-term liabilities | (1,002 | ) | |
| Total identifiable assets acquired and liabilities assumed | $ | 208,371 | |
| (1) | The cash consideration was funded utilizing cash on hand of $103.7 million, proceeds received from the<br>sale of equity of Holdings of $5 million, and proceeds borrowed under the Credit Agreement of $105.0 million, offset by deferred financing<br>costs of $5.35 million, and. See pro forma adjustment (a) below for adjustments to the unaudited pro forma condensed combined balance<br>sheet relating to cash and cash equivalents. | ||
| --- | --- | ||
| (2) | The total cash consideration transferred is subject to customary closing adjustments. | ||
| --- | --- | ||
| (3) | See pro forma adjustment (b) below for adjustments to the unaudited pro forma condensed combined<br>balance sheet relating to PP&E. | ||
| --- | --- | ||
| (4) | See pro forma adjustment (c) below for adjustments to the unaudited pro forma condensed combined<br>balance sheet relating to intangible assets. | ||
| --- | --- | ||
| (5) | See pro forma adjustment (d) below for adjustments to the unaudited pro forma condensed combined<br>balance sheet relating to goodwill. | ||
| --- | --- |
7
Pro Forma Adjustments to Unaudited Pro FormaCondensed Combined Balance Sheet
| (a) | Represents the cash consideration paid to the Red Trail Energy sellers, partially offset by the cash received<br>from the Credit Agreement and proceeds from the sale of equity of Holdings, as follows (in thousands): | ||
|---|---|---|---|
| Cash paid to Seller | $ | (208,371 | ) |
| --- | --- | --- | --- |
| Cash received from the Credit Agreement | 99,650 | ||
| Cash received from the noncontrolling interest holder | 5,000 | ||
| Total pro forma adjustment to cash and cash equivalents | $ | (103,721 | ) |
| (b) | Represents the purchase accounting adjustment to increase acquired property, plant and equipment assets<br>to their fair values. The fair value of the property, plant and equipment assets was determined primarily using the “cost”<br>and "market" approaches. | ||
| --- | --- | ||
| (c) | Represents the purchase accounting adjustment to record acquired intangible assets at their fair values.<br>As part of the preliminary valuation analysis, the Company identified an intangible asset related to customer relationships. The fair<br>value of the identifiable intangible asset is determined primarily using the “income approach,” which requires a forecast<br>of all of the expected future cash flows. | ||
| --- | --- | ||
| (d) | Represents the purchase accounting adjustment to goodwill based on the acquisition method. | ||
| --- | --- | ||
| (e) | Represents the estimated transaction costs associated with the Red Trail Energy Acquisition incurred by<br>Gevo subsequent to December 31, 2024. | ||
| --- | --- | ||
| (f) | Represents<br> the $105 million borrowed under the Credit Agreement, which was used to finance a portion<br> of total cash consideration, less $5.35 million in debt issuance costs incurred to obtain<br> the Credit Agreement. This obligation is classified as long-term debt as the principal is<br> repayable at the end of the 5-year term. | ||
| --- | --- | ||
| (g) | Represents purchase accounting adjustment to eliminate the historical APIC of Red Trail Energy. | ||
| --- | --- | ||
| (h) | Represents purchase accounting adjustment to eliminate the historical $88.2 million of retained earnings<br>of Red Trail Energy, plus the estimated transaction costs associated with the Red Trail Energy Acquisition incurred by Gevo subsequent<br>to December 31, 2024, described in note (e) above. | ||
| --- | --- | ||
| (i) | Establishes noncontrolling interest for the 4.24% of capital stock of Holdings that was issued in exchange<br>for $5 million as described in note (a) above. | ||
| --- | --- |
Note 5 – Acquisition Accounting Adjustmentsto Unaudited Pro Forma Condensed Combined Statement of Operations for the Year Ended December 31, 2024
| (a) | Represents incremental depreciation expense associated with the value of acquired PP&E and amortization expense associated with<br>the value of the acquired intangible asset (in thousands, except for useful life). | |||||
|---|---|---|---|---|---|---|
| Estimated fair<br><br> value | Estimated useful life<br><br> in years | Twelve months ended December<br><br> 31, 2024 depreciation and<br><br> amortization expense | ||||
| --- | --- | --- | --- | --- | --- | --- |
| Customer-related intangible | $ | 46,300 | 4 | $ | 11,575 | |
| Property, plant and equipment | 39,103 | 14 | 2,785 | |||
| (b) | Represents the estimated transaction costs associated with the Red Trail Energy Acquisition incurred by Gevo subsequent to December 31,<br>2024. These costs will not affect the Company’s income statement beyond 12 months after the acquisition date. | |||||
| --- | --- | |||||
| (c) | Represents the interest expense (including amortization of loan discount) on the Term Loan Credit Agreement as if the loan was obtained<br>on January 1, 2024, and was outstanding for the entire year ended December 31, 2024. The interest rate assumed for the purpose<br>of preparing this pro forma financial information is 11.5%. This rate is the contractually stated rate the Company would be subject to<br>during the first year of the loan. A 1/8 of a percentage point increase or decrease in the benchmark rate would result in a change in<br>interest expense of approximately $0.1 million for the year ended December 31, 2024. | |||||
| --- | --- | |||||
| (d) | Represents the adjustment to reflect the noncontrolling interest holder's proportionate share of 4.24% of Gevo's income from operations<br>for the year ended December 31, 2024 ($0.0 million of the $78.6 million historical Gevo loss); (ii) Red Trail Energy's income<br>from operations for the year ended September 30, 2024 ($0.0 million of the $0.3 million historical Red Trail Energy loss) and (iii) Gevo's<br>pro forma accounting adjustments ($0.6 million of the $14.4 million depreciation and amortization expense described in note (a) above). | |||||
| --- | --- |
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