Q3 2020 Gevo Inc Earnings Call
<unk> is being recorded.
I'll now turn the call over to Geoffrey Williams, Chief sales, Vice President General Counsel and Secretary. Please go ahead Mr. Williams.
Good afternoon, everyone and thank you for joining <unk> third quarter 2020 earnings conference call I.
I would like to start by introducing todays participants from the company.
With us today is Patrick Gruber, Jugos, Chief Executive Officer, when small cheap as Chief Financial Officer, and Karla Miranda Jugos Vice President controller.
Earlier today, we issued a press release that outlines the topics we plan to discuss today.
A copy of this press release is available on our website at Www Dot Djibo Dot com.
I like to remind our listeners that this conference call is open to the media that we are providing a simultaneous webcast of this call to the public.
A replay of today's call will be available on GBS website.
All the time on the call today and on this webcast you will hear discussions of certain non-GAAP financial measures.
Non-GAAP financial measures should not be considered in isolation from or as a substitute for financial information presented in accordance with GAAP.
Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is contained in the press release distributed today, which is posted on our website.
We will also make certain forward looking statements about events and circumstances that have not yet occurred, including but not limited to projections about cheap as business development plans and operating activities for the remainder of 2020 and beyond.
These forward looking statements are based on management's current beliefs expectations and assumptions that are subject to certain significant risks and uncertainties, including those disclosed in g. <unk> form 10-K for the year ended December 31, 2019 that was filed with the U.S. Securities and Exchange Commission.
And in subsequent reports and other filings made with the FCC fiveg about including GE Rose quarterly reports on form 10-Q.
Investors are cautioned not to place undue reliance on any such forward looking statements such.
Such forward looking statements speak only as of todays date, and GE, but disclaims any obligation to update information contained in these forward looking statements, whether as a result of new information future events or otherwise.
On today's call Pat will begin with a discussion of GBS business developments when will discuss the status of that citigroup financing process.
Carolyn will then review Juba its financial results for the third quarter of 2025.
Following the presentation, we'll open up the call for questions.
I'll now turn the call over to Pat.
Thanks, Jeff.
This past quarter was extremely significant for us.
We now have about 40 million gallons per year of take or pay off take agreements in place representing approximately $1.5 billion across the life of those contracts, which are running about six to seven years and to start a full scale production.
It's take or pay contracts are being used to secure the funding to build plans.
Not that long ago.
We were working hard just to sell out the capacity of our Luverne facility.
Our business has not changed.
Demand for our products.
And with contracts that justify more and one production facility. The burn is not big enough to service the contracts we are rehab side.
The increased demand is significant because it shows potential investors.
At our plant projects offer significant growth potential beyond just slow burn that's important because people why don't see platforms projects not.
Not only that potential investors and the projects. He clearly that we have the funds to fully pay off white box.
Before we raise money this past quarter there have been a real question of how we deal with white box.
White box for a potential investor point of view complicated future deals because white box by the way has been an outstanding partner over the last seven years has a senior secured position. It all up you go assets physical and intellectual property well now we have the money the bank to pay off white box and removed the leads.
People to be able to pay them off clearly is a big deal nothing to prevent that from happening by year end.
We also now have the money to do the required project engineering and development work necessary to secure project financing.
In fact, Weve already started to move forward on this we are in the midst of choosing additional plant sites.
Our choice of plant sites is impacted.
By the ideas of arc essentially equity investors.
You heard me right, while we haven't announced.
Potential equity investors are we are working with several potential.
Partners.
We'll talk more about the city group financing project in a couple of minutes.
On the business development front, we are expecting to secure additional large offtake agreements negotiations are progressing, albeit not fast enough for my taste I.
I would prefer to announce them already but they aren't inked yet.
We have more players in the mix wanting more volume that's great.
But we need the details good down the contract sign so big and then paid down additional plant sites.
As well as the total number of plants in.
In the meantime, we're getting on with the engineering for the 48 million gallons per year of plant projects that are already under the contracts.
I expect that in the near future, we will announce the names of the engineering firms that would be using.
To engineer and build the projects.
So for the first time in many years and this is a big deal. We are seeing the mode of having to raise money just simply to stay alive now it's all about project execution and growth, it's about leveraging our technology. The marketplace development that we already have in place and getting the project financing secured to build multiple projects.
Yes.
With that I will turn the call over to Dan to provide more details on the project finance process with Citigroup Lynn.
Thank you Pat.
The citigroup process to assist you go in securing financing to build out our production capacity is going well.
Recall that we're trying to raise about $700 million at the project level, which would finance three plant construction projects to supply about 70 million gallons per year.
We anticipate that this financing would require about 200 million in equity and 500 million in debt Citigroup is helping us with both the debt and the equity.
The 700 million in funding would be invested in special purpose project entities that are non recourse to djibo, we anticipate the G. BA will be a minority equity holder in the U.S.P. views.
By raising money at the project level, we avoid a couple of issues first it's not dilutive to Djibo Inc. stock.
Second it allows us access to capital from companies in funds, who may have limitations on investing in GE bought stock.
And may have perfect preferences for specific project exposures.
On the equity side, we have several terms sheets that are more than enough to cover the equity needed.
Each of these potential investors deep into diligence.
This isn't like investing in penny stocks, where people buy them knowing nothing in project finance investors go through every detail they hire experts who have to vet the information from technology to commercial structure, it's a pro forma financial results.
Project investors, both debt and equity require a complete understanding of the risk return proposition.
After they complete their diligence, we would move to finalize an equity investment terms.
The timeline for diligence typically takes months, even if we weren't in a co bid world. Despite cobot, we've become pretty adept at dealing with.
<unk> by increasing our use of video conferencing.
Once the diligence phase is complete and we've agreed on financial terms, we would enter into binding agreements for the investments and advanced the work to meet typical project style conditions precedent to financial close.
On the debt front Citigroup has been figuring out the best options and we believe we have a clear path to a debt format and structure that should appeal to investors.
The debt to build out the plants doesn't get into place unless the equity commitment is insured and vice versa. These closings or essentially simultaneous.
We're also paying attention to timing, we have approximately 48 million gallons per year under contract. The city projects contemplate 70 million gallons per year, we don't have to do all 70 million gallons at once which is why Pat said, we're moving forward on the first two plant sites now as we pin down the next set of clubs.
Summer contracts and their volumes will also pinned down a third site and begin development work and engineering for that site as well.
We have strong players who have strong strategic and financial reasons for wanting to invest in GBS projects stay tuned.
Now I'll turn the call over to Carolyn who will take us through the financials Carolyn.
Thank you Lynn.
Tivo reported revenue in the third quarter of 20 $20.2 million as compared to 6.1 million in the same period in 2019.
During the third quarter 2020.
Hydrocarbon revenue was 2.1 million compared to <unk> point Sixmillion in the same period in 2019 Heidrick.
Hydrocarbon sales decreased because of lower shipments of finished products from our demonstration plant at the South Hampton resources facility in Silsbee, Texas.
During the third quarter of 2020 revenue derived at the Luverne facility from ethanol sales and related products was.
0.0, 2 million compared with 5.6 billion during the same period in 2019 as a result of COVID-19, an unfavorable commodity environment, we terminated our production of ethanol and distillers grain in March 2020, which resulted in lower sales for the third quarter.
Cost of goods sold was 2.3 million in the third quarter 2020 versus $9.9 million in the same period in 2019.
Cost of goods sold included approximately 2.9 million associated with the production of idea and related products and the maintenance of the Luverne facility and approximately 1.4 million and depreciation expense.
The gross loss was $2.1 million for the third quarter 2020 versus 3.8 million for the third quarter of 2019.
Research and development expense decreased by 8.9 million during the third quarter 2020, compared with the same period in 2019, due primarily to a decrease in personnel and consulting expenses.
Selling general and administrative expense increased 5.8 million during third the third quarter of 2020 compared with the same period in 2019, due primarily to an increase in personnel consulting and insurance expenses.
And then professional fees offset by a decrease in investor relation expenses.
For the third quarter of 2020, we reported a loss from operations of 6.1 million compared to 8.0 million for the same period in 2019.
In the third quarter 2020, cash EBITDA loss, a non-GAAP measure that is calculated by adding back depreciation and non cash stock based compensation to GAAP loss from operations was 4.0 million compared to 5.8 million in the same quarter 2019.
Interest expense for the third quarter, 20, 21.5 million a slight decrease compared to the same period in 2019 as a result of lower amortization of original issue discount and debt issuance costs.
And the conversion of 2.0 million Oh, the 20 2021 notes to common stock during July 2020.
For the third quarter 2020, we reported a net loss of 6.8 million or a loss of nine cents per share based on a weighted average shares outstanding of 77 million.
49896 shares. This compares to a loss of 8.6 million in the third quarter 2019, or a loss of 66 cents per share based on a weighted average shares outstanding of 12.968 million 265 shares.
In the third quarter 2020, we recognize net non cash gain totaling 2.2 million due to changes in the fair value of certain of our financial instrument, such as warrant and embedded derivatives.
Also during the third quarter 2020, we incurred a point fivemillion loss related to the conversion of two point <unk> million of the 20 2021 notes.
The common stock during July 2020.
Adding back these non cash losses resulted in a non-GAAP adjusted net loss of $6.5 million in the third quarter 2020, or a non-GAAP adjusted net loss per share of eight cents based on a weighted average shares outstanding of 77.049 million 800.
96 shares.
This compares to a non-GAAP adjusted net loss of 8.6 million in the third quarter 29 team or a non-GAAP adjusted net loss per share of 66 cents based on weighted average shares outstanding of 12.968 million 265 shares.
Now I'll turn it back over to pass to wrap things up.
Thanks, Darryl and I've got a couple of other points to touch upon.
Price continues to make progress recall that they are working to licensing license and build plants in India with the idea that the any airports would be the ultimate customer.
I have a suspicion that other airlines might become customers to that'll continue to make progress over the coming months and over the next year.
We are also continuing the development of our bio gas projects. These projects are financially attractive offering significant cash flows and returns.
We have to development engineering money needed to secure project financing. So we're moving forward with that.
Rather than being stuck having to raise development expense capital and we also have the equity needed to move forward. We have to work on and we'll continue to work on getting the debt terms arranged.
That's a nice project.
Generates nice cash flows.
Now looking forward I expect I will soon announce the engineering firms and additional plant sites.
These things more rather than less our timing that we can influence I expect that we will soon have additional customer contracts to announce that they should be substantial and they are being worked on.
We are always faster than the big companies were negotiating with and timing is in their hands.
As I said before their contracts are progressing it just isn't fast enough for me.
Finally, I expect that as we finalize the equity investors in our plant production projects and get those deals done to the point, where they are allowed to be visible.
We're going be very glad to tell you about that too.
We've heard from some of you that you may have noticed more activity up at Luverne site that well you're right. There's more going on there. We are in the midst of running a campaign to produce more isobutanol to replenish their inventory.
We use the ISO butanol that we produce there as a feedstock for the hydrocarbon plant down in Texas Ultimate and others want the products, we still see no reason to run ethanol you would just lose money.
So with that let's open up the call for questions operator.
Thank you ladies and gentlemen, if you have a question at this time. Please press Star then one on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key to prevent any background noise. We ask that you. Please place your line on mute. Once your question has been stated.
Our first question comes from the line of Shawn Severson with water Tower Research. Your line is open. Please go ahead.
Thanks, Good afternoon, everyone.
Uh huh.
You have a little more color on who you're talking to and specifically address your strategic persist financial investors and maybe compare and contrast, I guess, which won't be preferred by you and and why.
[noise] well, what's interesting about what we're doing if you stop and really look at it is we're capturing renewable energy.
It happens to be in there were premium renewable energy into the form of liquid fuel.
It's our liquid fuels can be used in the gasoline sector for automobiles, which we've done for trucks course for airplanes.
We are using.
Wind energy filed.
Filed gas energy coldest synthetic energy, which touches on agriculture.
So when you start thinking about hydrogen to we can't because if you've got excess wind you give you something whether it will be involved with hydrogen as well. So you start to look at that and who might be interested it makes for different slate of people than one might expect because the whole game that is the whole greed.
Greenhouse gas issue that needs to be solved is how do we get off all coal fossil based natural gas fossil based electricity business system like ours allows and enables the capture of all these different things and packs that energy into a fungible fuel in the form of liquid hydrocarbon which of course can be taken.
Any market that.
That's interesting so it's a different different kinds of different groups of people are interested in these things and then as far as the individuals of whether the companies where their their funds or strategics.
Is that because the I think that.
Carbon is more valuable reductions of carbon are more valuable to strategics, because they have to do something about it. So that's what we're seeing.
In the midst of all this investment like in renewable diesel and.
Yeah, you have all these big energy companies, who are not that long ago, you said no way with the ever invest in such things now that's what they're starting to do you have that kind of thing.
There we have to do something and there is no more escaping.
I just have a follow up on.
Liquid fuels, I guess im kind of comparing.
That is a renewable solution I mean relative to you know when the bio and fuel cell fuel cell electric vehicles renewable natural gas you know a lot of different a lot of different technologies and.
Obviously, I, sometimes think liquid fuels gets gets left by the wayside a bit but can you sort of compare can you compare and contrast, how that fits in.
You then have renewable future.
Sure you know when you look at projections of energy for the future and actually what vehicles are you can be in salt and you look out plus 2050, it's pretty much the same kind of energy profile that we have today, although there is a bigger component of renewable attached to the speaking with this way the growth gets taken up by renewable energy and of course, we have.
Sales because economies are planned on developing still but we still wind up with the same kind of a size of the fossil fuel need unless something changes now when you think about trying to use electricity.
You've got to have a new vehicles kind of batteries you got to be able to have a good supply the batteries that got have to they have to work long enough you actually have to have renewable electricity to deliver to those batteries and it has to be done in a concentrated way. So that you can get the.
The bank for the block in terms of vehicles, you think of it this way with ours, we're taking that renewable energy packing it into liquid fuel and that it uses all the existing infrastructure, there's no change required and on the part of the consumer no change required and the part of a fleet order. It's just a different game to play in so isn't.
We need this it's one or the other we're going to need them all because the amount of fuel that has to be replaced the fossil based stuff. So freaking enormous.
We got to where it's going to take any and all solution. So I think it's a question of you know in some places it's going to be terrific sense to have e. The other places not so much.
Oh like in a in a rural place.
War it might be that you think about you know I mentioned that for instance, you mentioned fuel cells I mentioned agent earlier, you know what we have wind towers.
And we're making excess winter because the winds blowing and I don't need it for the plant you know.
What I think maybe you ought to make hedged out of it and me, we turn it into something to play in that market sector too. So.
What I think I look at the future I see that it's going to take multiple solutions. We have an interesting one because we're not hung up with infrastructure, we can leverage existing infrastructure, we're not hung up with having to get new fleets and talking you're going into buying a new vehicle. You know what gives you. The same all vehicle what were your carbon footprint by using our products directly.
People haven't thought of it much because they've been unaware of these types of things. They just don't know yet they're still and they still look at us and go what you didn't gasoline ethanol not we're not doing ethanol ethanol is like the 10% we're going the other 90, what you can do that and that we run into this all the time comes does it they are still learning that as possible. So.
It's interesting but of course this is why traffic or did sign up with us because they get it all through college gets it there will be others to get it as well.
Thanks, Pat My last question stuff out is is on cash flow is this quarter, a pretty good proxy going forward.
Cash burn or is it going to be any other changes or investments you think you need over the next next couple of quarters.
I think it's pretty typical they're going to creep up incrementally a little bit as well because we had a.
Reduce staff so we got to bring back a few more people. So it should be pretty typical we're going to have chunks that gets spent at various times for engineering projects. So these arent like your typical.
R&D burn type things, so you're gonna be now we're doing engineering work paying it to a company to deliver on a project and we expect to be reimbursed as the project closings swapped with some of those types expenses and we'll be able to.
Give more color on those so in terms of your basic burn we're in pretty good shape. What's interesting about this is a question I get most asked is hey, when are you going to raise money again, why don't have plans to raise money anytime soon although I do recognize that as we get these projects deployed and we have a good partnership with equity investors who might be who.
Yes to invest because what it makes with down you know and that might be that might be useful, but that's down the road sometime.
Thanks, Matt.
Thank you and our next question comes from the line.
Now with H.C. Wainwright. Your line is open. Please go ahead.
Thank you. Good afternoon, everyone. Appreciate your taking questions I'm glad to see you know little pieces come together on these plans forward. So did I hear it correctly you Brad that you have equity investors for 48 million gallons already in place.
Trying to see if you can get.
You know additional investors to come to that newly million gallon number now.
Doesn't come in within a certain timeframe you are happy to move forward with this 40 million gallon.
Financing that is shaping up for you.
[laughter] actually is slightly different than that we actually have a equity investors are willing to put up the equity for all 70 million gallons.
However, we probably tranche it because we have the contracted take or pay contracts in place for 48 million gallons and so we think that's clear we can move on with it and then depending upon who takes that next tranche and there's a couple of them who can do it then that would dictate where we might want to locate a plant in linking once a little bit of the decision, but we are.
The equity players, we have term sheets from them for them to do the whole build out of the first three plants.
Okay, and just so that's a really big development and alongside that.
You are finalizing the engineering firms or have you already sort of finalize did.
And you on region, where certain catalyst before you announce to the engineering team.
Well, it's it's it's yeah. We have our you know we have our lead horse and we're already engaging them and.
We have to go through.
You know there's initial step of ensuring they have to do and then once you do the lot the whole turnkey project.
Couple of other people, whose names have surfaced lately that we have to look at.
So it's about.
We'll announce them at the appropriate time, we're definitely engaged tomorrow, we're definitely engaged.
Okay. So if there's two there so theres like an engineering part and then they're saying here's here's who's going to feel about the whole giant plants are the two plants with whatever turnkey project those are two separate things.
Right. So so so based on this commentary.
Is any of this sort of news flow coming potentially going to come before the end of 2020 or should we.
We expect announcements around these two happen or lead to anyone.
Don't know yet it's like you know what time I.
I don't opera do stuff when it signed and.
The engineering stuff like I think it's more in our control the site selections more in our control so those could happen sooner rather than later, but we'll we'll do on when we'll announce them when they are ready to announce but it could be sooner. So I would expect those to be center regarding the customers.
This is one of these ones were.
Ill.
I I.
I see it growing so I see that the list of people who want product is growing.
And I see that the contracts are being negotiated there's a couple of contracts that out and thought have been done by now, but they got caught up in stuff with the other companies that had nothing to do with us or nothing to do with our product you're just you're there Paul.
What's going on with them in the world and it'll get done eventually.
So those could take a little bit longer but no. The stuff is still moving forward I don't know it's just.
It will.
This is your somewhat unpredictable anyway.
Before I, even heat, making predictions, but in terms of the engineering firms terms of site selection, that's something I'd expect to happen sooner rather than later, but I'll announce it when it's ready to announce.
Based on you know how old is sort of flows employees, you know and if it hadn't been controlling is set by the first half of 21.
At that point, you know going into the second half of 21.
Do you potentially start getting paid for development work that you will be.
You know putting into this.
Right. So the way that this should unfold is that a we do the development work upfront and then we get reimbursed for it if the things hold the schedule, we should start to see some of that money coming back to us late in 2021.
So in the late meaning the latter half I don't know exactly when depends upon how things get done in their timing. We have [laughter] couple of these partners want to go faster rather than slower which of course that suits us too. So what should happen is we will announce the engineering firms and that's the sites were bouncing digital customers, we'll announce that who it is that these equity.
Partners on the project, one announced who it is that how we are doing the debt side simultaneously as Lynn mentioned that'll all be moving it forward to the financial close and the financial close then we get reimbursed for the money. We just spent on the engineering and the other stock and licensing fees and things like that.
And so yes that should matter a lot in its material.
And the good news is we have enough money in our balance sheet that if you. If it takes longer we are still in good shape. So I don't have any reason to think it would take longer other than that other than the you know the practical reality of stuff, sometimes does but you know what they are working through well.
Well the next milestone for on the equity on the project run the product.
Plant project front is to get those equity investors lock down now I also mentioned that I guess.
In my comments about casting is interesting because bio gas is a we need it we watch it for <unk>.
Feeding our boilers at our plant because it reduced it gets us off natural gas, partially and that reduces our carbon scores.
Course, we get paid for carbon score it.
It matters. However, yes, what we also can sell that to California and that.
We'll be doing that.
Should we expect it and that should start up in the latter half if things go right you still got work to do on the financing front there on the debt side, but we.
We should that should be generating revenue.
You know maybe late next year or two it should be so we're going to have I would expect a couple of revenue streams, we hadn't seen before and of course, if ethanol ever does come back could be something where it's profitable we can always turn that back on to.
Okay.
And then you know with this timeline that you now have you know there's a lot more clarity was maybe you in last quarter and on this are you comfortable that you will be able to sort of.
You know meets your agreement with a drive for girl for the 25 million gallons a year by the gritty Greenstreet family.
Yes.
Okay understood.
And.
And then with respect to sort of the you know a 50000.
Production that is ongoing right now from South Hampton.
Which customers is this product going through is it all going to go to one or two customers or are these multiple trends that you're seeing.
Ah yes, so what we're doing is remember the capacity for our plant down in Silsbee, Texas is about 100000 gallons per year right, we have the ability to move.
Output from jet fuel to gasoline. These you know the renewable gasoline wholesome Carlos would they always want it always seems to me that they want more.
Hydrocarbon more isooctane and there's other people like them. The isooctane is particularly interesting jet fuel sure people are want to use it and test it but we don't have enough capacity to move the needle anywhere.
Except for some corporate aviation stuff that someday I hope to be able to announce because people will find it interesting as it has been my it.
We just aren't allowed to say who it is.
The what we're running now up at Luverne. So we did start or Luverne plant up.
It's not running ethanol is running isobutanol and we're running a campaign to make isobutanol gallons. So that we can feed them down into our plant.
Plant in Texas.
Okay.
Yes.
Yes, those are all my questions. Thank you.
Yeah, it's kind of fun to be running our isobutanol again, because you know how often do I get asked why can't right. Yeah, we do.
It's just because students you know we need renewable isobutanol. So we've got to go make it ourselves.
And we have a team in place to do that.
Thank you and our next question comes from the line of Paul Frat with Noble capital markets. Your line is open. Please go ahead.
Thank you good that nickel mine on the list.
<unk>.
Since the quarter last quarter. It looks like this quarter is going to be a little from.
Uh huh.
Right so.
Debt at the end of the quarter.
When you talk about the fall again.
Tom.
Well Corey about a certain amount and.
Can you remind me of the mountains that central like wouldn't and that's great and then what the timing might be.
It peeled depend upon having the debt side I think the best answer to this is it's not an outrageous investment I don't know the amount that we'll have to put in because there's been some equity players play or <unk>.
Errors.
Who have indicated some interesting co investing with us we have to decide does it make sense or not.
Hope it does.
Although I do like the returns from this project. So you did see a and then there's the debt side. So I think this is one where.
Because I have moving parts.
I don't want to I don't I don't want to speak out of turn.
It's not.
Huge capital.
So in any case. So you know it's like you know a $15 million would be the full equity amount if we had to pay it.
[noise] pinnacle, but I don't think well get a little.
It will be a class.
Yes, when a guess, but I just don't know you know and this is again strictly financial returns a project like this has financial returns that are ridiculous hi, I ours.
And so there is that real question, we're going to have to look at ourselves and say, maybe we want that money for ourselves to them about what the cash flow.
So that's the kind of stuff that we have to evaluate yet I just don't know.
And then we talked about.
You know the.
And he would be <unk>.
<unk> equity player.
I think on previous calls we've talked about lines on to plant location.
Yeah.
The strategic range potentially another plant location, replacing one of those telling lies.
Talk about you know the.
But I will I be previously held on plant location and then also when you.
<unk> expense move on those Alan on the Womens Oh.
Oh.
Okay. Okay. So two separate things so so I've got to say, let's let's do you kind of lose this first on our you know we've got the term sheets from equity investors. They definitely have ideas about where they want product how they want to do it how fast they want to go can we accelerate it stuff like that okay and that impulse is how we think about things it will be interesting for people. Once we can actually talk about.
Clearly openly.
Is going to be interesting.
No as we add more gallons you we continue our search and continue to look at other sites for.
Like taking over an ethanol plant or building a side by side Isobutanol hydrocarbon plant.
We have several players who who are they are interesting in that.
We could do it on their sites. They are open to it we have otherwise we have them already.
And so we could do that it's a question of which one makes the most economic sense in light of who it is that we're working with on the equity side on the project.
So we have multiple sites already.
That we could use we think there's a better one.
Okay, and then when we looked at what the.
Non recourse debt.
Okay.
Retain a minority interest.
Mhm.
I just ran alluded to that the debt structure.
On the line please share with us I know.
Tons on the debt side and then also what.
No more than that level, you might mm hmm.
HM on.
On yet.
Mobile.
Well, what's interesting is let I'll answer the last part first kinda has that is I don't what I'm not sure of them I know, what our minority interest will be exactly because it depends upon how much we invest we have enough cash on our balance sheet to make a good investment in those projects and that would lift our our portion of that project.
And the returns on these projects are attractive so that would be good for us in the cash flow since we only have money that we could invest without raising any more.
So there's a question of do we do that or not so that impacts then how big are minority interest is of course, just by being a developer and licensing technology and all the rest we would expect to get some.
No minority interest typical up what would be market in a developer. Although we're also a licensor.
In in for Us and as we make money is cheap, but remember we get money from a license fees or operating fees, because who's going to operate these plants can be GE, but we get paid to operate these things so.
Out of that profit before the project pays off returns to the investors, we got to get paid to operate the plants and do those kind of things.
So that's all part of this overall equation.
And then the debt structure itself. It is we have a very clear view of how to do it what to do who's going to do it.
Could it be subject to change still yeah, like so I don't want to give a.
Well a specific percentage interest rate.
You know what the specific terms because you know.
This all depends upon who plays how they play what do we do to do we tried CIT.
Good what do we do here is a bunch of things that still could move around I just don't want you know someone.
Send me 50 billion emails on what you said this I just not ready for yet.
Okay granted and then if you could talk about the engine. It sounds like you know to me.
Mm.
He player in place already.
Works on the way <unk> one one once that's all finalized when we go out and get it to the contractor.
Well.
<unk> <unk> thank <unk>.
HM.
Financial close enough to close the deal.
We got a little sooner.
Okay.
And then my second one I think we'd be poor we talk about financing gross profit to.
One.
Good luck.
Later, probably later rather than sooner mccluskey was in 21, it would be at EEI timing looks like this feed so feed is for everyone else feed means the full engineering work is good it's kind of an acronym we all use and you need that done gives you a final engineering sedan and then you turn around.
For the P.C. contractor or engineering firm, who built the plant construction and stuff like that.
We're working on feed right now, we're going to get that pin down the people were working with could be could be the PC, we'd expect them to they're certainly capable of it but there's other people who you know maybe have a sweeter deal in their perfectly capable of the two this is partly what you do when you're negotiating contracts are in the hundreds of millions.
So then we'd announce those things there's going to be a financial close the plant actually gets built after financial close.
The equity partners would be announced long before the equity club, but long before the equity close we're going to have to tell people about it. That's just the reality of it because it won't be we won't be able to hide it we're going to have to put it out there and tell everybody that would I'd expect in the first half of the year.
The close itself it depends on how all the pieces come together when all the site work as you know everything is completed all the everything is done in buttoned up and we can get to a project financial close and these projects are are.
Onerous in terms of the amount of detail on work that they take.
And you know the amount of diligence stuff that goes into it at the amount of reports an expert stuff that has to be done.
And so we plan for that in the second half of the year.
Okay, Yes, little group and <unk>.
Well.
Well actually it's the same yeah, yeah actually it's the same if you go back and look we talked about it being the second half of the year takes one year, you're going to do in the gas from a on the project to get something to close, but we talked about doing that the financial closer by I guess I would expect in the first half of the year.
And then.
Any comment on what you can't see happen <unk>.
Good bad or.
I mean, it's great.
That's interesting to see yeah, so that should be interesting it should bode well for assai I would think so ill because this is a chance for some of the.
No greenhouse gas stuff to get put into policy hopefully it will be done in a good constructive way.
Their say they got to win over the Midwest The dems do and so thats good for agriculture, there's a whole bunch of new techniques called regenerative agriculture.
But I'd say, how do you capture carbon in soil that does come into play people are waking up to the fact that it isn't super.
Growing stuck isn't necessarily keep your if I could do it but we've known that for years when talking about a good people are listening in.
And so I think overall you know it's good for US there's no question about it. It's just you know we got to see what happens in charge off you know does the whole thing turn blue or you know or is going to be more incremental but if the Senate stays red. So you know overall, it's Scott.
That'd be good for us right, because we happen to have one of the few technologies.
Maybe the only one that I am aware that can be scaled up to deal with gasoline itself.
Yes, the hydrocarbon portion of gasoline and of course, we have to really make the jet fuel or diesel fuel tool plus you know if the people are as aggressive as they they say they're going to be about.
Chemicals and materials good the building blocks for those two so let's go let's get on with it.
Okay, great. Thank you so much.
Got you.
Thank you and I'm showing no further questions at this time and I would like to turn the conference back over to Patrick for any further remarks.
Great. Thank you all for joining us its an exciting time for us is quite a different position that this company is in now it was not that long ago right. When we were you know haven't got there how are we going to live through the year I'm looking forward to paying off white box of getting out from under that debt I've heard from many of you that you know that's an important thing and.
And it's clear crystal clear that that's going to happen.
Moving forward on these engineering projects moving forward at bio gas. It's good we're going to you know, there's like it's interesting and momentum.
The momentum seems to be going in our favor across the board and including with the election and so we're pretty darn excited about what's going on in our partner seem to be too.
Oh Im just got to get them all.
Over the line on everything.
So.
Thanks for your support thanks for joining us.
Have a great evening bye [laughter].
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect everyone have a great day.
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