A major cash infusion to Emeryville, California-based biofuel producer Amyris from Total S.A., the French oil and gas multinational, is being interpreted as a vote of confidence in the company’s jet biofuel technology.
The commercialization agreement calls for Total to increase its ownership share in the joint venture from 50% to 75%. Total and one other major Amyris shareholder, Temasek Holdings of Singapore, will convert $175 million in loans to common shares, immediately or when the debts come due.
Total’s and Temasek’s willingness to increase their share of the company’s stock from 30% to 60% is “confirmation that both companies see strong long-term potential for Amyris,” wrote Jeffrey Osborne, managing director of New York-based Cowen & Company. “The reduction of convertible debt also improves Amyris’ balance sheet,” giving the firm “greater flexibility as the commercialization of its various products continues to gain traction.”
He said the deal signalled “a strong fundamental change in the company’s financial standing, as well as a solid validation of the viability of its jet fuel bioproduct.”
Analyst Pavel Molchanov of Raymond James & Associates noted that the deal had eliminated 72% of Amyris’ debt. “If only Greece was able to get a deal like that!” he wrote. “Naturally, there is no free lunch, and Amyris is giving up some future project economics.” But meanwhile, Amyris will have the flexibility to commercialize its product, along with Total’s commitment to participate as an active partner.
