Sweetwater Energy to raise up to USD 75m in equity by 1Q18 – CEO

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Sweetwater Energy, a biomass processing company, is looking to raise USD 50m-USD 75m by selling an equity stake, Chairman and Chief Executive Officer Arunas A. Chesonis said.

The pre-money valuation of Rochester, New York-based Sweetwater Energy (Sweetwater) is USD 150m, the CEO said. Since its establishment in 2006, it has raised USD 23m in debt and USD 17m in equity, the CEO said, adding that the management team is the company’s main investor. It would like to raise the new funds by March of next year, he added.

Sweetwater has patented and patent-pending technology that can process biomass into sugars and lignin fiber, which are feedstocks for biofuels and other chemicals and materials. Biochemical and biofuel companies as well as suppliers of feedstocks, enzymes and yeasts for biomass would be attractive strategic investors, as well as investment funds, Chesonis said.

The CEO said that Sweetwater is also looking to raise USD 50m in debt and it has already secured a part of it. Its advisor for the debt financing is New York-based Brevet Capital Management, but it is relying on the network of its management team for the equity raise.

The USD 50m of debt financing together with USD 50m of the equity funds will finance the building of a commercial production facility in Minnesota, Chesonis said. At the moment the company has a demonstration plant in Rochester.

To start construction the company needs a first tranche of funds of USD 25m, the CEO said and explained that the production site will require 21 months to become operational. The company projects that it could generate annual revenues of approximately USD 40m with 60 employees, he explained. At the moment Sweetwater has a headcount of 21, Chesonis said.

Sweetwater has already secured customers for half of the capacity of the new production site and is now working to secure the other half, the CEO said.

It could build a second commercial production facility in a JV with a partner, the CEO said. Sweetwater plans to invest the remaining USD 25m in equity into a potential JV, which could be in the US, in Europe or in South America, he said.

by Laura Larghi

As seen in the Mergermarket, an Acuris company, newsletter on 16/11/2017