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By Claudia Assis/MarketWatch

SAN FRANCISCO (MarketWatch) — Shares of biofuels maker KiOR Inc. skyrocketed Tuesday on news the company is getting up to $25 million from billionaire backer Vinod Khosla to stay afloat.

KiOR shares rose 48%. The gains were chipping away at the losses the company has accumulated in recent months amid financial troubles. The stock has fallen 81% in the past 12 months and 48% in the past three months.

KiOR has developed technology to manufacture fuels from wood chips, grasses and other plant materials. But biofuel makers that don’t use corn as a raw material have had a hard time scaling their production to compete with gasoline. KiOR told regulators in March it had doubts about its viability as a company.

Kior On Tuesday, it told regulators it entered into a note purchase agreement with Khosla’s trust. The agreement covers multiple tranches of financing up to $25 million, and first tranche is expected to close on Thursday. The funding follows $100 million that KiOR had received in October from Khosla Ventures LLC and Bill Gates’ Gates Ventures LLC.

Khosla, the co-founder of Sun Microsystems, has backed the company from its beginnings. KiOR debuted on the Nasdaq in June 2011, priced at $5 a share. It raised $150 million.

Comment on this Story

  • Lindsay Leveen

    This article is misleading. KIOR’s IPO was at $15 not $5 per share. The money that Gates and Khosla put into KIOR in October was not $100 million it was a commitment for $100 million but $50 million was put in. Now let’s focus on the $5 million Khosla will actually give KIOR this month. This will keep it going for a month and then Khosla will see if he gives it another $5 million a month going forward to August. The Company wrote down the plant in Columbus to approximately $40 million from a cost of $225 million because the plant is impaired and cannot produce nameplate of 13 million gallons a year. It can only produce about 2 million gallons a year. KIOR has no hope at this level of production and hence the story they have concocted to say they will work on improving technology while the plant is shut. They have had almost 7 years to work on technology. The fat lady is on her way to Columbus and is ready to sing.

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