We estimate that the net proceeds from our issuance and sale of shares of
common stock in this offering will be approximately $ million, assuming
an initial public offering price of $ per share after deducting
underwriting discounts and commissions and estimated offering expenses payable
by us.
A $1.00 increase (decrease) in the assumed initial public offering price of $
per share would increase (decrease) our net proceeds from this offering by
approximately $ million, assuming that the number of shares offered by
us remains the same, after deducting the underwriting discounts and commissions
and estimated offering expenses payable by us.
If the underwriters exercise their over-allotment option in full, we estimate
that the net proceeds from this offering will be approximately $
million, assuming an initial public offering price of $ per share after
deducting underwriting discounts and commissions and estimated offering
expenses payable by us.
We expect to use substantially all of the net proceeds for general corporate
purposes, which we expect to include funding capital expenditures, research and
development, working capital, product development and operating expenses. As a
result, our management will retain broad discretion over the allocation of the
net proceeds from this offering.
We expect that our products will compete globally with specialty chemical,
petrochemical and oleochemical products that serve our targeted markets, as
well as products from emerging companies who have targeted the production of
substitutes or replacements for existing products. In some cases, we will be
competing with entrenched, large scale enterprises with significant established
market shares and greater capital resources than ours. However, we believe that
the combination of our cost position, differentiated products and partnership
strategy will enable us to successfully grow. The competitive factors for each
of the markets in which we participate vary between our specialty chemicals and
our intermediate chemicals and are further detailed below.
Specialty Chemicals
Our specialty chemicals will compete with products targeting similar end
markets. We believe our specialty chemicals will compete on performance and
will provide performance improvements by combining the attributes of
oleochemicals and olefins on one molecule. The differentiation from existing
alternatives will provide our customers and us with the options of price
premiums or market share capture, depending on specific market strategies. We
expect that our specialty chemicals will include detergents and cleaners,
personal care products, performance waxes and candles, lubricants, lubricant
and fuel additives and engineering polymers and coatings.
While we expect to compete with various large and established specialty
chemical companies, in some cases we may seek to or may already be
collaborating with such companies.
Intermediate Chemicals
Olefins
We believe our intermediate olefins will serve as direct replacements for
intermediate olefins that are currently sold in the market. We believe our
operations currently provide the only renewable source of intermediate olefins.
Given our low cost of production and low capital intensity, we expect to be
immediately cost competitive with existing technologies. Existing producers of
olefins include BASF, Chevron Phillips, ExxonMobil Chemical, INEOS, Royal Dutch
Shell and Sasol. While we expect to compete with these large and established
olefin producers, in some cases we may seek to partner or collaborate with one
or more of these or other companies.
Oleochemicals
Our oleochemicals will compete in the existing global oleochemical market.
There are several large, global oleochemical manufacturers, including BASF,
Croda and Wilmar. These companies convert plant oils and animal fats into
derivative products, including fatty acids, fatty alcohols and fatty acid
methyl esters. Participants in the oleochemical market primarily compete on
delivered price, which is largely based on the price of delivered commodity
oils, including palm oil, palm kernel oil and coconut oil. We believe we are
able to effectively compete in this market through our proprietary conversion
technology, which allows us to enhance the mix of oleochemicals available from
natural oil feedstocks.
low-cost, capital
efficient production process, which utilizes Nobel Prize-winning innovations in
metathesis catalysis. Our process uses a highly efficient and selective
metathesis catalyst to break down the complex molecules found in natural oils
and recombine the fragments to produce high value chemicals. We can produce
these chemicals at lower cost and with lower capital investment than
conventional processes positioning us to deliver attractive returns on capital.
We are building what we believe will be the world’s largest integrated
biorefinery in Gresik, Indonesia, as part of a 50/50 joint venture with Wilmar
International Limited, the largest global processor and merchandiser of palm,
palm kernel and coconut oils. We plan to begin commercial operations at this
facility by the second quarter of 2012. We are also repurposing an existing
facility in Natchez, Mississippi into an integrated biorefinery. We expect
construction of our first two facilities to cost $215 to $535 per metric tonne
($0.10 to $0.25 per pound) of annual production capacity compared to $920 to
$2,300 per metric tonne ($0.42 to $1.04 per pound) of annual production
capacity for conventional facilities. We have established strategic
partnerships with market leaders to accelerate the commercialization and rapid
deployment of our technology.
Our specialty chemicals have unique and desirable functional attributes
previously unavailable in the marketplace. We believe these products will be
key performance ingredients and building blocks used in large end markets
including detergents, lubricants, personal care products, coatings and
plastics. Our intermediate chemicals, namely olefins and oleochemicals, can
directly replace critical molecules in large, attractive markets. We expect
that prevailing market dynamics, such as the desire for new and increasingly
demanding performance characteristics, changing regulatory requirements and
structural supply shortages will support rapid adoption of our specialty
chemicals and market penetration of our intermediate chemicals. We are in
discussions with existing partners and potential new customers for long-term
purchasing or offtake agreements for the entirety of our projected 2013
production.
Our Manufacturing Plan
We expect to have three world-scale facilities across three continents by the
end of 2014, with combined annual production capacity of approximately one
million metric tonnes (2.2 billion pounds). We have entered into the 50/50
joint venture (the “Wilmar JV”) with a subsidiary of Wilmar International
Limited (“Wilmar”) to build an integrated biorefinery in Gresik, Indonesia (the
“Indonesia facility”), our first world-scale biorefinery. The Indonesia
facility, at a total construction cost of approximately $40 million, is fully
funded and currently under construction. The Indonesia facility will have an
annual production capacity of 185,000 metric tonnes (400 million pounds), with
an option to expand the annual production capacity to 370,000 metric tonnes
(810 million pounds). We plan to be operating a 280,000 metric tonne (610
million pound) biorefinery in Natchez, Mississippi (the “Mississippi facility”)
in the second half of 2013 at a site we have acquired. By the end of 2014, we
expect to be operating an additional world-scale facility in South America. We
plan to rapidly deploy our technology using a combination of modular facility
design and repurposing of or integration into existing industrial sites. All of
our products are currently manufactured using tolling facilities, which are
facilities owned and operated by third parties with whom we contract for such
production. We have produced our chemicals at commercial scale through multiple
production campaigns ranging in size from 23 metric tonnes (50,000 pounds) to
450 metric tonnes (one million pounds), including two production campaigns that
utilized our proprietary biorefinery process, the first of which was completed
in November 2010. Our use of tolling facilities has enabled us to validate the
target cost of production for our biorefineries because these tolling
facilities are similar in size and have similar process conditions as the
commercial scale facilities we are designing and constructing. We plan to
continue to use tolling facilities to a limited extent after we complete
construction of our biorefineries.
Our Product Portfolio
Our products will include both specialty chemicals and intermediate chemicals.
Our novel di-functional specialty chemicals enable the development of products
that are both innovative and high value. Our customers are encouraged by our
ability to produce specialty chemicals that allow them to manufacture products
with enhanced functional attributes that can be sold at competitive prices. Our
intermediate chemicals, which include olefins and oleochemicals, will be direct
replacements for both olefins and oleochemicals produced using conventional
processes.
To date, our revenues have been primarily derived from product sales in the
performance waxes and candles markets and in the personal care markets, which
utilize our specialty chemicals. The sales into these markets constituted
approximately 91% and 96% of our revenue in the nine months ended September 30,
2011 and 2010, respectively.
Our Feedstocks
Our primary feedstocks will include palm, soy and rapeseed oils, all of which
we have used in our pilot plant to produce an array of specialty chemicals and
intermediate chemicals. These natural oils are available in liquid form in
industrial quantities from a variety of geographic regions. These
characteristics allow for low-cost transportation and storage compared to other
renewable feedstocks such as industrial sugars, biomass and waste. Our ability
to adjust our inputs in real time allows us to take advantage of changes in
feedstock prices and product demand. We have used multiple natural oils to
produce our products to date. Palm oil was used in commercial-scale toll
production runs mirroring our biorefinery process. Soy oil has been used in
multiple toll production runs using our metathesis process to produce material
for cosmetics, polymer modification and industrial applications. Canola and
mustard oils have been used to produce products in our pilot plant. We have
also tested other oils at lab scale including algae, camelina, pennycress,
jatropha and waste oils.
Our Partnerships
Our collaborative business model is designed to accelerate the
commercialization and rapid deployment of our technology. We have established
strategic partnerships with market leaders in the specialty chemical and
intermediate chemical value chains, including: Cargill, Incorporated, one of
the world’s largest agribusinesses (“Cargill”); Clariant International AG, a
leading global specialty chemicals company (“Clariant”); Dow Corning
Corporation, a global leader in silicone-based technology and innovation (“Dow
Corning”); Royal DSM N.V., a global science-based company (“DSM”); Stepan
Company, a leading producer of surfactants (“Stepan”); and Wilmar. These
partners provide us with sales and marketing expertise, established
distribution channels, technical know-how, product and application development
expertise and manufacturing infrastructure.
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We were incorporated in the State of Delaware on October 17, 2007, to pursue
work started in 2004 in a collaboration between Cargill and Materia. Our
corporate headquarters are located at 2501 Davey Road, Woodridge, Illinois
60517. Our telephone number is (866) 625-7103. Our website address is
www.elevance.com.