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Greentech, startups, deals

GreenFuel Snags $92 Million Deal To Build European Algae Fuel Plant

Robert Buderi 3/14/08

GreenFuel Technologies seems to be continuing its rebound under interim CEO Bob Metcalfe. The Cambridge, MA, alternative energy company has reached an agreement—worth up to some $92 million—to build an algae-based fuel plant in Europe, according to sources close to the firm. What makes the deal even more interesting is that it was reportedly negotiated largely by former GreenFuel CEO Cary Bullock, who stepped down from the top slot when Metcalfe took the reins last June on an emergency basis, but stayed on at the company in a business-development capacity.

GreenFuel is developing algae bioreactor systems to convert carbon dioxide emissions into renewable, clean-burning biofuels. The company declined to confirm or deny the report of its European deal. But Xconomy’s sources indicate that achieving the full value of the deal is likely contingent on GreenFuel building a small-scale pilot plant and meeting cost and productivity goals along the way.

The deal seems to mark a major step on the comeback trail for the battered firm. As we reported late last June, GreenFuel had to shut down its third-generation algae greenhouse in Arizona, which had produced too much algae for the system to handle properly. Around the same time, the firm had also learned that its algae-harvesting system would cost twice as much as planned. The twin pieces of bad news forced the layoffs of roughly half the company’s 50-person staff and the appointment of Metcalfe, a general partner at lead investor Polaris Venture Partners, as interim CEO (the other lead investor in GreenFuel is Draper Fisher Jurvetson).

Metcalfe quickly outlined a seven-step recovery plan for the firm: you can find a copy of his letter to investors and employees here. And in late January, he reported that the company “completed, and in cases blew away” the first five steps of that plan. The firm’s success in growing revenues while simultaneously cutting expenses had resulted in it pushing the deadline for its so-called interim period, the time by which the company needs to complete a new round of funding, “from December to March to now June,” Metcalfe reported. The two, still-uncompleted steps are finding a permanent chief executive to replace Metcalfe and closing a new, Series C financing round.

We’re working to learn more about this deal. But one of the most intriguing pieces of news involved former CEO Bullock’s instrumental role in bringing it about. Bullock, a respected energy industry veteran, had led the company since the spring of 2005. In the vast majority of management overhaul cases we know about, the departing CEO is encouraged or forced to leave the company altogether. But Bullock, who reportedly felt passionately about the company, stayed on as vice president of business development. Could this be a new type of case study in finding ways to retain talent—and making a management change work for everyone?

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