Danimer Scientific has announced it will go public via a SPAC transaction with Live Oak Acquisition Corp. Danimer Scientific CEO Stephen Croskrey joins the On the Move panel to discuss.
ADAM SHAPIRO: All right, welcome back to Yahoo Finance. We're off the session highs. The Dow is now barely positive. It's up about one point. But something that should bring a smile to the face of all of us concerned about the environment is news of a company that is going to become publicly traded, Danimer Scientific, they've entered into an agreement to merge with, we're getting used to these facts, right, Live Oak Acquisition Corp, and this will close perhaps at the end of Q4. But let's bring in the CEO of the company to talk about what this is going to mean, and we invite into the stream right now Stephen Croskrey, Danimer Scientific CEO. Good to have you here. And I'm not a scientist, I'm going to try and say this as best I can, biodegradable and compostable bioplastics. There's a documentary right now about how all of us were sold a line of garbage, forgive the pun, about recyclable plastics, but this is the real deal, how so?
STEPHEN CROSKREY: Well, let me explain in layman's terms how it's made. In nature, this polymer occurs naturally in bacteria. So what we do is we feed vegetable oil to bacteria, and when they've had enough to eat to satisfy their own metabolic processes, like us, if we continue to eat, we get fat. So they store this converted carbon into a polymer called PHA, polyhydroxyalkanoate, as energy reserve. So the scientists don't like me saying this, but I call it bug fat. So we extract that bug fat from inside the microorganism, and the beauty of this is that is the plastic resin. So if you make an article out of it like a fork or a straw and when it finds its way into a landfill or if it gets disposed of in nature where it shouldn't go anyway, but if it does, it's consumed by bacteria naturally, and it returns to the environment. That's what's so exciting about it.
JULIE HYMAN: Hey, Steve, it's Julie here. How expensive is this process? It sounds like it's pretty highly specialized, and also, how scalable?
STEPHEN CROSKREY: So we think it's very scalable. Right now, you know, from a cost standpoint, it would run, you know, 50% to double fossil fuel prices, but you know, I think what's important to remember is that the fossil fuel industry has been around for 70 years with lots of time to optimize, and biopolymers are just getting started. We're partnering with some of the best CPG companies in the world, people like PepsiCo and Nestlé who understand that we need their scale to help us scale. So it's a mutual beneficial arrangement as we can develop products for companies like this that use tremendous volumes, that's going to help us get the scale that we need to drive the cost down closer to fossil fuels. But I would just point out that, you know, there really is no requirement to sell these materials for the same price as fossil fuels when you have such a value added product. It's renewable and fully biodegradable.
BRIAN CHEUNG: Hey, Stephen, Brian Cheung here. So I guess going public is going to help you raise the capital to build that scale up, but I guess I'm just wondering why specifically did you decide to go the avenue with a SPACE here. We've heard that--
BRIAN CHEUNG: Avoid the volatility, you only need to pitch to one person, so what was the argument for your company doing this, and then why specifically Live Oak?
STEPHEN CROSKREY: Well, Brian, great question. We found a used fermentation facility in Kentucky that we purchased in December of 2018, and we have a plan in place to bring that online to retrofit it to our process in a two phased approach. Phase two is supposed to get kicked off late spring, early summer. Phase one came online in March of this year. So as you can imagine, we picked the worst month in human history to launch a new technology, so that really upset our plans for getting phase two going, but we have customer demand and customer contracts that, you know, we want to support, and so it was important to find some alternate source of financing.
Ultimately, going public is a great solution for us, because it gives us access to, you know, public market debt and using the stock as currency if need be or, you know, when the time is right. But in the meantime, you know, our plans were being delayed because of the current environment, and when we kind of came across the SPAC format, we realized it was a much quicker way to get to market than to do a traditional IPO. And we were introduced to the Live Oak team by some of our current investors, and there was just great chemistry there. We thought they had great backgrounds in the capital markets, which was something that we thought as a partner would be helpful in this process.
ADAM SHAPIRO: Stephen Croskrey is Danimer Scientific CEO. We wish you the best and look forward to coming back after we can start buying the stock. All the best to you, sir.
STEPHEN CROSKREY: Thank you, Adam.