Trellis Earth steps closer to IPO
By Lee van der Voo
Sustainable Business Oregon contributing writer
Trellis aims to raise $8 million on the public market, with shares trading as soon as next month.
Trellis Earth Products Inc. is on the verge of breaking Oregon’s IPO drought aiming to start selling shares as early as next month.
The Wilsonville-based company on Wednesday said it will start selling shares to the public on Feb. 20, barring any regulatory holdups from the U.S. Securities and Exchange Commission.
Oregon hasn’t had an initial public offering since Dec. 16, 2004, when Beaverton’s Cascade Microtech Corp. began trading on the Nasdaq exchange. Several Oregon companies have filed paperwork for IPOs.
Trellis develops and manufactures compostable garbage bags, cutlery, trash liners, shopping bags and disposable deliware.
Trellis develops and manufactures compostable garbage bags, cutlery, trash liners, shopping bags and disposable deliware.
It wants to raise $8 million in its IPO, which it initially filed for last September.
Shares have been priced at $2 and Tripoint Global Equities LLC, which specializes in raising capital in the $10 million to $100 million range, is the placement agent.
The money would be used to equip its Oregon facility, initiate manufacturing there, promote its brand and retire debts.
The offering does not disclose how many shares of the company will be sold, only that CEO William Collins will retain a majority stake in the company.
The company is banking on green-leaning consumer trends as well as an uptick in pricing for petroleum and crude oil in a long-shot bid to become one of the largest U.S. suppliers of bioplastics.
It wants to compete with plastic trash bags and other products by selling green alternatives at the same or lower prices. The company plans to build a second manufacturing facility in Illinois in 2013.
“We expect our 'Made In Oregon' branding will help us compete nationally as we pioneer new innovations including 100 percent petroleum-free plastic resins that re-purpose Oregon agricultural by-products into sustainable alternatives to conventional plastics,” CEO Bill Collins said in an email.
The offering is small by IPO standards, which could make it a long shot. The IPO market has also been relatively cool in the past year, with only a few high-tech companies making big splashes.
Trellis Earth began moving its manufacturing operations from a production facility in China to its headquarters in Wilsonville in 2011. Combined with a planned, but yet unfunded, facility in Illinois, the two would have a production capacity of 40 million pounds, far outstripping the company’s current production level of 2.4 million pounds annually.
Trellis has predicted it can fill the gap between current demand and future production goals through marketing and an increase in domestic demand.
Trellis Earth incorporated in 2006 in Oregon and has yet to become profitable.
It had $2.15 million in 2011 revenue. Annual revenue was $2.15 million in 2011, while losses increased to $1.25 million from $444,081 in 2009. Losses are primarily attributed to start-up costs and growing its marketing operation.
Among risks for investors, Trellis Earth discloses it is competing with established rivals with more cash on hand for expansion. The company also relies on a single distributor for much of its business, with between 62 and 71 percent of revenues derived from sales through Bunzel in recent years.
While end users include Trader Joe’s, Kroger, Costco, Cash & Carry, Marriott and Westin, Trellis is highly dependent on Bunzel’s marketshare.
Lee van der Voo, lvdvoo*at*gmail.com, is a freelance writer for Sustainable Business Oregon.
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