Pacific Ethanol increases ownership in ethanol plants

By Chris Hanson | December 30, 2013

Pacific Ethanol recently announced its entrance into debt reducing and ownership increasing agreements.

The company will reduce the principal amount of its senior notes by $2 million by issuing 500,000 shares of common stock. As of Dec. 13, the stock was valued at $4 per share. By reducing the principal on the senior notes, the company will avoid scheduled interest rate increases and lock in a 5 percent interest rate for the remaining term of the senior notes.

Additionally, the company will pay $500,000 to buy an aggregate of 6 percent of additional ownership in New PE Holdco LLC, the owner of the Pacific Ethanol plants. The move will increase the company’s ownership interest in the Pacific Ethanol plants to 91 percent.  Having an increased ownership will provide additional earning power for Pacific Ethanol and is immediately accretive to shareholders, said Paul Koehler, vice president corporate development for Pacific Ethanol. At the 91 percent ownership level the company is virtually at complete ownership, but PE would be interested in 100 percent ownership at the right prices, Paul Koehler added.

“These transactions reduce principal and future interest on our senior debt and increase our ownership of the Pacific Ethanol plants at an attractive valuation. The company is currently benefitting from the best operating margins of the year and this increase in ownership is immediately accretive to earnings,” said Neil Koehler, president and CEO of Pacific Ethanol.

Pacific Ethanol also recently announced a partnership with Sweetwater Energy Inc., a Rochester, N.Y.-based cellulosic sugar producer. Sweetwater’s partnership will support the integration of second-generation cellulosic ethanol into existing production, Paul Koehler said. Pacific Ethanol has an agreement with Sweetwater to buy the sugar syrup they produce, he added.