Pacific Ethanol stock now over $1, increases credit facility

By Holly Jessen | June 14, 2011

Just a week after a enacting a one-for-seven reverse stock split that brought stock prices up over $1, Pacific Ethanol Inc. announced it was increasing the credit facility of its subsidiary, Kinergy Marketing LLC with Wells Fargo Capital Finance LLC.

"Our total gallons sold have increased rapidly and consistently over the last seven quarters at an annualized compound growth rate of 66 percent,” said Neil Koehler, president and CEO of the company. “This growth continues as our unique distribution business enables us to increase our market share in the Western United States.”

Credit was increased from $20 million to $30 million, with a $5 million accordion feature. The credit maturity date, however, remains the same at Dec. 31, 2013. “Our expanded credit facility lowers our cost of capital and clearly demonstrates our lender's confidence in our growth strategy,” Koehler added.

The reverse stock split on NASDAQ Capital Market was effective June 8. Pacific Ethanol stocks went from 25 cents a share at closing June 8 to $1.72 a share the next day. The last time Pacific Ethanol stocks closed at more than $1 was Jan. 5, when the closing price was $1.04, according to information obtained by Rick Kment, ethanol analyst for Telvent/DTN, a commodity market information company.

In the days since the reverse stock split, Pacific Ethanol shares dropped to $1.51 at closing June 9 and $1.32 June 10. Before closing June 13 the stock price was back up slightly at $1.57 a share, Kment said. Keeping the stock price above $1 is important for the company. The company announced Dec. 29 that it had until June 21 to regain compliance with the minimum $1 closing bid price per share for a minimum of 10 consecutive business days for continued listing on NASDAQ. “The challenge here is,” Kment said, “is it going to stay over a dollar? Is this going to be enough to draw players back into the market to maintain the price level?”

Pacific Ethanol announced last fall that it purchased a 20 percent ownership in New PE Holdco LLC, which owned Pacific Ethanol's four ethanol plants: a 60 MMgy plant in Burley, Idaho, a 40 MMgy plant in Boardman, Ore., a 60 MMgy plant in Stockton, Calif., and a 40 MMgy plant in Madera, Calif. The $23.3 million purchase gave Pacific Ethanol the ability to regain controlling interest in its ethanol plants. While the plants in Burley and Boardman were already operating, the company restarted its Stockton plant in December 2010. The Madera plant will be restarted when market conditions support it, the company said.