Pacific Ethanol increases ownership percentage, still on NASDAQ

By Holly Jessen | December 06, 2011

A month after announcing record net sales in the third quarter, Pacific Ethanol Inc. made two more positive announcements. First, the company said it is back in compliance with NASDAQ listing requirements. Just a few days later it said it hads purchased an additional 7 percent ownership interest in New PE Holdco LLC, which owns the four Pacific Ethanol plants.

Pacific Ethanol beat a March 12, 2012, deadline to regain compliance with NASDAQ Stock Market listing rule that requires a minimum closing bid of $1 per share. NASDAQ contacted Pacific Ethanol Nov. 29 by letter, confirming that the company qualified for continued listing by maintaining a closing bid price of at least $1 per share for 10 consecutive trading days.

On Dec. 1 Pacific Ethanol announced that it paid $4.5 million in cash for 7 percent additional interest in the company that owns the four ethanol plants that bear the Pacific Ethanol name. The company now owns a 27 percent ownership interest in New PE Holdco. The company first paid $23.3 million in cash on Oct. 6, 2010, for the initial 20 percent of New PE Holdco.

“We are excited to increase our ownership interest at an attractive valuation. At current margins, this transaction is immediately accretive to shareholders, and is priced at a discount to both market valuations and our initial 20 percent purchase,” said Neil Koehler, the company's president and CEO. “Ethanol continues to grow as a cost effective and low-carbon component of transportation fuel and we intend to seek additional ownership opportunities in these and other production facilities on favorable terms to further enhance shareholder value.”

Pacific Ethanol's four ethanol plants include three operating plants: a 60 MMgy plant in Burley, Idaho, a 40 MMgy plant in Boardman, Ore., and a 60 MMgy plant in Stockton, Calif. A 40 MMgy Pacific Ethanol plant in Madera, Calif., will be restarted when market conditions support it, the company has said repeatedly. Kinergy Marketing LLC is a subsidiary of Pacific ethanol, which markets ethanol from the Pacific ethanol plants and other third-party plants. Another subsidiary, Pacific Ag Products LLC, markets wet distillers grains.