Pacific Ethanol boosts ownership stake to 34 percent

By Pacific Ethanol | December 12, 2011

Pacific Ethanol Inc. has entered into a definitive purchase agreement with a group of institutional investors to raise $8 million in a private placement transaction. Further, the company has signed purchase agreements to
acquire an additional 7 percent interest in the Pacific Ethanol production facilities.


Of the net proceeds from the financing, $4.6 million will be used for the purchase of the
additional 7 percent ownership interest in New PE Holdco LLC, the owner of the four Pacific Ethanol
production facilities with a combined annual production capacity of 200 million gallons. Upon
closing, the company’s total ownership interest will increase to 34 percent.

On Oct. 6, 2010, the company paid $23.3 million in cash for its initial 20 percent ownership interest, and on Nov. 29,  the company purchased an additional 7 percent ownership interest for $4.5 million.
“With the purchase of this additional 7 percent interest, we continue to further our objective of
increasing ownership in these and other production facilities,” said Neil Koehler, the company’s
president and CEO. “Within a month, we will have increased our total ownership in the Pacific
Ethanol Plants from 20 percent to 34 percent at values that are favorable compared to both replacement costs and current market.” (See earlier story here. )


Under the terms of the financing transaction, the company is to issue in aggregate 7,625,000
shares of its common stock, at a price of $1.05 per share for gross proceeds of $8,006,250. The
purchase price per share was determined based on a discount of approximately 19 percent to the
closing sale price of the company’s common stock on Dec. 8. The investors will also
acquire warrants under which they will have the right to purchase an aggregate of 4,956,250
shares of common stock at an exercise price of $1.50 per share. The warrants have a five-year
term.

Lazard Capital Markets LLC acted as the sole placement agent for the private placement,
which is expected to close on or about Dec. 13. Further details on the transactions are
available in the company’s Form 8-K filed today with the Securities and Exchange Commission.
The securities sold in this private placement have not been registered under the Securities Act of
1933 and may not be offered or sold in the United States in the absence of an effective
registration statement or exemption from registration requirements. The company has agreed to
file a resale registration statement on Form S-1 by no later than Dec. 23,  for the
purpose of registering the resale of the shares of common stock issued at the closing and the
shares of common stock underlying the warrants.