Pacific Ethanol increases plant ownership to 80 percent

By Holly Jessen | December 20, 2012

Pacific Ethanol has agreed to increase its ownership interest in four ethanol plants and is taking steps to improve its debt position, it said Dec. 19.

Three Pacific Ethanol plants are in operation in Boardman, Ore., Burley, Idaho, and Stockton, Calif., while the fourth facility in Madera, Calif., has been idled for quite some time. The company has now agreed to purchase $21.54 million of ethanol plant secured debt. The maturity date of the purchased term debt will be extended by three years, to June 2016. In addition, the maturity of a $10 million secured revolving debt facility by two years, to June 2015.

At closing, Pacific Ethanol will purchase an additional 13 percent ownership in New PE Holdco LLC. The $1.3 million purchase will increase the company’s equity ownership to 80 percent.

Funding came through an agreement with certain institutional investors to issue $22.2 million in senior unsecured notes and five-year stock warrants to purchase up to 25.6 million shares of the company’s common stock. The senior unsecured notes will accrue 5 percent interest per annum, subject to adjustment, with interest payments beginning the March 30, 2013, with a maturity date of March 30, 2016. The warrants will have an exercise price of 2 cents per share.

The transactions will significantly improve the company’s balance sheet and operations, said Neil Koehler, the company’s president and CEO. “Upon the closing of these transactions, we will reduce plant debt due in 2013 to $6.7 million and reduce our combined purchase price of ownership interests in New PE Holdco to 34 cents per gallon on a weighted average basis, thereby securing a competitive and low cost ownership basis for our stockholders.”