Merger Connects Destination and Origin Market
Strategies, Providing Synergies in Ethanol Production and Marketing
-
- Annual Combined Production Capacity of 515
Million Gallons -
- Combined Annual Ethanol Marketing Volume of
Over 800 Million Gallons -
- Transaction Expected to Close in Q2 2015 -
- Conference Call to Discuss Transaction on
Wednesday, January 7th at 1:30 p.m. PT -
Pacific Ethanol, Inc. (Nasdaq:PEIX), the leading
producer and marketer of low-carbon renewable fuels in the Western
United States, and Aventine Renewable Energy Holdings, Inc.
("Aventine"), a Midwest-based producer of ethanol and related
co-products, announced they have entered into a definitive merger
agreement under which Pacific Ethanol will acquire all of
Aventine's outstanding shares in a stock-for-stock merger
transaction.
"With this transaction, Pacific Ethanol strengthens its unique
production and marketing advantages by diversifying into two
additional discrete markets and connecting its Western markets with
Aventine's Midwest and Eastern markets for low-carbon renewable
fuels," said Neil Koehler, CEO of Pacific Ethanol. "The merger
offers a rare opportunity to combine the experience, market
presence and diversification that Aventine brings with our industry
leadership in Western US markets. It will complement our existing
business as we balance assets across new regional markets, expand
our footprint for the production and marketing of low-carbon
renewable fuels, diversify our technology and increase our mix of
co-products."
"This transaction will more than double our annual ethanol
production capacity, and it will establish Pacific Ethanol as the
fifth largest producer and marketer of ethanol in the United
States. Once closed, we expect the transaction to be immediately
accretive to earnings with expected operational synergies and the
expansion of our ethanol and co-product marketing business. We are
impressed with the both the quality of Aventine's assets and the
seasoned employees operating the business, and we look forward to
integrating our teams," concluded Koehler.
"In late 2012, the new Aventine management team defined a very
aggressive turnaround strategy," stated Mark Beemer, CEO of
Aventine. "Our mission has been accomplished with our plants
achieving five new production records; over $30 million invested in
the Pekin facilities, including coal-to-natural gas conversion; and
additional capital investments in our Nebraska facilities. In 2014,
Aventine achieved record earnings and successfully restarted its
155 million gallons of ethanol production in Nebraska. We look
forward to making a successful transition of the business to
Pacific Ethanol and bringing the combined strength of the two
companies to the market."
Under the terms of the merger agreement, Pacific Ethanol expects
to issue approximately 17.75 million shares of its common stock
upon closing in exchange for all of the issued and outstanding
shares of Aventine's common stock. Upon completion, existing
Pacific Ethanol shareholders will own approximately 58% of the
issued and outstanding shares of common stock of the combined
entity, and Aventine will nominate two representatives to be named
later to Pacific Ethanol's board of directors, increasing the total
board count to nine.
Aventine will be operated as Pacific Ethanol's wholly-owned
subsidiary. Aventine currently has $135 million in term loan
debt.
Aventine's ethanol production assets include its 100 million
gallon per year wet mill and 60 million gallon per year dry mill
located in Pekin, Illinois, and its 110 million gallon per year and
45 million gallon per year dry mills in Aurora, Nebraska. Combined
with Pacific Ethanol's current ethanol production capacity of 200
million gallons per year, the combined company will have a total
ethanol production capacity of 515 million gallons per year, and
together with Pacific Ethanol's marketing business will sell over
800 million gallons of ethanol annually.
The closing of the transaction, which is expected to occur
during the second quarter of 2015, is subject to customary and
other closing conditions and regulatory approvals, as well as the
approval of Pacific Ethanol's and Aventine's shareholders.
For Pacific Ethanol, Troutman Sanders LLP served as legal
advisors and Craig-Hallum Capital Group LLC provided a fairness
opinion to the Board of Directors of Pacific Ethanol. For Aventine,
Akin Gump Strauss Hauer & Feld LLP served as legal advisors and
RPA Advisors, LLC served as financial advisors.
Conference Call
The Company will host a conference call and live webcast on
Wednesday, January 7th at 1:30 p.m. Pacific Time to discuss the
merger. To participate, interested parties should dial
1-877-847-6066 in the United States or 1-970-315-0267 from
international locations, conference ID 60307901. A webcast of the
conference call will be available at
http://www.pacificethanol.net/investors with an accompanying slide
presentation that may be accessed on that page and through the
webcast link.
A playback of the call will be available until January 14th by
dialing 1-855-859-2056 within the United States or 1-404-537-3406
from international locations, passcode 60307901.
About Pacific Ethanol, Inc.
Pacific Ethanol, Inc. (PEIX) is the leading producer and
marketer of low-carbon renewable fuels in the Western United
States. Pacific Ethanol also sells co-products, including wet
distillers grain ("WDG"), a nutritional animal feed. Serving
integrated oil companies and gasoline marketers who blend ethanol
into gasoline, Pacific Ethanol provides transportation, storage and
delivery of ethanol through third-party service providers in the
Western United States, primarily in California, Arizona, Nevada,
Utah, Oregon, Idaho and Washington. Pacific Ethanol has a 96%
ownership interest in PE Op Co., the owner of four ethanol
production facilities. Pacific Ethanol operates and manages the
four ethanol production facilities, which have a combined annual
production capacity of 200 million gallons. These operating
facilities are located in Boardman, Oregon, Burley, Idaho,
Stockton, California and Madera, California. The facilities are
near their respective fuel and feed customers, offering significant
timing, transportation cost and logistical advantages. Pacific
Ethanol's subsidiary, Kinergy Marketing LLC, markets ethanol from
Pacific Ethanol's managed plants and from other third-party
production facilities, and another subsidiary, Pacific Ag.
Products, LLC, markets WDG. For more information please visit
www.pacificethanol.com.
Cautionary Statement Regarding Forward-Looking
Statements
Statements contained in this communication that refer to Pacific
Ethanol's estimated or anticipated future results, including
estimated synergies, or other non-historical expressions of fact
are forward-looking statements that reflect Pacific Ethanol's
current perspective of existing trends and information as of the
date of this communication. Forward looking statements generally
will be accompanied by words such as "anticipate," "believe,"
"plan," "could," "should," "estimate," "expect," "forecast,"
"outlook," "guidance," "intend," "may," "might," "will,"
"possible," "potential," "predict," "project," or other similar
words, phrases or expressions. Such forward-looking statements
include, but are not limited to, statements about the benefits of
the acquisition of Aventine, including future financial and
operating results, Pacific Ethanol's or Aventine's plans,
objectives, expectations and intentions and the expected timing of
completion of the transaction. It is important to note that Pacific
Ethanol's goals and expectations are not predictions of actual
performance. Actual results may differ materially from Pacific
Ethanol's current expectations depending upon a number of factors
affecting Pacific Ethanol's business, Aventine's business and risks
associated with acquisition transactions. These factors include,
among others, the inherent uncertainty associated with financial
projections; restructuring in connection with, and successful
closing of, the Aventine acquisition; subsequent integration of the
Aventine acquisition and the ability to recognize the anticipated
synergies and benefits of the Aventine acquisition; the ability to
obtain required regulatory approvals for the transaction (including
the approval of antitrust authorities necessary to complete the
acquisition), the timing of obtaining such approvals and the risk
that such approvals may result in the imposition of conditions that
could adversely affect the combined company or the expected
benefits of the transaction; the ability to obtain the requisite
Pacific Ethanol and Aventine stockholder approvals; the risk that a
condition to closing of the Aventine acquisition may not be
satisfied on a timely basis or at all; the failure of the proposed
transaction to close for any other reason; risks relating to the
value of the Pacific Ethanol shares to be issued in the
transaction; the anticipated size of the markets and continued
demand for Pacific Ethanol's and Aventine's products; the impact of
competitive products and pricing; the risks and uncertainties
normally incident to the ethanol production and marketing
industries; the difficulty of predicting the timing or outcome of
pending or future litigation or government investigations; changes
in generally accepted accounting principles; costs and efforts to
defend or enforce intellectual property rights; successful
compliance with governmental regulations applicable to Pacific
Ethanol's and Aventine's facilities, products and/or businesses;
changes in the laws and regulations; changes in tax laws or
interpretations that could increase Pacific Ethanol's consolidated
tax liabilities; the loss of key senior management or staff; and
such other risks and uncertainties detailed in Pacific Ethanol's
periodic public filings with the Securities and Exchange
Commission, including but not limited to Pacific Ethanol's "Risk
Factors" section contained in Pacific Ethanol's Form 10-Q filed
with the Securities and Exchange Commission on November 12, 2014
and from time to time in Pacific Ethanol's other investor
communications. Except as expressly required by law, Pacific
Ethanol disclaims any intent or obligation to update or revise
these forward-looking statements.
Important Information for Investors and
Stockholders
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. In connection with the
proposed merger between Pacific Ethanol and Aventine, Pacific
Ethanol will file with the Securities and Exchange Commission a
registration statement on Form S-4 that will include a joint proxy
statement of Pacific Ethanol and Aventine that also constitutes a
prospectus of Pacific Ethanol. The definitive joint proxy
statement/prospectus will be delivered to Pacific Ethanol's and
Aventine's stockholders. INVESTORS AND SECURITY HOLDERS OF PACIFIC
ETHANOL AND AVENTINE ARE URGED TO READ THE DEFINITIVE JOINT PROXY
STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT WILL BE FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION CAREFULLY AND IN THEIR
ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders will be able
to obtain free copies of the registration statement and the
definitive joint proxy statement/prospectus (when available) and
other documents filed with the Securities and Exchange Commission
by Pacific Ethanol through the website maintained by the Securities
and Exchange Commission at http://www.sec.gov. Copies of the
documents filed with the Securities and Exchange Commission by
Pacific Ethanol will be available free of charge on Pacific
Ethanol's internet website at www.pacificethanol.net or by
contacting Pacific Ethanol's investor relations agency, LHA, at
(415) 433-3777.
Participants in the Merger Solicitation
Pacific Ethanol, Aventine, their respective directors and
certain of their executive officers and employees may be considered
participants in the solicitation of proxies in connection with the
proposed transaction. Information regarding the persons who may,
under the rules of the Securities and Exchange Commission, be
deemed participants in the solicitation of the Pacific Ethanol and
Aventine stockholders in connection with the proposed merger will
be set forth in the joint proxy statement/prospectus when it is
filed with the Securities and Exchange Commission. Information
about the directors and executive officers of Pacific Ethanol is
set forth in its proxy statement for its 2014 annual meeting of
stockholders, which was filed with the Securities and Exchange
Commission on April 28, 2014. Information about the executive
officers of Aventine is set forth in www.aventinerei.com.
Additional information regarding the participants in the proxy
solicitations and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the joint proxy statement/prospectus filed with the
above-referenced registration statement on Form S-4 and other
relevant materials to be filed with the Securities and Exchange
Commission when they become available.
CONTACT: Company IR Contact:
Pacific Ethanol, Inc.
916-403-2755
866-508-4969
Investorrelations@pacificethanol.com
IR Agency Contact:
Becky Herrick
LHA
415-433-3777
Media Contact:
Paul Koehler
Pacific Ethanol, Inc.
916-403-2790
paulk@pacificethanol.com
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