Pacific Ethanol Enters Agreements to Refinance Term Debt and Acquire Ownership in Aurora, NE Grain Elevator
December 12 2016 - 6:00AM
- Reduces interest costs by more than $8 million
annually -
Pacific Ethanol, Inc. (NASDAQ:PEIX), a leading
producer and marketer of low-carbon renewable fuels in the United
States, is refinancing its $155.1 million principal term debt, due
in September 2017, and expanding its business through the following
transactions:
- Pacific Ethanol will obtain a new five-year term amortizing
loan from CoBank and First Farm Credit in the amount of $64.0
million and a revolving line of credit of $32.0 million secured by
its Pekin assets. This loan bears interest at LIBOR plus
3.75%.
- Pacific Ethanol will also obtain $55.0 million from a
three-year senior note offering secured by Pacific Ethanol’s
ownership interest in its Western assets. The senior notes will
bear initial interest at LIBOR plus 7.00%. The senior notes will
have no prepayment penalty.
- Pacific Ethanol has entered into an agreement with the Aurora
Cooperative Elevator Company (ACEC), whereby Pacific Ethanol will
contribute its Aurora plant assets into a newly created company,
Pacific Aurora, LLC (PAL), and ACEC will simultaneously contribute
its Aurora West Grain Elevator, loop track, related land and other
assets into PAL. In addition, Pacific Ethanol will sell a 14%
interest in PAL to ACEC for $30.0 million in cash. These
transactions will result in Pacific Ethanol owning 74% and ACEC
owning 26% of the combined ethanol production, grain elevator and
rail facilities in Aurora, Nebraska. To further strengthen
liquidity, PAL will obtain a five-year amortizing, revolving term
loan of $30 million from CoBank secured by PAL’s assets. This loan
will bear interest at LIBOR plus 4.00%.
- Pacific Ethanol will use the combined proceeds to repay the
$155.1 million in outstanding principal and accrued and unpaid
interest owed under the terms of its existing term loans. The debt
refinancing reduces total debt outstanding by more than $12 million
and reduces annual interest costs by over $8 million. PAL will be a
fully consolidated subsidiary of Pacific Ethanol and is expected to
reduce operating costs by over $5 million annually. Excess proceeds
will strengthen Pacific Ethanol’s cash and working capital
positions and will be used for general corporate purposes.
- Pacific Ethanol, in connection with the refinancing, will also
increase Kinergy’s line of credit facility with Wells Fargo by
$10.0 million, from $75.0 million to $85.0 million, to provide
additional liquidity to Kinergy, its ethanol marketing
subsidiary.
Neil Koehler, Pacific Ethanol’s President and
CEO, stated: “In this series of agreements, we will accomplish a
major milestone for the company by refinancing the Midwest plants’
term debt at favorable terms, strengthening our balance sheet and
significantly lowering our cost of capital. The expanded strategic
relationship with the Aurora Cooperative will allow us to directly
benefit from farmer ownership in our ethanol business, which has
proven to be a winning combination over the years in the ethanol
industry. These transactions will be immediately accretive to our
shareholders and create new growth opportunities for Pacific
Ethanol.”
Chris Vincent, ACEC’s President and CEO, stated:
“We are pleased and excited to deepen our relationship with Pacific
Ethanol. We will be combining Aurora Cooperative's grain terminal
and handling facility with both of Pacific Ethanol's adjacent
bio-refineries. Our plan is to unify both entities’ operations to
gain efficiencies and enhance performance. Aurora Cooperative will
use its years of grain origination and operations experience
combined with Pacific Ethanol's production expertise to greatly
benefit Pacific Aurora, LLC. Bringing both companies’ resources
together benefits our respective stockholders, and adds value and
strength to our communities, the State of Nebraska and both the
ethanol and grain industries.”
About Pacific Ethanol,
Inc.Pacific Ethanol, Inc. (PEIX) is the leading producer
and marketer of low-carbon renewable fuels in the Western United
States. With the addition of four Midwestern ethanol plants in July
2015, Pacific Ethanol more than doubled the scale of its
operations, entered new markets, and expanded its mission to
advance its position as an industry leader in the production and
marketing of low carbon renewable fuels. Pacific Ethanol owns and
operates eight ethanol production facilities, four in the Western
states of California, Oregon and Idaho, and four in the Midwestern
states of Illinois and Nebraska. The plants have a combined
production capacity of 515 million gallons per year, produce over
one million tons per year of ethanol co-products – on a dry matter
basis – such as wet and dry distillers grains, wet and dry corn
gluten feed, condensed distillers solubles, corn gluten meal, corn
germ, corn oil, distillers yeast and CO2. Pacific Ethanol markets
and distributes ethanol and co-products domestically and
internationally. Pacific Ethanol’s subsidiary, Kinergy Marketing
LLC, markets all ethanol for Pacific Ethanol’s plants as well as
for third parties, approaching one billion gallons of ethanol
marketed annually based on historical volumes. Pacific Ethanol’s
subsidiary, Pacific Ag. Products LLC, markets wet and dry
distillers grains. For more information, please visit
www.pacificethanol.com.
About Aurora Cooperative Grain
CompanyAurora Cooperative is one of the largest
agricultural retailers in the nation, ranking 34th in the nation
among all agricultural cooperatives. Aurora Cooperative has been a
partner in the success of agriculture for over 108 years, providing
high quality, competitive products and services growers rely on
every day. Headquartered in Aurora Nebraska, Aurora Cooperative has
80 locations across seven states (Nebraska, Kansas, Colorado, South
Dakota, Texas, Iowa, Maryland) and provides service and expertise
in grain, agronomy, animal nutrition, and energy. In 2016, Aurora
cooperative had total sales of nearly $1 billion, serviced over
4.3M acres, merchandised over 100 million bushels of grain, and
worked with more than 14,000 owner customers. Aurora Cooperative is
a well-established, competitive and innovative cooperative that is
built upon providing our owners with profitable solutions that meet
their specific needs. We do this by actively putting our owners’
equity to work, every day, for their farm, their cooperative and
for their future. For more information on Aurora Cooperative,
please visit www.auroracoop.com.
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995Statements and
information contained in this communication that refer to or
include 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 the 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 debt financing transactions and the combination of
Pacific Ethanol’s Aurora, Nebraska ethanol production facilities
with Aurora Cooperative Elevator Company’s grain elevator and
related real estate and other assets, including future financial
and operating results; Pacific Ethanol’s other plans, objectives,
expectations and intentions; and the expected timing of completion
of the transactions. The debt financing and business combination
transactions are subject to numerous conditions to closing. It is
important to note that Pacific Ethanol’s plans, objectives,
expectations and intentions 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 and risks associated with debt
financing and business combination transactions. These factors
include, among others, the inherent uncertainty associated with
financial projections; restructuring in connection with the
contemplated business combination transaction; subsequent
integration of the grain elevator and related real estate and other
assets and the ability to recognize the anticipated synergies and
benefits of the contemplated business combination transaction; the
risk that one or more conditions to closing of the debt financing
or business combination transactions may not be satisfied on a
timely basis or at all; the failure of any of the proposed
transactions, all of which are interdependent, to close for any
other reason; fluctuations in prevailing interest rates; adverse
economic and market conditions, including for ethanol and its
co-products; fluctuations in the price of oil and gasoline; raw
material costs, including ethanol production input costs;
insufficient capital resources; the anticipated size of the markets
and continued demand for Pacific Ethanol’s products; the impact of
competitive products and pricing; other risks and uncertainties
normally incident to the grain procurement and ethanol production
and marketing industries; changes in generally accepted accounting
principles; successful compliance with laws and governmental
regulations and policies applicable to the combined Aurora,
Nebraska facilities; changes in laws or governmental regulations or
policies; 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 8, 2016 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.
Company IR Contact:
Pacific Ethanol, Inc.
916-403-2755
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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