Pacific Ethanol buys Aventine Renewables in all-stock deal

December 31, 2014 |

In California, Pacific Ethanol and Aventine Renewables 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.

Tags: , ,

Category: Producer News

Comments are closed.