Pacific Ethanol buys ICP for $76M, diversifies into beverage alcohols

June 28, 2017 |

In California, Pacific Ethanol will acquire Illinois Corn Processing, LLC (ICP) from SEACOR Holdings and MGPI Processing for $76 million, which includes $15 million in working capital. adding 90 million gallons in capacity adjacent to the company’s Pekin, IL plant. The plant can produce gin/vodka, ethanol as well as proteins

The acquisition will be funded with $30 million in cash (the company had $73.7 million in cash on hand at the end of 1Q17 and $46M through the issuance of non-amortizing secured promissory notes due 18 months after closing, which the company intends to refinance at similar terms to the existing Pekin non-recourse loan. The acquisition is expected to close in July.

Management expects the agreement to be immediately accretive to earnings and yield ~$3mn in annual cost savings over the first 6-12 months. The acquisition of ICP increases the production capacity in Pekin, Illinois by 90 million gallons to a total of 250 million gallons. ICP also brings diversification, producing beverage and industrial grade alcohol in addition to fuel-grade ethanol, DDG, and corn oil.

Jeffrey Osborne of Cowen & Company wrote:

“We like the transaction at first blush given the diversification outside of the lumpy ethanol markets and the fact that it is immediately accretive. In addition to fuel grade ethanol, the facility can produce other high margin alcohol products as well such as vodka and gin. MGP purchased the plant in 1980 and since then the plant has undergone numerous upgrades and formed into a JV in 2009. For many years the facility produced commodity wheat starch and wheat gluten; however, over the years and through the JV has focused on ethanol and alcohol.”

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Category: Fuels

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