Aventine Renewable to merge with Pacific Ethanol

Pacific Ethanol Inc, the producer and marketer of low-carbon renewable fuels in the Western United States, and Aventine Renewable Energy Holdings, a Midwest-based producer of ethanol and related co-products, 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. The merger 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 US,” said Neil Koehler, CEO of Pacific Ethanol.
 
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.