Pacific Ethanol Signs Agreements to Raise Up to $14.0 Million to Reduce
Plant Debt and Acquire Additional Plant Ownership Interest
-- Enters into agreements to issue up to $14.0 million in subordinated
convertible notes and acquire an additional 3% Plant interest, increasing ownership to 83%
-- $6.0 million of the financing to close within two business days subject
to satisfaction of closing conditions and $8.0 million of the financing
to close in June 2013 subject to satisfaction of closing conditions and
stockholder approval
-- Net proceeds to be used to:
-- Purchase $6.6 million of Plant debt maturing in June 2013
-- Acquire an additional 3% Plant ownership interest
-- Purchase and retire $3.5 million of Plant debt maturing in 2016
-- Provide $2.0 million in cash reserves to Pacific Ethanol
-- Prepay a portion of senior unsecured notes
-- Increase plant liquidity and reduce interest expense
Pacific Ethanol, Inc. PEIX, the leading marketer and producer of low-carbon renewable
fuels in the Western United States, has entered into agreements to raise up
to $14.0 million in two installments by issuing $6.0 million in subordinated
convertible Series A notes, together with Series A Warrants and Series B
Warrants ("Tranche A") and, subject to stockholder approval, an additional
$8.0 million in subordinated convertible Series B notes ("Tranche B"). The
company has also entered into agreements to, among other things, purchase
certain outstanding debt currently due in June 2013 ("June Debt"), retire
debt due in June 2016 ("2016 Debt") and prepay a portion of its senior
unsecured notes ("Senior Notes"), while lowering overall debt costs and
improving cash available to Pacific Ethanol.
Both the Tranche A and B notes (together, the "Notes") will mature one year
from the issuance of the Tranche A notes and will accrue interest at 5.00%
per annum from their respective dates of issuance. The Notes may be repaid,
at the company's election, in either cash or, subject to certain conditions,
shares of the company's common stock. The Notes are also convertible from
time to time, at the election of the holders, into shares of the company's
common stock at a conversion price of $1.00 per share. Warrants to purchase
an aggregate of 27,594,000 shares of the company's common stock will be
issued with the Notes and will have an initial exercise price of $0.52 per
share, representing a 50% premium to the closing bid price of the company's
common stock on March 27, 2013. The Series A Warrants will have a term of
two years from issuance and will be exercisable beginning one year from
issuance. The Series B Warrants to purchase 15,768,000 shares of Common
Stock are subject to stockholder approval of the Tranche B Notes, will have
a term of two years from such stockholder approval and will be exercisable
beginning one year from such stockholder approval. If such approval is not
obtained, such warrants will not be exercisable and will expire. The Notes
and the Supplemental Indentures relating to the Notes will include certain
covenants, including, among other, the punctual payment of principal and
interest, certain limitations on the incurrence of indebtedness,
restrictions on the redemption of outstanding securities, restrictions on
the transfer of assets and restrictions on the existence of liens on the
company's assets.
Estimated net proceeds, after deducting placement agent fees, of $5.6
million from the issuance and sale of the Tranche A notes and related
Warrants are expected to be used to (1) purchase approximately $2.6 million
of June Debt and an aggregate 3% additional ownership interest in the
Pacific Ethanol Plants from existing Plant lenders, for a total purchase
price of $2.1 million; and (2) purchase and retire approximately $3.5
million of 2016 Debt from existing Plant lenders at par. The company will
also amend the purchased June Debt to extend the debt's maturity date from
June 25, 2013 to June 30, 2016.
Estimated net proceeds, after deducting placement agent fees and other
expenses in connection with the sale of the Notes, of $6.5 million from the
issuance and sale of the Tranche B notes and related Warrants, if approved
by the company's stockholders, are expected to be used to (1) purchase the
remaining $4.0 million of June Debt from existing Plant lenders at a price
to be negotiated; (2) fund $2.0 million in reserves at the parent; and (3)
repay a portion of the Senior Notes.
Upon the Tranche A closing, the Pacific Ethanol Plants will also obtain $5.0
million in further availability under an existing credit facility to provide
additional liquidity for operations.
The Tranche A and related transactions are subject to the satisfaction of
numerous closing conditions and are expected to close within two business
days. The Tranche B and related transactions are subject to the satisfaction
of numerous closing conditions, including stockholder approval, and are
expected to close in June 2013; however, there can be no assurance that the
closing conditions will be satisfied and the transactions will close. Lazard
Capital Markets LLC served as the sole placement agent for the Tranche A and
Tranche B transactions. Additional details are available in the company's
Form 8-K, which is scheduled to be filed today with the Securities and
Exchange Commission ("SEC").
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