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31.12.2014 15:37:46

Pacific Ethanol To Buy Aventine Renewable Energy Holdings

(RTTNews) - Pacific Ethanol, Inc. (PEIX), a producer and marketer of low-carbon renewable fuels in the Western U.S, has agreed to acquire Midwest-based ethanol producer Aventine Renewable Energy Holdings Inc. (AVRW), the two companies said Wednesday.

Under a definitive merger agreement, Sacramento, California-based Pacific Ethanol will acquire all of Aventine's outstanding shares in a stock-for-stock merger transaction. Dallas, Texas-based Aventine is a producer of ethanol and related co-products.

Pacific Ethanol noted that the merger will connect its destination and origin market strategies as well as provide synergies in ethanol production and marketing. According to the company, the deal will strengthen its production and marketing advantages by diversifying into two additional discrete markets and also connecting its Western markets with Aventine's Midwest and Eastern markets for low-carbon renewable fuels.

Under the terms of the merger deal, Pacific Ethanol said it expects to issue about 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 of the deal, existing Pacific Ethanol shareholders will own about 58 percent of the combined entity. 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.

Neil Koehler, CEO of Pacific Ethanol said, "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."

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. In addition, the company has a 110 million gallon per year and 45 million gallon per year dry mills in Aurora, Nebraska.

Including Pacific Ethanol's current ethanol production capacity of 200 million gallons per year, the combined company will have total ethanol production capacity of 515 million gallons per year. Together with Pacific Ethanol's marketing business, the combined company will sell over 800 million gallons of ethanol annually.

Troutman Sanders LLP served as legal advisors to Pacific Ethanol, while Craig-Hallum Capital Group LLC provided a fairness opinion to the company's board.

For Aventine, Akin Gump Strauss Hauer & Feld LLP served as legal advisors and RPA Advisors, LLC served as financial advisors.

PEIX closed Tuesday's trading at $10.71. In Wednesday's pre-market activity, the stock is up $0.59 or 5.51 percent to $11.30.

AVRW closed Tuesday's trading at $9.00, down $1.00 or 10.00 percent on a volume of 1,000 shares.

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