Pacific Ethanol Sold For a 23.4% Profit
December 12, 2016: Sold for a 23.4% profit in 12 days. Will look for a pullback before considering another entry. Congratulations to everyone who made money on this trade.
December 12, 2016: Craig-Hallum raises price target of Pacific Ethanol to $14 from $10 and reiterates a Buy rating.
December 12, 2016: Pacific Ethanol will obtain a new five-year term amortizing loan from CoBank and First Farm Credit in the amount of $64 million and a revolving line of credit of $32 million secured by its Pekin assets. This loan bears interest at LIBOR plus 3.75%.
Pacific Ethanol will also obtain $55 million from a three-year senior note offering secured by Pacific Ethanols ownership interest in its Western assets. The senior notes will bear initial interest at LIBOR plus 7%. The senior notes will have no prepayment penalty.
Pacific Ethanol has entered into an agreement with the Aurora Cooperative Elevator Company (ACEC), whereby Pacific Ethanol will contribute its Aurora plant assets into a newly created company, Pacific Aurora, LLC (PAL), and ACEC will simultaneously contribute its Aurora West Grain Elevator, loop track, related land and other assets into PAL. In addition, Pacific Ethanol will sell a 14% interest in PAL to ACEC for $30 million in cash. These transactions will result in Pacific Ethanol owning 74% and ACEC owning 26% of the combined ethanol production, grain elevator and rail facilities in Aurora, Nebraska. To further strengthen liquidity, PAL will obtain a five-year amortizing, revolving term loan of $30 million from CoBank secured by PAL’s assets. This loan will bear interest at LIBOR plus 4%.
Pacific Ethanol will use the combined proceeds to repay the $155.1 million in outstanding principal and accrued and unpaid interest owed under the terms of its existing term loans. The debt refinancing reduces total debt outstanding by more than $12 million and reduces annual interest costs by over $8 million. PAL will be a fully consolidated subsidiary of Pacific Ethanol and is expected to reduce operating costs by over $5 million annually. Excess proceeds will strengthen Pacific Ethanols cash and working capital positions and will be used for general corporate purposes.
Pacific Ethanol, in connection with the refinancing, will also increase Kinergys line of credit facility with Wells Fargo by $10 million, from $75 million to $85 million, to provide additional liquidity to Kinergy, its ethanol marketing subsidiary.
November 4, 2016: H.C. Wainwright & Co./ Rodman & Renshaw reiterates a Buy rating on Pacific Ethanol, and sets a price target of $11.
Pacific Ethanol Stock Chart
The Finviz screener settings used to find Pacific Ethanol are: Forward P/E Low (<15), P/S Low (<1), EPS growth next year Over 30%, Sales growth past 5 years High (>25%), EPS growth qtr over qtr High (>25%)
Pacific Ethanol, Inc. (PEIX) is the leading producer and marketer of low-carbon renewable fuels in the Western United States. Pacific Ethanol also sells co-products, including wet distillers grain (“WDG”), a nutritional animal feed.