Pacific Ethanol enters agreement to refinance term debt and acquire ownership in Nebraska grain elevator

US ethanol producer and marketer Pacific Ethanol has announced a series of agreements to refinance debt and acquire ownership in a grain elevator in Nebraska.

The company is refinancing its $155.1 million (€ 146.1m) principal term debt, due in September 2017.

The deals include a new $64-million five-year term amortising loan from CoBank and First Farm Credit plus a revolving credit line of $32 million, as well as a three-year senior note offering of $55 million.

In addition, Pacific Ethanol will create a new company with the Aurora Cooperative Elevator Co.(ACEC), called Pacific Aurora (PAL). The ethanol group will contribute its Aurora plant assets in Nebraska into the new firm, while ACEC will contribute its Aurora West Grain Elevator, loop track, related land and other assets.

Pacific Ethanol will sell a 14% stake in PAL to ACEC for $30 million in cash and will end up owning 74% of the combined business. PAL will also obtain a five-year amortising, revolving term loan of $30 million from CoBank.  

Pacific Ethanol said the deals will reduce total debt outstanding by more than $12 million and annual interest costs by over USD 8 million. At the same time, the company's cash, working capital and liquidity resources will increase by USD 55 million.

Pacific Ethanol also said that in connection with the refinancing, it will increase the line of credit facility of Kinergy, its ethanol marketing subsidiary, by $10 million to $85 million.

"In this series of agreements, we will accomplish a major milestone for the company by refinancing the Midwest plants’ term debt at favourable terms, strengthening our balance sheet and significantly lowering our cost of capital," said Pacific Ethanol's president and chief executive Neil Koehler.