Pacific Ethanol Inc (NASDAQ:PEIX) revealed that it struck a definitive deal to buy Illinois Corn Processing, LLC for $76 million. This included $15 million in working capital. The company indicated that the transaction would close next month subject to regulatory approvals. The transaction would be accretive to its earnings immediately.
Pacific Ethanol thinks that the acquisition would add 90 million gallons a day of production capacity. It would also diversify fuel ethanol production with superior-value beverage, as well as, industrial grade alcohol.
The company believes that the purchase of Illinois Corn Processing would expand its export opportunities. Aside from that, Pacific Ethanol expects consolidation of additional production in Pekin with a combined 250 million gallons of production.
Of the 76 million, the company would pay $30 million in cash and $46 million through the issue of non-amortizing secured promissory notes due 18 months from closing. The company plans to refinance the seller notes in the near term.
Pacific Ethanol president and CEO, Neil Koehler, commented, “Two-thirds of ICP’s production is currently dedicated to producing high-quality, premium-priced alcohol products for the beverage and industrial markets. The consolidation of the ICP facility with our two Pekin, Illinois plants integrates the Pekin site into a unique combination of technologies and products with a combined operating capacity of 250 million gallons per year.”