Quarterly report pursuant to Section 13 or 15(d)

11. SUBSEQUENT EVENTS

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11. SUBSEQUENT EVENTS
6 Months Ended
Jun. 30, 2015
Subsequent Events [Abstract]  
11. SUBSEQUENT EVENTS

Acquisition of Aventine – As discussed in Note 3, the Company completed its acquisition of Aventine on July 1, 2015 in a stock-for-stock transaction. On July 1, 2015, the Company issued an aggregate of 17,759,193 shares of common stock and non-voting common stock for 100% of the outstanding shares of common stock of Aventine. Aventine is now a wholly-owned subsidiary of Pacific Ethanol, Inc.

 

Kinergy Operating Line of Credit – As discussed in Note 6, the Company amended Kinergy’s operating line of credit with the following significant changes:

 

· Extended the term and maturity date of the credit facility from December 31, 2016 to December 31, 2020;
· Increased the maximum credit under the credit facility from $30,000,000 to $75,000,000, with an “accordion” feature to further increase the maximum credit under the credit facility to up to $100,000,000 in minimum increments of $5,000,000 each, upon Kinergy’s request, but subject to the consent of the agent and the lenders in their sole discretion.
· Increased the inventory loan limit under the credit facility from $12,500,000 to $40,000,000 and increased the letter of credit limit under the credit facility from $5,000,000 to $20,000,000;
· Reduced the applicable margin to 1.75% to 2.75% depending on the quarterly average amounts available for borrowing and reduced the unused line fee under the credit facility to an annual rate equal to 0.25% to 0.375% depending on the average daily principal balance during the immediately preceding month; and
· Deleted the financial covenant concerning Kinergy’s EBITDA but retained financial covenants concerning its fixed-charge coverage ratios.

 

Aurora Coop SettlementThe Company, through subsidiaries acquired in its acquisition of Aventine, became involved in various pending lawsuits with Aurora Cooperative Elevator Company (“Aurora Coop”) that pre-dated the Aventine acquisition. On July 26, 2015, the Company settled all outstanding litigation with Aurora Coop. The Company and Aurora Coop agreed to dismiss all lawsuits with prejudice with no admission of fault or liability by the parties, and to release the alleged option held by Aurora Coop to repurchase the land upon which the Company’s 110 million gallon ethanol production facility in Aurora, Nebraska is located (the “Aurora West Facility”). In addition, the parties agreed to terminate the grain supply, marketing and various other agreements between them or their subsidiaries. Under the terms of the settlement, the Company and Aurora Coop will each bear its own costs and fees associated with the lawsuits and the settlement. The Company and Aurora Coop agreed to continue to work together to amend or replace certain real property easements currently in place to ensure continued mutual access by both parties to a system of rails, rail switches, roads, electrical improvements, and utilities already constructed near the Aurora West Facility.