PACIFIC ETHANOL PLANTS. |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PACIFIC ETHANOL PLANTS |
Pacific Aurora
On December 15, 2016, PE Central closed on an agreement with ACEC under which (i) PE Central contributed to Pacific Aurora 100% of the equity interests of its wholly-owned subsidiaries, Pacific Ethanol Aurora East, LLC ("AE") and Pacific Ethanol Aurora West, LLC ("AW"), which owned the Company's Aurora East and Aurora West ethanol plants, respectively, and (ii) ACEC contributed to Pacific Aurora its grain elevator adjacent to the Aurora East and Aurora West properties and related grain handling assets, including the outer rail loop and the real property on which they are located. Following the closing of these transactions, PE Central owned 73.93% of Pacific Aurora and ACEC owned 26.07% of Pacific Aurora.
The Company has consolidated 100% of the results of Pacific Aurora and recorded the amount attributed to ACEC as noncontrolling interests under the voting rights model. Since the Company had control of AE and AW prior to forming Pacific Aurora, there was no gain or loss recorded on the contribution and ultimate sale of a portion of the Company's interests in Pacific Aurora. A noncontrolling interest was recognized to reflect ACEC's proportional ownership interest multiplied by the book value of Pacific Aurora's net assets. As a result, the Company recorded $16.2 million as additional paid-in capital attributed to the difference between Pacific Aurora's book value and the contribution and sale.
Held-for-Sale Classification
On December 19, 2019, PE Central entered into a term sheet covering the proposed sale of its 73.93% ownership interest in Pacific Aurora to ACEC for $52.8 million, and as a result, the Company determined that as of December 31, 2019, the long-lived assets of Pacific Aurora should be classified as held-for-sale. The Company's analysis resulted in an impairment of $29.3 million in its production segment.
The Company has the following assets and liabilities of Pacific Aurora that will be derecognized upon sale of PE Central's interest in Pacific Aurora and as to which the Company will no longer consolidate any portion of Pacific Aurora:
In addition to the above accounts, upon the sale, the Company will no longer have noncontrolling interests on its balance sheet and no longer record income (loss) of noncontrolling interests for the future periods.
For the years ended December 31, 2019 and 2018, Pacific Aurora contributed $163.5 million and $233.6 million in net sales, $43.4 million and $24.3 million in pre-tax loss, and $12.3 million and $7.7 million in net loss attributed to noncontrolling interests, respectively.
On February 28, 2020, the Company entered into a definitive membership interest purchase agreement with ACEC for this sale and expects to close the sale during the second quarter of 2020. Upon close, the Company expects to receive total consideration of $52.8 million, subject to certain working capital adjustments, payable in cash and $16.5 million in ACEC promissory notes. The Company expects the promissory notes to be noncurrent upon the sale, and as such has shown the amount as assets held-for-sale noncurrent. |