Sacramento-based Pacific Ethanol Inc. continues to expand its Midwest presence, announcing Tuesday that it has a definitive agreement to acquire Illinois Corn Processing LLC for $76 million.
The parties hope to finalize the deal in July.
Officials said ICP is a 90 million-gallon-per-year fuel and industrial alcohol manufacturing, storage and distribution facility adjacent to the Pacific Ethanol Pekin facility along the Illinois River. ICP produces fuel-grade ethanol, beverage and industrial-grade alcohol, dry distillers grain and corn oil. The facility has barge, rail and truck distribution, and expands PEI’s domestic and international distribution channels.
Pacific Ethanol expanded into the Midwest in 2015 when it bought Aventine Energy Holdings Inc. of Pekin, Ill., for $192 million in stock. The deal doubled Pacific Ethanol's production capacity and marked a major milestone for a company that had to shut down most of its production and put its plants in bankruptcy in 2009.
Neil Koehler, PEI’s president and CEO, said he expects not only an earnings boost but also that the acquisition will produce $3 million in annual cost savings, related to grain supply management and transportation costs.
PEI said the pending deal involves a $30 million cash payment and $46 million to be paid via non-amortizing secured promissory notes due 18 months from closing. Pacific Ethanol said it intends to refinance the seller notes in the near future, and the company negotiating to secure a long-term financing plan.