Pacific Ethanol Inc. (NASDAQ:PEIX) filed Quarterly Report for the period ended 2010-03-31.
Pacific Ethanol Inc. has a market cap of $62.8 million; its shares were traded at around $1.09 with and P/S ratio of 0.2. PEIX is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:On April 16, 2010, the Bankrupt Debtors filed an amended joint plan of reorganization with the Bankruptcy Court, which was structured in cooperation with certain of the Bankrupt Debtors secured lenders. The amended plan contemplates that ownership of the Bankrupt Debtors would be transferred to a new entity, which would be wholly-owned by the Bankrupt Debtors secured lenders. Under the proposed plan, the Bankrupt Debtors existing prepetition and postpetition secured indebtedness would be restructured to consist of approximately $50.0 million in three-year term loans and a new three-year revolving credit facility of up to $35.0 million to fund working capital requirements (the revolver is initially capped at $15.0 million but may be increased to up to $35.0 million if more than two of the Bankrupt Debtors ethanol production facilities cease operations). Further, the amended plan includes terms under which the lenders may grant us an option to purchase up to 25% of the total ownership in the new entity for up to $30.0 million in cash. The option would be exercisable until 90 days following the Bankruptcy Court s confirmation of the amended plan. The Bankruptcy Court has set June 8, 2010 as the plan confirmation hearing date.
Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As a result of ethanol industry conditions that have negatively affected our business and ongoing financial difficulties, we believe we have sufficient liquidity to meet our anticipated working capital, debt service and other liquidity needs until either June 30, 2010, if we are unable to timely close a prospective $5.0 million credit facility, or through December 31, 2010, if we are able to timely close the credit facility and either pay or further defer a $1.5 million payable owed to a judgment creditor on June 30, 2010. These expectations concerning our available liquidity until June 30, 2010 or through December 31, 2010 presume that a creditor does not pursue any action against us due to our default on an aggregate of $17.5 million of remaining principal, plus accrued interest and fees, and that we maintain our current levels of borrowing availability under Kinergy s line of credit. Accordingly, there continues to be substantial doubt as to our ability to continue as a going concern.
Effective January 1, 2010, we adopted the new guidance to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidations, which resulted in reassessing that, under the guidance, we are no longer the primary beneficiary and, effective January 1, 2010, have prospectively adopted the guidance resulting in a deconsolidation of the financial results of Front Range. Upon deconsolidation, on January 1, 2010, we removed $62.6 million of assets and $12.7 million of liabilities from our consolidated balance sheet and recorded a cumulative debit adjustment to retained earnings of $1.8 million. The periods presented in this report prior to the effective date of the deconsolidation continue to include related balances associated with Front Range. Effective January 1, 2010, we will account for our investment in Front Range under the equity method, with equity earnings recorded in other income (expense) in the consolidated statements of operations.
Our average sales price per gallon increased 11% to $1.83 for the three months ended March 31, 2010 from an average sales price per gallon of $1.65 for the three months ended March 31, 2009. The average CBOT price per gallon increased 8% to $1.71 for the three months ended March 31, 2010 from an average CBOT price per gallon of $1.58 for the three months ended March 31, 2009.
Our selling, general and administrative expenses, or SG&A, decreased both in absolute dollars and as a percentage of net sales for the three months ended March 31, 2010. SG&A decreased $4.5 million to $3.2 million for the three months ended March 31, 2010 as compared to $7.7 million for the same period in 2009. The decrease in the dollar amount of SG&A is primarily due to the following factors:
Other expense decreased by $5.3 million to $1.6 million for the three months ended March 31, 2010 from $7.0 million for the same period in 2009. The decrease in other expense is primarily due to the following factors:
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