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Pacific Ethanol (PEIX) Enters Convertible Subordinated Note Direct Placement

March 28, 2013 9:28 AM EDT Send to a Friend
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On March 28, 2013, Pacific Ethanol Inc. (Nasdaq: PEIX) entered into a placement agent agreement (the “Placement Agent Agreement”) with Lazard Capital Markets LLC as the exclusive placement agent relating to the sale and issuance to selected institutional investors (the “Investors”) in (i) a registered direct offerings of 6,000 units (“Units”), with each Unit consisting of $1,000 of our Series A Subordinated Convertible Notes (collectively, “Series A Notes”), a Series A Warrant (collectively, “Series A Warrants”) to purchase up to 1,971 shares of our common stock for a term of two years and a Series B Warrant (collectively, “Series B Warrants” and together with the Series A Warrants, the “Warrants”) to purchase up to 2,628 shares of our common stock for a term of two years after the closing of the Series B Note Offering (as defined below), in an offering (“Series A Offering”) pursuant to a prospectus supplement to our effective shelf registration statement Form S-3 (Registration No. 333-180731) at an initial closing and (ii) $8,000,000 of our Series B Subordinated Convertible Notes (collectively, “Series B Notes” and together with the Series A Notes, the “Convertible Notes”) in an offering (the “Series B Note Offering”) pursuant to a separate prospectus supplement to our effective shelf registration statement on Form S-3 (Registration No. 333-180731) at a subsequent closing (collectively, the Series A Offering and the Series B Note Offering, the “Financing Transaction”). Lazard Capital Markets LLC served as the sole placement agent for the Financing Transaction pursuant to the terms of a Placement Agent Agreement. Under the terms of the Placement Agent Agreement, we will pay our placement agent a fee of $355,000 in connection with the Series A Offering and a fee of $470,000 in connection with the Series B Note Offering.

We will issue the Series A Notes under an indenture to be dated as of the closing date of the Series A Offering, between us and U.S. Bank National Association, as trustee (the “Base Indenture”), as supplemented by a first supplemental indenture thereto, to be dated as of the closing date of the Series A Offering, relating to the Series A Notes (the “First Supplemental Indenture” and, the Base Indenture as supplemented by the First Supplemental Indenture, the “First Indenture”). The terms of the Series A Notes include those provided in the First Indenture and those made part of the First Indenture by reference to the Trust Indenture Act. We will issue the Series B Notes under the Base Indenture as supplemented by a second supplemental indenture thereto, to be dated as of the closing date of the Series B Note Offering, relating to the Series B Notes (the “Second Supplemental Indenture” and, the Base Indenture as supplemented by the Second Supplemental Indenture, the “Second Indenture” and together with the First Indenture the “Indentures”). The terms of the Series B Notes include those provided in the Second Indenture and those made part of the Second Indenture by reference to the Trust Indenture Act.

The Series A Offering is expected to close (the “Series A Closing”) on or prior to March 29, 2013 (the actual date of the Series A Closing is referred to herein as the “Series A Closing Date”), subject to satisfaction of customary closing conditions. The closing of the Series B Note Offering is subject to various closing conditions, including, without limitation, the requirement that we obtain stockholder approval for the Series A Offering and the Series B Note Offering. We have agreed to hold a meeting of our stockholders to obtain stockholder approval for the Series A Offering and the Series B Note Offering by June 26, 2013. If we do not obtain stockholder approval for the Series A Offering and the Series B Note Offering by July 1, 2013 the Series B Note Offering will not be consummated and the Series B Notes will not be issued. There can be no assurance that the Series A Offering or the Series B Note Offering will be consummated.

We will receive approximately $5.6 million in net proceeds from the Series A Offering, after deducting our placement agent’s fee of $355,000. Our other offering expenses, other than our placement agent’s fee, will be approximately $500,000, which expenses will be paid out of the proceeds the Series B Note Offering, if any, or out of our cash reserve if the Series B Note Offering is not consummated.




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