Pacific Ethanol, Inc. (Nasdaq: PEIX) announced it would acquire a 42% minority interest in Front Range Energy, LLC, the owner of a 40 million gallon nameplate ethanol plant located in Windsor, Colorado. The Front Range facility is currently running at an annual production rate of 47 million gallons. The plant began full production in June 2006.
When Front Range completed construction of the plant in June, they agreed Pacific Ethanol would market all of the output of the plant (fuel ethanol and wet distillers grain), procure the corn feedstock, and manage plant operations. As a part of Pacific Ethanol’s purchase of an ownership stake in Front Range, the parties have extended the term of the ethanol marketing agreement until June 9, 2013.
Neil Koehler, President and CEO of Pacific Ethanol stated, “This transaction is immediately accretive to earnings and accelerates our goal to be the leading ethanol producer in the western US. Our acquisition of a stake in Front Range in effect adds approximately 20 million gallons to our annual operating production capacity. This represents a significant step in achieving our stated annual production capacity targets of 220 million gallons by the middle of 2008 and 420 million gallons by the end of 2010. This agreement further cements our close working relationship with Front Range Energy. And finally, as this plant supplies local markets for both fuel and feed, obviating the need to ship our product long distances, it is also a perfect fit with Pacific Ethanol’s low cost destination business model.”
Loading...