SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) NOVEMBER 1, 2005
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PACIFIC ETHANOL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 000-21467 41-2170618
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
5711 N. WEST AVENUE, FRESNO, CALIFORNIA 93711
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (559) 435-1771
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (SEE General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
LOAN REVISION/EXTENSION AGREEMENT DATED OCTOBER 4, 2005 AND EFFECTIVE
AS OF JUNE 20, 2005 BETWEEN KINERGY MARKETING, LLC AND COMERICA BANK
On November 1, 2005, Kinergy Marketing, LLC ("Kinergy"), a wholly-owned
subsidiary of Pacific Ethanol, Inc. (the "Company"), executed a Loan
Revision/Extension Agreement dated October 4, 2005 (the "Agreement") with
Comerica Bank ("Comerica"). The Agreement is effective as of June 20, 2005 and
relates to a Master Revolving Note (the "Note") dated September 24, 2004 in the
amount of $2 million, as further described below. Under the Agreement, the
maturity date of the Note was extended from October 5, 2005 to October 5, 2006.
As of the execution date of the Agreement, no amounts were owed to Comerica
under the Note.
LETTER AGREEMENT DATED OCTOBER 4, 2005 BETWEEN KINERGY MARKETING, LLC
AND COMERICA BANK
On November 1, 2005, Kinergy executed a Letter Agreement dated October
4, 2005 (the "Letter Agreement") with Comerica concerning the Agreement and the
Note. The Letter Agreement provides for the provision by Kinergy of certain
financial documents and includes certain financial covenants and limitations.
Kinergy is obligated to provide to Comerica annual audited financial statements
and quarterly financial statements as well as quarterly accounts receivable and
accounts payable ageing reports. Kinergy has covenanted to Comerica to, on a
quarterly basis, maintain a quick ratio of 0.90:1.00, maintain a
debt-to-tangible effective net worth ratio of not more than 1.75:1.00, generate
minimum net income of at least $100,000 and maintain working capital of not less
than $1.0 million. In addition, Kinergy has covenanted to not, without
Comerica's prior written consent, among other things, change its name, business
structure, liquidate, merge or consolidate with or into any other business
organization.
GUARANTY DATED OCTOBER 4, 2005 BY PACIFIC ETHANOL, INC. IN FAVOR OF
COMERICA BANK
On November 1, 2005, the Company executed a Guaranty dated October 4,
2005 (the "Guaranty") in favor of Comerica. The Guaranty relates to the
Agreement and the Note described above and any other obligations of Kinergy to
Comerica. Under the Guaranty, the Company guarantees payment and performance of
all indebtedness and obligations of Kinergy to Comerica. The Company may
terminate the Guaranty, upon written notice to Comerica, but not less than five
business days following receipt of the written acknowledgement by Comerica of
its receipt of such notice. Any obligations of the Company under the Guaranty
arising on or prior to the date of termination shall continue notwithstanding
such termination.
MASTER REVOLVING NOTE DATED SEPTEMBER 24, 2004 OF KINERGY MARKETING,
LLC IN FAVOR OF COMERICA BANK
The Master Revolving Note dated September 24, 2004 was executed by
Kinergy in favor of Comerica. The Note has a maximum principal amount of $2
million and initially matured on October 5, 2005. Under the Agreement, as
described above, the maturity date of the Note was extended to October 5, 2006.
Principal amounts outstanding under the Note accrue interest, on a per annum
basis, at the Prime Rate of interest plus 1.0%. Comerica's "base rate"
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of interest is a certain annual rate of interest so designated by Comerica and
which is changed by Comerica from time to time. As of the filing of this report,
Comerica's "base rate" of interest is the Prime Rate of interest. Upon the
occurrence of an event of default, an additional 3.0% is added to the
interest rate then-applicable under the Note. The Note sets forth customary
events of default and remedies, including, the right of Comerica to demand all
amounts owed immediately due and payable by Kinergy. An addendum (the
"Addendum") to the Note provides that Comerica may issue letters of credit
under the Note for the account of Kinergy, but that all outstanding principal
plus the sum of the amounts of all outstanding letters of credit shall not
exceed the $2 million maximum principal amount under the Note.
SECURITY AGREEMENT DATED AS OF SEPTEMBER 24, 2004 EXECUTED BY KINERGY
MARKETING, LLC IN FAVOR OF COMERICA BANK
A Security Agreement dated as of September 24, 2004 (the "Security
Agreement") was executed by Kinergy in favor of Comerica in connection with
Kinergy's indebtedness and obligations under the Note and other agreements with
Comerica. The Security Agreement grants a continuing security interest and lien
to Comerica in certain collateral comprising essentially all of Kinergy's
assets. Kinergy is obligated to keep the collateral free of all liens, claims
and encumbrances other than those in favor of Comerica. Under the Security
Agreement, Comerica may require Kinergy to establish a "lock box" and instruct
all of Kinergy's account debtors to remit all payments to Kinergy to the "lock
box" and may also require Kinergy to establish a non-interest bearing deposit
account, which shall operate as a cash collateral account, to which Comerica has
exclusive access and control and into which Kinergy shall direct all of its
account debtors to remit payment. The Security Agreement sets forth customary
events of default and remedies, including, the right of Comerica to demand all
amounts owed immediately due and payable by Kinergy in the event of a default.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
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None.
(b) Pro Forma Financial Information.
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None.
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(c) Exhibits.
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Number Description
10.1 Master Revolving Note dated September 24,
2004 of Kinergy Marketing, LLC in favor of
Comerica Bank
10.2 Loan Revision/Extension Agreement dated
October 4, 2005 and effective as of June 20,
2005 between Kinergy Marketing, LLC and
Comerica Bank
10.3 Letter Agreement dated as of October 4, 2005
between Kinergy Marketing, LLC and Comerica
Bank
10.4 Guaranty dated October 4, 2005 by Pacific
Ethanol, Inc. in favor of Comerica Bank
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 7, 2005 PACIFIC ETHANOL, INC.
By: /S/ RYAN W. TURNER
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Ryan W. Turner
Chief Operating Officer
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EXHIBITS FILED WITH THIS REPORT
Number Description
10.1 Master Revolving Note dated September 24, 2004 of
Kinergy Marketing, LLC in favor of Comerica Bank
10.2 Loan Revision/Extension Agreement dated October 4,
2005 and effective as of June 20, 2005 between
Kinergy Marketing, LLC and Comerica Bank
10.3 Letter Agreement dated as of October 4, 2005 between
Kinergy Marketing, LLC and Comerica Bank
10.4 Guaranty dated October 4, 2005 by Pacific Ethanol,
Inc. in favor of Comerica Bank
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