pacificethanol_8k.htm
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)
|
May
22,
2008
|
|
PACIFIC ETHANOL, INC.
|
|
(Exact
name of registrant as specified in its
charter)
|
|
Delaware
|
|
000-21467
|
|
41-2170618
|
|
(State
or other jurisdiction
of
incorporation)
|
|
(Commission
File Number)
|
|
(IRS
Employer
Identification
No.)
|
|
|
|
400
Capitol Mall, Suite 2060
Sacramento,
California
|
|
95814
|
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
|
Registrant’s
telephone number, including area code:
|
|
(916)
403-2123
|
|
|
|
(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):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o 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.
|
Investment
by Neil M. Koehler, Bill Jones, Paul P. Koehler and Thomas D.
Koehler
On May
22, 2008, Pacific Ethanol, Inc. (the “Company”) closed the
transactions described below in connection with the sale of shares of its Series
B Cumulative Convertible Preferred Stock (the “Series B Preferred
Stock”).
Securities
Purchase Agreement dated May 20, 2008 by and among Pacific Ethanol, Inc. and
Neil M. Koehler, Bill Jones, Paul P. Koehler and Thomas D. Koehler
On May
20, 2008, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”)
with Neil M. Koehler, Bill Jones, Paul P. Koehler and Thomas D. Koehler (the
“Purchasers”). The
Purchase Agreement provides for the sale by the Company and the purchase by the
Purchasers of (i) an aggregate of 294,870 shares of the Company’s Series B
Preferred Stock, all of which are initially convertible into an aggregate of
884,610 shares of the Company’s common stock based on an initial three-for-one
conversion ratio, and (ii) warrants (the “Warrants”) to
purchase an aggregate of 442,305 shares of the Company’s common stock at an
exercise price of $7.00 per share, for an aggregate purchase price of
$5,750,000. The Series B Preferred Stock was issued and sold under
the Certificate of Designations described below.
The
description of the Purchase Agreement does not purport to be complete and is
qualified in its entirety by reference to the Purchase Agreement, which is filed
as Exhibit 10.1 to this report and incorporated by reference
herein.
Form
of Warrant dated May 22, 2008 issued by Pacific Ethanol, Inc.
The
Warrants are exercisable for up to 442,305 shares of the Company’s common stock
at an exercise price of $7.00 per share at any time during the period commencing
on the date that is six months and one day from the date of the Warrant and
ending ten years from the date of the Warrant. The Warrant contains
customary anti-dilution provisions for stock splits, stock dividends and the
like and other customary terms and conditions.
The
description of the Warrant does not purport to be complete and is qualified in
its entirety by reference to the Warrant, which is filed as Exhibit 10.2 to this
report and incorporated by reference herein.
Certificate
of Designations, Powers, Preferences and Rights of the Series B Cumulative
Convertible Preferred Stock
The
Certificate of Designations, Powers, Preferences and Rights of the Series B
Cumulative Convertible Preferred Stock (the “Certificate of
Designations”) designates 3,000,000 shares of preferred stock as Series B
Cumulative Convertible Preferred Stock.. The Series B Preferred Stock
ranks senior in liquidation and dividend preferences to the Company’s common
stock and on parity with respect to dividend and liquidation rights with the
Company’s Series A Cumulative Redeemable Convertible Preferred Stock (“Series A Preferred
Stock”). Holders of Series B Preferred Stock are entitled to
quarterly cumulative dividends payable in arrears in cash in an amount equal to
7.00% of the purchase price per share of the Series B Preferred Stock on a pari passu basis with the
holders of Series A Preferred Stock; however, subject to the provisions of the
Letter Agreement described below, such dividends may, at the option of the
Company, be paid in additional shares of Series B Preferred Stock based
initially on the value of the purchase price per share of the Series B Preferred
Stock. The holders of Series B Preferred Stock have a liquidation preference
over the holders of the Company’s common stock equivalent to the purchase price
per share of the Series B Preferred Stock plus any accrued and unpaid dividends
on the Series B Preferred Stock but on a pro rata and pari passu basis with the
holders of Series A Preferred Stock. A liquidation will be deemed to occur upon
the happening of customary events, including transfer of all or substantially
all of the capital stock or assets of the Company or a merger, consolidation,
share exchange, reorganization or other transaction or series of related
transaction, unless holders of 66 2/3% of the Series B Preferred Stock vote
affirmatively in favor of or otherwise consent that such transaction shall not
be treated as a liquidation.
The
holders of the Series B Preferred Stock have conversion rights initially
equivalent to three shares of common stock for each share of Series B Preferred
Stock. The conversion ratio is subject to customary antidilution adjustments. In
addition, antidilution adjustments are to occur in the event that the Company
issues equity securities at a price equivalent to less than $6.50 per share,
including derivative securities convertible into equity securities (on an
as-converted or as-exercised basis). Certain specified issuances will not result
in antidilution adjustments (the “Anti-Dilution Excluded
Securities”), including (i) securities issued to employees, officers or
directors of the Company under any option plan, agreement or other arrangement
duly adopted by the Company, the issuance of which is approved by the
Compensation Committee of the Board of Directors of the Company, (ii) any common
stock issued upon conversion of the Series A Preferred Stock or as payment of
dividends thereon, (iii) Series B Preferred Stock and any common stock issued
upon conversion of the Series B Preferred Stock or as payment of dividends
thereon, (iv) securities issued upon conversion or exercise of any derivative
securities outstanding on the date the Certificate of Designations is first
filed with the Delaware Secretary of State, and (v) securities issued in
connection with a stock split, stock dividend, combination, reorganization,
recapitalization or other similar event for which adjustment to the conversion
ratio of the Series B Preferred Stock is already made. The shares of
Series B Preferred Stock are also subject to forced conversion upon the
occurrence of a transaction that would result in an internal rate of return to
the holders of the Series B Preferred Stock of 25% or more. The forced
conversion is to be based upon the conversion ratio as last adjusted.
Notwithstanding the foregoing, no shares of Series B Preferred Stock will be
subject to forced conversion unless the shares of common stock issued or
issuable to the holders upon conversion of the Series B Preferred Stock are
registered for resale with the SEC and eligible for trading on The NASDAQ Stock
Market or such other exchange approved by holders of 66 2/3% of the then
outstanding shares of Series B Preferred Stock. Accrued but unpaid dividends on
the Series B Preferred Stock are to be paid in cash upon any conversion of the
Series B Preferred Stock.
The
holders of Series B Preferred Stock vote together as a single class with the
holders of the Company’s Series A Preferred Stock and common stock on all
actions to be taken by the Company’s stockholders. Each share of
Series B Preferred Stock entitles the holder to the number of votes equal to the
number of shares of common stock into which each share of Series B Preferred
Stock is convertible on all matters to be voted on by the stockholders of the
Company. Notwithstanding the foregoing, the holders of Series B
Preferred Stock are afforded numerous customary protective provisions with
respect to certain actions that may only be approved by holders of a majority of
the shares of Series B Preferred Stock. These protective provisions include
limitations on (i) the increase or decrease of the number of authorized shares
of Series B Preferred Stock, (ii) increase or decrease of the number of
authorized shares of other capital stock, (iii) generally any actions that have
an adverse effect on the rights and preferences of the Series B Preferred Stock,
(iv) the authorization, creation or sale of any securities senior to or on
parity with the Series B Preferred Stock as to voting, dividend, liquidation or
redemption rights, including subordinated debt, (v) the authorization, creation
or sale of any securities junior to the Series B Preferred Stock as to voting,
dividend, liquidation or redemption rights, including subordinated debt, other
than the Company’s common stock, (vi) the authorization, creation or sale of any
shares of Series B Preferred Stock other than the shares of Series B Preferred
Stock authorized, created and sold under the Purchase Agreement, and (vii)
engaging in a transaction that would result in an internal rate of return to
holders of Series B Preferred Stock of less than 25%.
The
holders of the Series B Preferred Stock are afforded preemptive rights with
respect to certain securities offered by the Company. The preemptive
rights of the holders of the Series B Preferred Stock are subordinate to the
preemptive rights of, and prior exercise thereof by, the holders of the Series A
Preferred Stock. So long as 50% of the shares of Series B Preferred
Stock remain outstanding, and not including any securities of the Company as to
which any holder of the Series A Preferred Stock has exercised its preemptive
rights, each holder of Series B Preferred Stock has the right to purchase a
pro rata portion of
such securities equivalent to the number of shares of common stock then held by
such holder (giving effect to the conversion of all shares of convertible
preferred stock then held by such holder), divided by the total number of shares
of common stock then held by all holders of the Series B Preferred Stock (giving
effect to the conversion of all outstanding shares of convertible preferred
stock then held by such holders), plus any amounts not purchased by other
holders of Series B Preferred Stock. Notwithstanding the foregoing, certain
proposed securities offerings will not result in preemptive rights in favor of
the holders of the Series B Preferred Stock. These offerings include
offerings of Anti-Dilution Excluded Securities as well as the issuance of
securities other than for cash pursuant to a merger, consolidation, acquisition
or similar business combination by the Company approved by the Board of
Directors of the Company.
The
description of the Certificate of Designations does not purport to be complete
and is qualified in its entirety by reference to the Certificate of
Designations, which is filed as Exhibit 10.7 to this report and incorporated by
reference herein.
Ancillary
Agreements
Letter
Agreement dated May 22, 2008 by and among Pacific Ethanol, Inc., and Neil M.
Koehler, Bill Jones, Paul P. Koehler and Thomas D. Koehler
In
connection with the closing of the transactions contemplated by the Purchase
Agreement, the Company entered into a Letter Agreement with the Purchasers under
which the Company expressly waives its rights under the Certificate of
Designation to make dividend payments to a Purchaser in additional shares of
Series B Preferred Stock in lieu of cash dividend payments without the prior
written consent of the Purchaser.
The
description of the Letter Agreement does not purport to be complete and is
qualified in its entirety by reference to the Letter Agreement, which is filed
as Exhibit 10.4 to this report and incorporated by reference
herein.
Common
Stock and Warrant Offering
On May
22, 2008, the Company entered into a Placement Agent Agreement with Lazard
Capital Markets LLC (the “Placement Agent”), relating to the sale by the Company
of 6,000,000 units, with each unit consisting of (i) one share of common stock,
and (ii) a warrant to purchase 0.50 shares of common stock at an exercise price
of $7.10 per share of common stock, for a purchase price of $4.75 per unit (the
“Units’”). The Warrants are to be exercisable at any time after the
sixth-month anniversary of the closing of the transaction and prior to fifth
anniversary of the closing of the transaction. In the aggregate the
Company is expected to issue 6,000,000 shares of common stock and warrants to
purchase up to 3,000,000 shares of common stock. The form of
Subscription Agreement and form of Warrant pursuant to the which the Company is
to sell and issue the Units to the purchasers are filed as Exhibit 10.4 and
Exhibit 10.5, respectively, to this Current Report on Form 8-K and such
documents are incorporated herein by reference. The descriptions of the material
terms of such documents are qualified in their entirety by reference to such
exhibits. The expected net proceeds to the Company from the sale of the Units,
after deducting for the fees of the Placement Agent and estimated offering
expenses, are approximately $26,800,000. The form of Placement Agent
Agreement is filed as Exhibit 10.6 to this Current Report on Form 8-K and is
incorporated herein by reference. The description of the material terms of the
Placement Agent Agreement is qualified in its entirety by reference to such
exhibit. The Company’s press release dated May 22, 2008, announcing its
agreement to sell the Units is filed as Exhibit 99.1 to this Current Report on
Form 8-K, and the information contained therein is incorporated herein by
reference.
The
shares were offered and sold pursuant to (i) a prospectus dated July 27, 2007,
and (ii) a prospectus supplement dated May 22, 2008, pursuant to the Company’s
effective shelf registration statement on Form S-3 (Registration No.
333-143617).
The
offering is scheduled to close on May 29, 2008, subject to the satisfaction of
customary closing conditions. Following the offering, the Company
will have approximately $221,500,000 of securities available for future issuance
under its effective shelf registration statement.
|
Item
3.02
|
Unregistered
Sales of Equity Securities.
|
As
described in Item 1.01 above, on May 22, 2008, the Company issued to Neil M.
Koehler, Bill Jones, Paul P. Koehler and Thomas D. Koehler (i) an aggregate of
294,870 shares of the Company’s Series B Preferred Stock, all of which are
initially convertible into an aggregate of 884,610 shares of the Company’s
common stock based on an initial three-for-one conversion ratio, and (ii)
warrants to purchase an aggregate of 442,305 shares of the Company’s common
stock at an exercise price of $7.00 per share, for an aggregate purchase price
of $5,750,000. The disclosures contained in Item 1.01 above are incorporated
herein by reference.
Exemption
from the registration provisions of the Securities Act of 1933 for the
transaction described above is claimed under Section 4(2) of the Securities Act
of 1933, among others, on the basis that such transaction did not involve any
public offering and each of Neil M. Koehler, Bill Jones, Paul P. Koehler and
Thomas D. Koehler was an accredited investor and had access to the kind of
information that registration would provide. Appropriate investment
representations were obtained, and the securities were or will be issued with
restricted securities legends.
Item
8.01 Other
Events.
On May
23, 2008, the Company issued a press release announcing the common stock and
warrant offering described above. A copy of the press release is attached hereto
as Exhibits 99.1 and incorporated herein by reference.
Neither
the filing of the press release as an exhibit to this report nor the inclusion
in the press release of a reference to our internet address shall, under any
circumstances, be deemed to incorporate the information available at our
internet address into this report. The information available at our internet
address is not part of this report or any other report filed by us with the
Securities and Exchange Commission.
|
Item
9.01.
|
Financial
Statements and Exhibits.
|
(a) Financial statements of
businesses acquired. Not applicable.
(b) Pro forma financial
information. Not applicable.
(c) Shell company
transactions. Not applicable.
(d) Exhibits.
|
|
10.1
|
Securities
Purchase Agreement dated May 20, 2008 by and among Pacific Ethanol, Inc.
and Neil M. Koehler, Bill Jones, Paul P. Koehler and Thomas D.
Koehler
|
|
|
10.2
|
Form
of Warrant dated May 22, 2008 issued by Pacific Ethanol,
Inc.
|
|
|
10.3
|
Letter
Agreement dated May 22, 2008 by and among Pacific Ethanol, Inc. and Neil
M. Koehler, Bill Jones, Paul P. Koehler and Thomas D.
Koehler
|
|
|
10.4
|
Form
of Subscription Agreement dated May 22, 2008 between Pacific Ethanol, Inc.
and each of the purchasers
|
|
|
10.5
|
Form
of Warrant to purchase shares of Pacific Ethanol, Inc. Common
Stock
|
|
|
10.6
|
Form
of Placement Agent Agreement dated May 22, 2008, by and between Pacific
Ethanol, Inc. and Lazard Capital Markets
LLC
|
|
|
10.7
|
Certificate
of Designations, Powers, Preferences and Rights of the Series B Cumulative
Convertible Preferred Stock (*)
|
|
|
99.1
|
Press
Release dated May 23, 2008
|
|
|
(*)
|
Filed
as an exhibit to the Registrant’s current report on Form 8-K for March 26,
2008 filed with the Securities and Exchange Commission on March 27, 2008
and incorporated herein by
reference.
|
SIGNATURES
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.
| |
PACIFIC ETHANOL,
INC. |
|
| |
|
|
|
|
Date:
May 23, 2008
|
By:
|
/S/
CHRISTOPHER W. WRIGHT |
|
| |
|
Christopher
W. Wright |
|
| |
|
Vice
President, General Cousel & Secretary |
|
| |
|
|
|
EXHIBITS
FILED WITH THIS REPORT
|
|
10.1
|
Securities
Purchase Agreement dated May 20, 2008 by and among Pacific Ethanol, Inc.
and Neil M. Koehler, Bill Jones, Paul P. Koehler and Thomas D.
Koehler
|
|
|
10.2
|
Form
of Warrant dated May 22, 2008 issued by Pacific Ethanol,
Inc.
|
|
|
10.3
|
Letter
Agreement dated May 22, 2008 by and among Pacific Ethanol, Inc. and Neil
M. Koehler, Bill Jones, Paul P. Koehler and Thomas D.
Koehler
|
|
|
10.4
|
Form
of Subscription Agreement dated May 22, 2008 between Pacific Ethanol, Inc.
and each of the purchasers
|
|
|
10.5
|
Form
of Warrant to purchase shares of Pacific Ethanol, Inc. Common
Stock
|
|
|
10.6
|
Form
of Placement Agent Agreement dated May 22, 2008, by and between Pacific
Ethanol, Inc. and Lazard Capital Markets
LLC
|
|
|
99.1
|
Press
Release dated May 23, 2008
|
8