Aventine sells its auction rate securities

By Bryan Sims | June 02, 2008
Web exclusive posted June 23, 2008 at 11:57 a.m. CST

Pekin, Ill.-based ethanol producer and marketer Aventine Renewable Energy Holdings Inc. has sold $127.2 million per value of its student-loan-based auction rate securities to several unnamed parties for cash totaling approximately $97.1 million.

In its first quarter ending March 31, Aventine recorded an impairment charge of $21.6 million related to the remaining auction rate securities it held March 31. As a result of the recent sales, the company will now record an additional loss of $8.5 million on the sale of these securities in its second quarter 2008.

"The funds received from the sale of the auction rate securities will be used to fund plant construction, which remains an integral part of our growth strategy," Aventine President and Chief Executive Officer Ronald H. Miller said. "We expect to begin ethanol and DDGS production at our new Aurora, Neb., and Mt. Vernon, Ind., plants currently under construction in the first quarter of 2009 as scheduled."

With the cash available from the sale of its auction rate securities, as well as the cash on hand and borrowing availability under its liquidity facility as of March 31, Aventine is forecasted to have in excess of $300 million available to be used towards its operations. As of March 31, the company needed approximately $250 million to complete its two new ethanol facilities. In addition, Aventine is continuing discussions with banks to increase the amount of liquidity available to it under a revolving asset-based loan facility. Existing debt agreements permit the company to increase its senior credit facilities by another $75 million, which would further strengthen the company's liquidity position.