PACIFIC ETHANOL, INC. (NASDAQ:PEIX) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01.Entry Into a Material Definitive Agreement.

Note Purchase Agreement and Contribution
Agreement

On December 12, 2016, Pacific Ethanol, Inc. (the Company)
entered into a Note Purchase Agreement (the Note Purchase
Agreement) with 5 accredited investors (the
Investors). On December 15, 2016, under the terms of the
Note Purchase Agreement, the Company sold $55.0 million in
aggregate principal amount of its senior secured notes (the
Notes) to the Investors in a private offering (the Note
Transaction) for aggregate gross proceeds of 97% of the
principal amount of the Notes sold.

The Notes will mature on December 15, 2019 (the Maturity
Date). Interest on the Notes will accrue at a rate equal to
(i) the greater of 1% and the three-month London Interbank
Offered Rate (LIBOR), plus 7.0% from the closing through
December 14, 2017, (ii) the greater of 1% and LIBOR, plus 9%
between December 15, 2017 and December 14, 2018, and (iii) the
greater of 1% and LIBOR plus 11% between December 15, 2018 and
the Maturity Date. The interest rate will increase by an
additional 2% per annum above the interest rate otherwise
applicable upon the occurrence, and during the continuance, of an
event of default until such event of default has been cured.
Interest shall be payable in cash in arrears on the 15th calendar
day of each March, June, September and December beginning on
March 15, 2017. The Company is required to pay all outstanding
principal and any accrued and unpaid interest on the Notes on the
Maturity Date. The Company may, at its option, prepay the Notes
at any time without premium or penalty. The Notes contain a
variety of events of default which are typical for transactions
of this type. The payments due under the Notes will rank senior
to all other indebtedness of the Company, other than permitted
senior indebtedness. The Notes contain a variety of obligations
on the part of the Company not to engage in certain activities,
which are typical for transactions of this type, including that
(i) the Company and certain of its subsidiaries will not incur
other indebtedness, except for certain permitted indebtedness,
(ii) the Company and certain of its subsidiaries will not redeem,
repurchase or pay any dividend or distribution on their
respective capital stock without the prior consent of the holders
of the Notes holding 66-2/3% of the aggregate principal amount of
the Notes, other than certain permitted distributions, (iii) the
Company and certain of its subsidiaries will not sell, lease,
assign, transfer or otherwise dispose of any assets of the
Company or any such subsidiary, except for certain permitted
dispositions (including the sales of inventory or receivables in
the ordinary course of business), and (iv) the Company and
certain of its subsidiaries will not issue any capital stock or
membership interests for any purpose other than to pay down a
portion of all of the amounts owed under the Notes and in
connection with the Companys stock incentive plans. The Notes are
secured by a first-priority security interest in the Companys
equity interest in its wholly-owned subsidiary, PE Op. Co. to the
terms of a Security Agreement (the Note Security
Agreement) entered into at closing by and among the Company,
the Investors and Cortland Capital Market Services LLC (as
collateral agent).

On December 12, 2016, Pacific Ethanol Central, LLC (PE
Central), a wholly-owned subsidiary of the Company, entered
into a Contribution Agreement (the Contribution Agreement)
with Aurora Cooperative Elevator Company, a Nebraska cooperative
corporation (Aurora Coop) and Pacific Aurora, LLC, a
Delaware limited liability company (Pacific Aurora), to
which, on December 15, 2016, (i) PE Central contributed 100% of
the equity interests of its wholly-owned subsidiaries, Pacific
Ethanol Aurora East, LLC (AE) and Pacific Ethanol Aurora
West, LLC (AW) (which own the Companys Aurora East and
Aurora West ethanol plants, respectively) to Pacific Aurora in
exchange for an 88.15% ownership interest in Pacific Aurora and a
certain amount in cash, and (ii) Aurora Coop contributed its
elevator and related grain handling assets located in Aurora,
Nebraska, to Pacific Aurora in exchange for an 11.85% ownership
interest in Pacific Aurora.

Unit Purchase Agreement

On December 15, 2016, PE Central entered into a Unit Purchase
Agreement (the Unit Purchase Agreement) with Aurora Coop
to which PE Central sold a 14.22% ownership interest in Pacific
Aurora to Aurora Coop for $30.0 million in cash. Following the
closing of the Contribution Agreement and the Unit Purchase
Agreement, the Company, through PE Central, owns 73.93% of
Pacific Aurora and Aurora Coop owns 26.07% of Pacific Aurora.

Pekin Credit Facility

On December 15, 2016, the Companys wholly-owned subsidiary,
Pacific Ethanol Pekin, Inc. (Pekin), entered into a Credit
Agreement (the Pekin Credit Agreement) with 1^st
Farm Credit Services, PCA and CoBank, ACB (CoBank) (as
cash management provider and agent). On December 15, 2016, under
the terms of the Pekin Credit Agreement, Pekin borrowed from
1^st Farm Credit Services $64.0 million under the terms
of a term loan facility that will mature on August 20, 2021 (the
Pekin Term Loan) and $32.0 million under the terms of a
revolving term loan facility that will expire on February 1, 2022
(the Pekin Revolving Loan and, together with the Pekin Term Loan,
the Pekin Credit Facility). The Pekin Credit Facility is secured
by a first-priority security interest in all of the assets of
Pekin under the terms of a Security Agreement, dated December 15,
2016, by and between Pekin and CoBank (the Pekin Security
Agreement). Interest accrues under the Pekin Credit Facility
at a rate equal to the 30-day LIBOR plus 3.75%, payable monthly.
Pekin will make quarterly principal payments in the amount of
$3.5 million on the Pekin Term Loan beginning on May 20, 2017
followed by a principal payment of $4.5 million on August 20,
2021. Pekin will pay a 0.75% per annum fee on any unused portion
of the Pekin Revolving Loan, payable monthly in arrears.
Prepayment of the Pekin Credit Facility will be subject to a
prepayment penalty. Under the terms of the Pekin Credit
Agreement, Pekin will be required to maintain not less than $20.0
million in working capital and an annual debt coverage ratio of
not less than 1.25 to 1.0. The Pekin Credit Agreement contains a
variety of affirmative covenants, negative covenants and events
of default which are customary for transactions of this type.

Pacific Aurora Credit Facility

On December 15, 2016, Pacific Aurora, AW and AE (collectively,
the Aurora Borrowers) entered into a Credit Agreement (the
Pacific Aurora Credit Agreement) with CoBank. Under the
terms of the Pacific Aurora Credit Agreement, Pacific Aurora may
borrow up to $30.0 million under the terms of a revolving term
loan facility from CoBank that will mature on February 1, 2022
(the Pacific Aurora Credit Facility). The Pacific Aurora
Credit Facility is secured by a first-priority security interest
in all of the assets of the Aurora Borrowers under the terms of a
Security Agreement, dated December 15, 2016, by and among the
Borrowers and CoBank (the Pacific Aurora Security
Agreement). Availability under the Pacific Aurora Credit
Facility will be reduced by $2.5 million on the first day of each
June and December beginning on June 1, 2017 through and including
December 1, 2020. Interest accrues under the Pacific Aurora
Credit Facility at a rate equal to the 30-day LIBOR plus 4.0%,
payable monthly. Pacific Aurora will pay a 0.75% per annum fee on
any unused portion of the Pacific Aurora Credit Facility, payable
monthly in arrears. Prepayment of the Pacific Aurora Credit
Facility will be subject to a prepayment penalty. Under the terms
of the Pacific Aurora Credit Agreement, Pacific Aurora will be
required to maintain not less than $22.5 million in working
capital through June 30, 2017, not less than $24.0 million in
working capital after June 30, 2017, and a debt coverage ratio of
not less than 1.5 to 1.0.

On December 15, 2016, the Company entered into a Working Capital
Maintenance Agreement with CoBank, to which the Company agreed to
contribute capital to Pacific Aurora (through PE Central) from
time to time to ensure that Pacific Aurora maintains the minimum
working capital thresholds required in the Pacific Aurora Credit
Agreement (the Working Capital Maintenance Agreement). The
Pacific Aurora Credit Agreement contains a variety of affirmative
covenants, negative covenants and events of default which are
customary for transactions of this type.

Use of Proceeds

On December 15, 2016, the Company used the borrowings under the
Pekin Credit Facility together with the $30.0 million received
from the sale of interests under the Unit Purchase Agreement and
approximately $32.5 million of the net proceeds received under
the Note Purchase Agreement to repay the approximately $158.5
million owed under the terms of the Amended and Restated Senior
Secured Term Loan Credit Agreement dated September 24, 2012 among
PE Central, the lenders from time to time party thereto, and
Citibank, N.A.

The descriptions of the Note Purchase Agreement, the Notes, the
Note Security Agreement, the Unit Purchase Agreement, the
Contribution Agreement, the Pekin Credit Agreement, the Pekin
Security Agreement, the Pacific Aurora Credit Agreement, the
Pacific Aurora Security Agreement and the Working Capital
Maintenance Agreement do not purport to be complete and are
qualified in their entirety by reference to the copies of such
agreements filed as exhibits to this Current Report on Form 8-K
and incorporated herein by reference. Readers should review those
agreements for a complete understanding of the terms and
conditions associated with the transactions described in this
Current Report on Form 8-K.

On December 15, 2016, the Company sold $55.0 million in aggregate
principal amount of its Notes to the terms of the Note Purchase
Agreement, as described above under Item 1.01. The disclosures
regarding the Notes and the Note Purchase Agreement contained
above under Item 1.01 are incorporated herein by reference.

On December 15, 2016, Pekin obtained a credit facility by
entering into the Pekin Credit Agreement, as described above
under Item 1.01. The disclosures regarding the Pekin Credit
Facility contained above under Item 1.01 are incorporated herein
by reference.

On December 15, 2016, the Aurora Borrowers obtained a credit
facility by entering into the Pacific Aurora Credit Agreement, as
described above under Item 1.01. The disclosures regarding the
Pacific Aurora Credit Facility contained above under Item 1.01
are incorporated herein by reference.

(d)Exhibits.

_______________

(#)Certain of the agreements filed as exhibits to this report
contain representations and warranties made by the parties
thereto. The assertions embodied in such representations and
warranties are not necessarily assertions of fact, but a
mechanism for the parties to allocate risk. Accordingly,
investors should not rely on the representations and warranties
as characterizations of the actual state of facts or for any
other purpose at the time they were made or otherwise.

(*)Filed as an exhibit to the Companys Current Report on Form 8-K
filed with the Securities and Exchange Commission on December 12,
2016.

(**)Filed herewith.

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.

EXHIBITS FILED WITH THIS REPORT

About PACIFIC ETHANOL, INC. (NASDAQ:PEIX)

Pacific Ethanol, Inc. is a producer and marketer of low-carbon renewable fuels in the United States. The Company’s segments include a production segment and a marketing segment. It owns and operates over eight ethanol production facilities at which it produces ethanol and co-products. It produces ethanol co-products, including wet distiller’s grains, dry distillers’ grains with soluble, wet and dry corn gluten feed, condensed distillers solubles, corn gluten meal, corn germ, corn oil, distillers yeast and carbon dioxide. It markets distiller’s grains and other feed co-products to dairies and feedlots in various cases located near its ethanol plants. Approximately four of its plants are in the Western states of California, Oregon and Idaho, or the Pacific Ethanol West plants; and over four of its plants are located in the Midwestern states of Illinois and Nebraska, or the Pacific Ethanol Central plants. Its plants have ethanol production capacity of over 515 million gallons per year.

PACIFIC ETHANOL, INC. (NASDAQ:PEIX) Recent Trading Information

PACIFIC ETHANOL, INC. (NASDAQ:PEIX) closed its last trading session up +0.15 at 10.00 with 454,238 shares trading hands.