Aventine Renewable Energy widens Q2 net loss to US$23.9M from net loss of US$9.3M a year ago on falling margins, production problems at Mt. Vernon facility, despite revenues more than doubling to US$213M
August 9, 2011
– Aventine Renewable Energy Holdings, Inc. AVRW -2.33% ("Aventine"), a leading producer of clean renewable energy, announced today its results for the second quarter 2011.
Net loss for the three months ended June 30, 2011 was $23.9 million, or $2.71 per diluted share, compared to a net loss of $9.3 million, or $1.06 per diluted share for the three months ended June 30, 2010. Net loss for the six months ended June 30, 2011 was $43.1 million, or $4.95 per diluted share, compared to a net loss of $16.4 million, or $1.87 per diluted share for the four months ended June 30, 2010 and a net loss of $266.3 million, or $6.14 per diluted share for the two months ended February 28, 2010.
"This was a challenging quarter for the Company with industry wide margins falling through most of the period. Operationally we continued to experience production problems at our Mt. Vernon facility leading to an extensive shutdown taken in July," said Thomas Manual, Chief Executive Officer.
Revenues were $213.0 million for the three months ended June 30, 2011, compared to $96.9 million for the three months ended June 30, 2010. Revenues were $411.1 million for the six months ended June 30, 2011, compared to $133.9 million and $77.7 million, respectively, for the four months ended June 30, 2010 and the two months ended February 28, 2010.
"We expect to see improvements in our profitability over the next several quarters assuming industry wide margins are maintained at the current levels. With the upturn in the margin environment we have been able to lock in profitable margins on approximately 12% of our current production for the remainder of the year," commented Manual. "Since quarter end we have made progress at the Mt. Vernon facility. Production there has stabilized for the first time since we started the plant. This is an encouraging development. We have also made significant strides to improve co-product yields at our Pekin plant. This coupled with the return of the Aurora East plant to production should have a positive impact on profits." Manual also noted, "We are in the process of making system improvements at the Canton facility and expect to begin startup procedures in mid-October."
Q2 2011 Activity
On April 7, 2011, we entered into an incremental amendment (the "Incremental Amendment") with Citibank, N.A., as administrative agent for the lenders under the senior secured term loan agreement, dated as of December 22, 2010 (the "Term Loan Agreement"), and Macquarie Bank Limited, as lender ("Macquarie"), to the Term Loan Agreement. Pursuant to the Incremental Amendment, Macquarie loaned us an aggregate principal amount equal to $25.0 million, net of $1.3 million in fees. The loan under the Incremental Amendment has substantially the same terms as the existing loans under the Term Loan Agreement, including seniority ranking in right of payment and of security, maturity date, applicable margin and interest rate floor. We continue to be subject to all other terms and restrictions contained in the original Term Loan Agreement.
On April 27, 2011, we temporarily shut down our dry mill plant in Aurora, Nebraska to make some improvements to the fermentation process at the facility. This work was completed by the third week of May 2011, and we began grinding corn again during the week of July 25, 2011.
On May 13, 2011, the Company commenced a pro-rata distribution, consisting of 19,414 shares of common stock, to holders of the Company's pre-petition notes and to holders of allowed general unsecured claims, with 9,806 shares distributed to holders of pre-petition notes and 9,608 shares to holders of allowed general unsecured claims. Approximately 1.1 million shares of common stock are reserved for future distributions of these holders.
On July 20, 2011, Aventine and each of its subsidiaries, as co-borrowers (collectively, the "Borrowers"), entered into a revolving credit facility (the "New Revolving Facility") with the lenders party thereto (the "Lenders"), and Wells Fargo Capital Finance, LLC, as Lender and as agent for the Lenders (in such capacity, "Wells Fargo") (the "New Revolving Facility Agreement") with a $50.0 million commitment. The proceeds of loans under the New Revolving Facility were used to (1) repay the Borrowers' obligations under Revolving Facility, (2) pay related transaction costs, fees and expenses, and (3) for general corporate purposes. In connection with the New Revolving Facility, the rights and obligations of the lenders under the Revolving Facility have been assigned from PNC to Wells Fargo.
On July 20, 2011, Aventine entered into an amendment ("Citi Amendment") to the Term Loan Agreement with the lenders party thereto and Citibank, N.A., as administrative agent and collateral agent (the "Term Loan Agent"). Under the terms of the Citi Amendment, the amount of indebtedness that Aventine is permitted to incur under the New Revolving Facility (including bank products and hedging obligations) is capped at $58.0 million. The Citi Amendment reduces Aventine's minimum liquidity covenant for 2012 from $25.0 million to $15.0 million. The Citi Amendment also includes certain technical amendments to permit the New Revolving Facility.
Second Quarter Conference Call
We will hold a conference call at 9 a.m. CST (10 a.m. Eastern time) on Tuesday, August 9, 2011, to discuss the contents of this press release. Please dial in to the conference call at (877) 312-5514 (U.S.), or (253) 237-1137 (International), access code: 85213032, approximately 10 minutes prior to the start time. A link to the broadcast can be found at http://www.aventinerei.com/ in the Investor Relations section under the "Conference Calls" link. If you are unable to participate at this time, a replay will be available through August 15, 2011, on this Website or by dialing (855) 859-2056 (U.S.), or (404) 537-3406 (International), access code: 85213032. Should you need any assistance accessing the call or the replay, please contact Aventine at (214) 451-6750.
About Aventine Renewable Energy
Aventine is a leading producer of ethanol. Through our production facilities, we market and distribute ethanol to many of the leading energy companies in the U.S. In addition to producing ethanol, our facilities also produce several by-products, such as distillers grain, corn gluten meal and feed, corn germ and grain distillers dried yeast, which generate revenue and allow us to help offset a significant portion of our corn costs.