PACIFIC ETHANOL, INC. : Entry into a Material Definitive Agreement, Unregistered Sale of Equity Securities, Regulation FD Disclosure, Other Events, Financial Statements and Exhibits (form 8-K)

Item 1.01 Entry into a Material Definitive Agreement.

Underwritten Public Offering of Common Stock and Pre-Funded Warrants

Underwriting Agreement

On October 26, 2020, Pacific Ethanol, Inc. (the "Company") entered into an underwriting agreement (the "Underwriting Agreement") with Guggenheim Securities, LLC, as sole book-running manager, and Craig-Hallum Capital Group LLC and H.C. Wainwright & Co., LLC, as co-managers (collectively, the "Underwriters"), relating to the issuance and sale in an underwritten public offering (the "Offering") by the Company of (i) 5,075,000 shares (the "Common Shares") of the Company's common stock, par value $0.001 per share (the "Common Stock"), at a public offering price of $8.42 per share, and (ii) pre-funded warrants (the "Pre-Funded Warrants") to purchase up to 3,825,493 shares of Common Stock at a public offering price of $8.4199 per Pre-Funded Warrant for total gross proceeds of approximately $75 million.

The Underwriting Agreement contains customary representations, warranties, covenants and agreements by the Company, indemnification obligations of the Company and the Underwriters, including for liabilities under the Securities Act of 1933, as amended (the "Securities Act"), other obligations of the parties and termination provisions. The representations, warranties and covenants contained in the Underwriting Agreement were made only for the purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement and may be subject to limitations agreed upon by the contracting parties.

In addition, pursuant to the terms of the Underwriting Agreement, the Company and its executive officers and directors have entered into agreements providing that the Company and each of these persons may not, without the prior written approval of the Underwriters, subject to limited exceptions, offer, sell, transfer or otherwise dispose of the Company's securities for a period of 90 days (and for a certain executive officer who owns, or beneficially owns, an aggregate of 60,639 shares of common stock, 30 days) following the date of the final Prospectus Supplement (as defined below) filed by the Company with the Securities and Exchange Commission (the "SEC") in connection with the Offering. Notwithstanding the foregoing, beginning on a date that is 30 days after the date of the Prospectus Supplement, a certain executive officer may exercise or exchange any option or warrant to acquire shares of Common Stock or options to purchase shares of Common Stock, in each case for cash or on a "cashless" or "net exercise" basis, pursuant to any stock option, stock bonus or other stock plan or arrangement described or incorporated by reference in the Registration Statement (as defined below) of which the Prospectus Supplement forms a part; provided, however, that the underlying shares of Common Stock shall continue to be subject to the restrictions on transfer set forth in that lock-up agreement and that no filing by any party under the Securities Exchange Act of 1934, as amended, or other public announcement shall be required or shall be made voluntarily in connection with such distribution.

The foregoing summary of the Underwriting Agreement does not purport to be complete and is qualified in its entirety by the Underwriting Agreement, which is filed as Exhibit 1.1 to this Current Report on Form 8-K and incorporated herein by this reference.

The Offering

The Common Shares and Pre-Funded Warrants are being issued and sold pursuant to an effective registration statement on Form S-3 (Registration No. 333-238939) (as amended to date, the "Registration Statement") and a prospectus supplement dated October 26, 2020 filed with the SEC pursuant to Rule 424(b) of the Securities Act (the "Prospectus Supplement").

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The Offering is expected to close on October 28, 2020, subject to the satisfaction of customary closing conditions. The net proceeds to the Company from the Offering are expected to be approximately $70 million, excluding any exercise of the Pre-Funded Warrants issued in connection with the Offering and any exercise of the Series A Warrants (as defined below) issued in connection with the concurrent Private Placement (as defined below), after deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company. The Company expects to use a portion of the net proceeds to repay a portion of its indebtedness under some or all of the following credit facilities: (i) the term loan credit facility entered into by its subsidiary Pacific Ethanol Pekin, LLC ("PE Pekin") with 1st Farm Credit Services, PCA and CoBank, ACB ("CoBank"), which matures on August 20, 2021 and bears interest at a rate per annum equal to the 30-day LIBOR plus 5.75%, (ii) the revolving credit facility entered into by PE Pekin with CoBank, which matures on February 1, 2022 and bears interest at a rate per annum equal to the 30-day LIBOR plus 5.75%, (iii) the term loan credit facility entered into by its subsidiary Illinois Corn Processing, LLC ("ICP") with Compeer Financial, PCA and CoBank, which matures on September 1, 2021 and bears interest at a rate per annum equal to the 30-day LIBOR plus 3.75%, (iv) the revolving credit facility entered into by ICP with CoBank, which matures on September 1, 2021 and bears interest at a rate per annum equal to the 30-day LIBOR plus 3.75%, and (v) the Company's senior secured notes, which mature on December 15, 2021 and bear interest at a rate per annum equal to 15.0%. The Company intends to use the remaining net proceeds for working capital needs, capital expenditures, acquisitions and other general corporate purposes.

Form of Pre-Funded Warrant
. . .

Item 3.02 Unregistered Sales of Equity Securities.

Pursuant to the Private Placement described in Item 1.01 of this Current Report on Form 8-K, which description is incorporated by reference into this Item 3.02 in its entirety, the Company sold the Series A Warrant exercisable for Series A Warrant Shares to an institutional investor in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act and corresponding provisions of state securities or "blue sky" laws. The investor represented that it is acquiring the Series A Warrant for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. Accordingly, the Series A Warrant and Series A Warrant Shares have not been registered under the Securities Act and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.

Neither this Current Report on Form 8-K nor any exhibit attached hereto is an offer to sell or the solicitation of an offer to buy securities of the Company.

Item 7.01 Regulation FD Disclosure.

On October 26, 2020, the Company issued a press release announcing the pricing and terms of the above-described Offering and Private Placement. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by this reference. A copy of the investor slide deck presented in connection with the Offering is also attached hereto as Exhibit 99.2 and is incorporated herein by this reference.

Item 8.01 Other Events.

In connection with the offering discussed in Item 1.01 above, the legal opinion letter of Troutman Pepper Hamilton Sanders LLP, counsel to the Company, regarding the validity of the Common Shares and shares of Common Stock underlying the Pre-Funded Warrants is filed as Exhibit 5.1 to this Current Report on Form 8-K. The legal opinion letter is also filed with reference to, and is hereby incorporated by reference into, the Registration Statement.

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Item 9.01 Financial Statements and Exhibits.

(d)    Exhibits.



Number   Description
1.1        Underwriting Agreement by and among Pacific Ethanol, Inc., Guggenheim
         Securities, LLC, Craig-Hallum Capital Group LLC and H.C. Wainwright &
         Co., LLC dated as of October 26, 2020 (*)
4.1        Form of Pre-Funded Warrant (*)
4.2        Form of Series A Warrant (*)
5.1        Opinion of Troutman Pepper Hamilton Sanders LLP (*)
10.1       Securities Purchase Agreement dated October 26, 2020 by and between
         Pacific Ethanol, Inc. and the investor party thereto (*)
10.2       Form of Registration Rights Agreement to be entered into by and between
         Pacific Ethanol, Inc. and the investor party thereto (*)
23.1       Consent of Troutman Pepper Hamilton Sanders LLP (contained in Exhibit
         5.1) (*)
99.1       Press Release dated October 26, 2020 (*)
99.2       Investor Slide Deck (*)

(*) Filed herewith. The agreement filed as an exhibit to this report contains

     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.




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