SACRAMENTO, CALIFORNIA, U.S. — Pacific Ethanol, Inc., a producer and marketer of low-carbon renewable fuels in the United States, entered into a definitive agreement to acquire Illinois Corn Processing, LLC (ICP) for $76 million, which includes $15 million in working capital. The transaction is expected to close in July 2017, subject to customary and other closing conditions.

ICP is a 90 million gallon per year fuel and industrial alcohol manufacturing, storage and distribution facility adjacent to the Pacific Ethanol Pekin facility and is located on the Illinois River. ICP produces fuel-grade ethanol, beverage and industrial-grade alcohol, dry distillers grain (DDG) and corn oil.

“The acquisition of ICP underscores our commitment to making strategic investments that expand and diversify our production platform, increase revenue, expand our marketing reach and improve our overall profitability,” said Neil Koehler, president and chief executive officer of Pacific Ethanol. “Two-thirds of ICP’s production is currently dedicated to producing high-quality, premium-priced alcohol products for the beverage and industrial markets.”

The Pekin facility has direct access to end-markets via barge, rail and truck, and expands Pacific Ethanol’s domestic and international distribution channels.

“ICP is strategically located on the Illinois River,” Koehler said. “It’s dedicated barge terminal creates transportation cost advantages, and like our existing Pekin facilities, ICP benefits from access to abundant low-cost corn feedstocks in Illinois. In addition, it has direct access to the Mississippi River system, giving us an outlet to export markets for all our production in Pekin, Illinois.”

The new addition is expected to create cost savings for the company.

“The consolidation of the ICP facility with our two Pekin, Illinois plants integrates the Pekin site into a unique combination of technologies and products with a combined operating capacity of 250 million gallons per year,” Koehler said. “We expect the acquisition will yield approximately $3 million in annual cost savings over the first six to twelve months after closing, including economies of scale in purchasing power, managing grain supply and transportation costs for DDG and ethanol.”

After the acquisition is complete Pacific Ethanol is looking forward to increasing efficiency and improving initiatives.

“ICP has a history of consistent profitability operating at better-than-average industry margins,” Koehler said. “As such, we expect the ICP acquisition to be immediately accretive to earnings. To further enhance the plant’s value, we have identified several improvement initiatives. As we apply the best practices developed at our plants, we expect to improve yields, increase plant capacity utilization and continue to enhance ICP’s production processes through additional capital investments.”

Currently, there are no plans to rebrand or change the ICP name. The company will continue to operations as Illinois Corn Processing.