Michael Lau’s Candlewood Investment Group purchased more than 26 thousand shares of Pacific Ethanol Inc. (NASDAQ:PEIX) on February 11th at prices below $3. These purchases were perfectly timed as the transactions yielded a 40+% gain for the $2.5 billion New York based hedge fund.
The purpose of Candlewood’s transaction in Pacific Ethanol Inc. is summarized in the filing as follows:
“The Reporting Persons became beneficial owners of more than 5% of the outstanding Common Stock in connection with the Aventine Purchase, when the Reporting Persons received shares of Common Stock, as well as shares of Non-Voting Common Stock, as consideration for their ownership of Aventine.
The Reporting Persons believe that the public markets, which represent only a small portion of the ethanol industry’s ownership profile, currently undervalue the Common Stock of the Issuer (the “Securities”) based on transactions in assets comparable to the Issuer’s assets. The Reporting Persons believe that, in light of Issuer’s substantial asset holdings, certain of which are currently unencumbered by debt (based on the Reporting Persons’ review of the Issuer’s public filings), and potential strategic interest in other ethanol related production assets, there are transactions that the Issuer can engage in to improve shareholder value. The Reporting Persons intend to engage in constructive dialogue with the Issuer’s Board of Directors and third parties regarding various strategic alternatives including, but not limited to, capital structure optimization, asset monetization or a sale or merger of the Issuer (including, without limitation, transactions that would cause the Issuer to cease being a public company).
In addition, subject to a number of factors, including the market valuation of the Issuer, changes in market or industry conditions, other investment opportunities and capital available to the Reporting Persons, and the availability of Securities at prices that would make the purchase or sale of such Securities desirable, the Reporting Persons may endeavor (i) to increase or decrease their respective ownership in the Issuer through, among other things, the purchase or sale of Securities on the open market or in private transactions on such terms and at such times as the Reporting Persons may deem advisable and/or (ii) to enter into transactions that increase or decrease their economic exposure to the Common Stock without affecting their beneficial ownership of shares of Common Stock.”
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Candlewood Investment Group controls 26% of Pacific Ethanol’s shares. Renaissance Technologies, Marshall Wace, and D.E. Shaw were among other hedge funds with positions in the stock at the end of December.
The details of Candlewood’s filing can be found below:
Ownership Summary Table
Name | Sole Voting Power | Shared Voting Power | Sole Dispositive Power | Shared Dispositive Power | Aggregate Amount Owned Power | Percent of Class |
---|---|---|---|---|---|---|
Candlewood Investment Group | 0 | 10,129,908 | 0 | 10,129,908 | 10,129,908 | 26.0% |
Michael Lau | 0 | 10,129,908 | 0 | 10,129,908 | 10,129,908 | 26.0% |
David Koenig | 0 | 10,129,908 | 0 | 10,129,908 | 10,129,908 | 26.0% |
Phil DeSantis | 0 | 10,129,908 | 0 | 10,129,908 | 10,929,908 | 26.0% |
Jonathan Weiss | 0 | 10,129,908 | 0 | 10,129,908 | 10,129,908 | 26.0% |
Candlewood Investment Group General | 0 | 10,129,908 | 0 | 10,129,908 | 10,129,908 | 26.0% |
Candlewood Special Situations General | 0 | 9,889,141 | 0 | 9,889,141 | 9,889,141 | 25.4% |
Candlewood Special Situations Master Fund, Ltd | 0 | 5,783,759 | 0 | 5,783,759 | 5,783,759 | 14.8% |
CWD OC 5 | 0 | 3,127,913 | 0 | 3,127,913 | 3,127,913 | 8.0% |
Page 1 of 14 – SEC Filing
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
Pacific
Ethanol, Inc.
(Name of Issuer)
Common Stock, $0.001 par value
(Title of Class of Securities)
69423U305
(CUSIP Number)
Janet Miller
Chief Operating Officer and General Counsel
Candlewood Investment Group, LP
555 Theodore Fremd Ave., Suite C-303
Rye, NY 10580
(212)
493-4495
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)
April 7, 2016
(Date of
Event Which Requires Filing of this Statement)
If the filing
person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following
box. ¨
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d-7 for
other parties to whom copies are to be sent.
* | The remainder of this cover page shall be filled out for a reporting persons initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. |
The information required on the remainder of this cover page
shall not be deemed to be filed for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (Act) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other
provisions of the Act (however, see the Notes).
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Page 2 of 14 – SEC Filing
CUSIP No. 69423U305 |
1. | Names of Candlewood Investment Group, LP | |||||
2. | Check the Appropriate Box if a Member (a) ¨ (b) ¨ | |||||
3. | SEC Use Only | |||||
4. | Source of Funds (See Instructions) AF | |||||
5. | Check if Disclosure of Legal | |||||
6. | Citizenship or Place of Delaware | |||||
Number of Shares Beneficially Owned by Each Reporting Person With | 7. | Sole Voting Power 0 | ||||
8. | Shared Voting Power 10,129,908 | |||||
9. | Sole Dispositive Power 0 | |||||
10. | Shared Dispositive Power 10,129,908 | |||||
11. | Aggregate Amount Beneficially Owned by Each Reporting Person 10,129,908 | |||||
12. | Check if the Aggregate Amount in Row | |||||
13. | Percent of Class Represented by Amount 26.0% | |||||
14. | Type of Reporting Person (See IA |
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Page 3 of 14 – SEC Filing
CUSIP No. 69423U305 |
1. | Names of Michael Lau | |||||
2. | Check the Appropriate Box if a Member (a) ¨ (b) ¨ | |||||
3. | SEC Use Only | |||||
4. | Source of Funds (See Instructions) AF | |||||
5. | Check if Disclosure of Legal | |||||
6. | Citizenship or Place of United States | |||||
Number of Shares Beneficially Owned by Each Reporting Person With | 7. | Sole Voting Power 0 | ||||
8. | Shared Voting Power 10,129,908 | |||||
9. | Sole Dispositive Power 0 | |||||
10. | Shared Dispositive Power 10,129,908 | |||||
11. | Aggregate Amount Beneficially Owned by Each Reporting Person 10,129,908 | |||||
12. | Check if the Aggregate Amount in Row | |||||
13. | Percent of Class Represented by Amount 26.0% | |||||
14. | Type of Reporting Person (See IN |
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Page 4 of 14 – SEC Filing
CUSIP No. 69423U305 |
1. | Names of David Koenig | |||||
2. | Check the Appropriate Box if a Member (a) ¨ (b) ¨ | |||||
3. | SEC Use Only | |||||
4. | Source of Funds (See Instructions) AF | |||||
5. | Check if Disclosure of Legal | |||||
6. | Citizenship or Place of United States | |||||
Number of Shares Beneficially Owned by Each Reporting Person With | 7. | Sole Voting Power 0 | ||||
8. | Shared Voting Power 10,129,908 | |||||
9. | Sole Dispositive Power 0 | |||||
10. | Shared Dispositive Power 10,129,908 | |||||
11. | Aggregate Amount Beneficially Owned by Each Reporting Person 10,129,908 | |||||
12. | Check if the Aggregate Amount in Row | |||||
13. | Percent of Class Represented by Amount 26.0% | |||||
14. | Type of Reporting Person (See IN |
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Page 5 of 14 – SEC Filing
CUSIP No. 69423U305 |
1. | Names of Phil DeSantis | |||||
2. | Check the Appropriate Box if a Member (a) ¨ (b) ¨ | |||||
3. | SEC Use Only | |||||
4. | Source of Funds (See Instructions) AF | |||||
5. | Check if Disclosure of Legal | |||||
6. | Citizenship or Place of United States | |||||
Number of Shares Beneficially Owned by Each Reporting Person With | 7. | Sole Voting Power 0 | ||||
8. | Shared Voting Power 10,129,908 | |||||
9. | Sole Dispositive Power 0 | |||||
10. | Shared Dispositive Power 10,129,908 | |||||
11. | Aggregate Amount Beneficially Owned by Each Reporting Person 10,929,908 | |||||
12. | Check if the Aggregate Amount in Row | |||||
13. | Percent of Class Represented by Amount 26.0% | |||||
14. | Type of Reporting Person (See IN |
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Page 6 of 14 – SEC Filing
CUSIP No. 69423U305 |
1. | Names of Jonathan Weiss | |||||
2. | Check the Appropriate Box if a Member (a) ¨ (b) ¨ | |||||
3. | SEC Use Only | |||||
4. | Source of Funds (See Instructions) AF | |||||
5. | Check if Disclosure of Legal | |||||
6. | Citizenship or Place of United States | |||||
Number of Shares Beneficially Owned by Each Reporting Person With | 7. | Sole Voting Power 0 | ||||
8. | Shared Voting Power 10,129,908 | |||||
9. | Sole Dispositive Power 0 | |||||
10. | Shared Dispositive Power 10,129,908 | |||||
11. | Aggregate Amount Beneficially Owned by Each Reporting Person 10,129,908 | |||||
12. | Check if the Aggregate Amount in Row | |||||
13. | Percent of Class Represented by Amount 26.0% | |||||
14. | Type of Reporting Person (See IN |
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Page 7 of 14 – SEC Filing
CUSIP No. 69423U305 |
1. | Names of Candlewood Investment Group General, LLC | |||||
2. | Check the Appropriate Box if a Member (a) ¨ (b) ¨ | |||||
3. | SEC Use Only | |||||
4. | Source of Funds (See Instructions) AF | |||||
5. | Check if Disclosure of Legal | |||||
6. | Citizenship or Place of Delaware | |||||
Number of Shares Beneficially Owned by Each Reporting Person With | 7. | Sole Voting Power 0 | ||||
8. | Shared Voting Power 10,129,908 | |||||
9. | Sole Dispositive Power 0 | |||||
10. | Shared Dispositive Power 10,129,908 | |||||
11. | Aggregate Amount Beneficially Owned by Each Reporting Person 10,129,908 | |||||
12. | Check if the Aggregate Amount in Row | |||||
13. | Percent of Class Represented by Amount 26.0% | |||||
14. | Type of Reporting Person (See OO |
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Page 8 of 14 – SEC Filing
CUSIP No. 69423U305 |
1. | Names of Candlewood Special Situations General, LLC | |||||
2. | Check the Appropriate Box if a Member (a) ¨ (b) ¨ | |||||
3. | SEC Use Only | |||||
4. | Source of Funds (See Instructions) AF | |||||
5. | Check if Disclosure of Legal | |||||
6. | Citizenship or Place of Delaware | |||||
Number of Shares Beneficially Owned by Each Reporting Person With | 7. | Sole Voting Power 0 | ||||
8. | Shared Voting Power 9,889,141 | |||||
9. | Sole Dispositive Power 0 | |||||
10. | Shared Dispositive Power 9,889,141 | |||||
11. | Aggregate Amount Beneficially Owned by Each Reporting Person 9,889,141 | |||||
12. | Check if the Aggregate Amount in Row | |||||
13. | Percent of Class Represented by Amount 25.4% | |||||
14. | Type of Reporting Person (See OO |
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Page 9 of 14 – SEC Filing
CUSIP No. 69423U305 |
1. | Names of Candlewood Special Situations Master Fund, Ltd. | |||||
2. | Check the Appropriate Box if a Member (a) ¨ (b) ¨ | |||||
3. | SEC Use Only | |||||
4. | Source of Funds (See Instructions) WC | |||||
5. | Check if Disclosure of Legal | |||||
6. | Citizenship or Place of Cayman Islands | |||||
Number of Shares Beneficially Owned by Each Reporting Person With | 7. | Sole Voting Power 0 | ||||
8. | Shared Voting Power 5,783,759 | |||||
9. | Sole Dispositive Power 0 | |||||
10. | Shared Dispositive Power 5,783,759 | |||||
11. | Aggregate Amount Beneficially Owned by Each Reporting Person 5,783,759 | |||||
12. | Check if the Aggregate Amount in Row | |||||
13. | Percent of Class Represented by Amount 14.8% | |||||
14. | Type of Reporting Person (See OO |
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Page 10 of 14 – SEC Filing
CUSIP No. 69423U305 |
1. | Names CWD OC 522 Master Fund, Ltd. | |||||
2. | Check the Appropriate Box if a Member (a) ¨ (b) ¨ | |||||
3. | SEC Use Only | |||||
4. | Source of Funds (See WC | |||||
5. | Check if Disclosure of Legal | |||||
6. | Citizenship or Place of Cayman Islands | |||||
Number of Shares Beneficially Owned by Each Reporting Person With | 7. | Sole Voting Power 0 | ||||
8. | Shared Voting Power 3,127,913 | |||||
9. | Sole Dispositive Power 0 | |||||
10. | Shared Dispositive Power 3,127,913 | |||||
11. | Aggregate Amount Beneficially Owned by Each Reporting Person 3,127,913 | |||||
12. | Check if the Aggregate Amount in Row | |||||
13. | Percent of Class Represented by Amount 8.0% | |||||
14. | Type of Reporting Person (See OO |
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Page 11 of 14 – SEC Filing
Item 4. | Purpose of Transaction |
Item 4 is amended and restated as follows:
The Reporting Persons became beneficial owners of more than 5% of the outstanding Common Stock in connection with the Aventine Purchase, when
the Reporting Persons received shares of Common Stock, as well as shares of Non-Voting Common Stock, as consideration for their ownership of Aventine.
The Reporting Persons believe that the public markets, which represent only a small portion of the ethanol industrys ownership profile,
currently undervalue the Common Stock of the Issuer (the Securities) based on transactions in assets comparable to the Issuers assets. The Reporting Persons believe that, in light of Issuers substantial asset holdings,
certain of which are currently unencumbered by debt (based on the Reporting Persons review of the Issuers public filings), and potential strategic interest in other ethanol related production assets, there are transactions that the
Issuer can engage in to improve shareholder value. The Reporting Persons intend to engage in constructive dialogue with the Issuers Board of Directors and third parties regarding various strategic alternatives including, but not limited to,
capital structure optimization, asset monetization or a sale or merger of the Issuer (including, without limitation, transactions that would cause the Issuer to cease being a public company).
In addition, subject to a number of factors, including the market valuation of the Issuer, changes in market or industry conditions, other
investment opportunities and capital available to the Reporting Persons, and the availability of Securities at prices that would make the purchase or sale of such Securities desirable, the Reporting Persons may endeavor (i) to increase or decrease
their respective ownership in the Issuer through, among other things, the purchase or sale of Securities on the open market or in private transactions on such terms and at such times as the Reporting Persons may deem advisable and/or (ii) to enter
into transactions that increase or decrease their economic exposure to the Common Stock without affecting their beneficial ownership of shares of Common Stock.
The Reporting Persons intend to review their investment in the Issuer on a continuing basis and may from time to time in the future express
their views to and/or meet with management, the Board of Directors of the Issuer or third parties. The Reporting Persons may in the future formulate plans or proposals regarding the Issuers business, strategies, assets, corporate
governance, Board of Directors composition, and other matters related to the Issuer that are referred to in paragraphs (a) through (j) of Item 4 of Schedule 13D. The Reporting Persons may also change their intention with any of the foregoing
matters.
Item 5. | Interest in Securities of the Issuer |
Item 5 is amended and restated as follows:
(a)-(b) The information set forth in rows 7 through 13 of the cover pages to this Schedule 13D is incorporated by reference. The percentage set
forth in row 13 is based on 38,982,931 outstanding shares of Common Stock as of March 14, 2016, as reported in the Issuers Form 10-K/A filed on March 16, 2016. Certain private investment funds advised by the Investment Manager or an entity
controlled by the Investment Manager, including the Special Situations Fund and the OC Fund, directly hold the shares of Common Stock. The Fund GP serves as general partner to certain of these private investment funds, including the Special
Situations Fund and the OC Fund.
The Special Situations Fund, the OC Fund and certain other private investment funds advised by the
Investment Manager or an entity controlled by the Investment Manager also directly hold shares of non-voting common stock, $0.001 par value, of the Issuer (the Non-Voting Common Stock). The Special Situations Funds holds 1,797,147
shares of Non-Voting Common Stock; the OC Fund holds 1,350,577 shares of Non-Voting Common Stock; and certain other private investment funds advised by the Investment Manager or an entity controlled by the Investment Manager hold, in the aggregate,
391,744 shares of Non-Voting Common Stock. The Non-Voting Common Stock are convertible on a one-for-one basis into Common Stock (i) if the holder of such shares of Non-Voting Common Stock and any of its affiliates would not, after such conversion,
beneficially own greater than 9.99% of the Companys outstanding shares of Common Stock and (ii) no earlier than sixty-one days after the Company receives a notice of conversion from the holder. Because the Reporting Persons cannot acquire such
converted Common Stock within sixty days, they do not have beneficial ownership of such converted Common Stock.
(c) Schedule B sets
forth all transactions with respect to the Common Stock effected by any Reporting Person and any person named in Schedule A during the past sixty days.
(d) The private investment funds advised by the Investment Manager or an entity controlled by the Investment Manager that directly hold the
shares of Common Stock have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of Common Stock (the Economic Interest) reported as beneficially owned by the
Investment Manager, the Fund GP, the Manager GP and the Managing Partners. The Economic Interest of each of the Special Situations Fund and the OC Fund exceeds five percent of the Common Stock.
(e) Not applicable
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Page 12 of 14 – SEC Filing
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: April 8, 2016
CANDLEWOOD INVESTMENT GROUP, LP | ||
By: | /s/ Janet Miller | |
Name: | Janet Miller | |
Title: | COO/GC/Authorized Person | |
CANDLEWOOD INVESTMENT GROUP GENERAL, LLC | ||
By: | /s/ Michael Lau | |
Name: | Michael Lau | |
Title: | Manager | |
CANDLEWOOD SPECIAL SITUATIONS MASTER FUND, LTD. | ||
By: | /s/ David Koenig | |
Name: | David Koenig | |
Title: | Portfolio Manager | |
CWD OC 522 MASTER FUND, LTD. | ||
By: | /s/ David Koenig | |
Name: | David Koenig | |
Title: | Portfolio Manager | |
CANDLEWOOD SPECIAL SITUATIONS GENERAL, LLC | ||
By: | /s/ Michael Lau | |
Name: | Michael Lau | |
Title: | Class A Member |
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Page 13 of 14 – SEC Filing
/s/ Michael Lau |
Michael Lau |
/s/ David Koenig |
David Koenig |
/s/ Phil DeSantis |
Phil DeSantis |
/s/ Jonathan Weiss |
Jonathan Weiss |
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Page 14 of 14 – SEC Filing
Schedule B
Except as otherwise noted below, all such transactions were purchases of Common Stock effected in the open market, and the weighted average price per share
includes commissions paid.
Name | Date of Transaction | Amount of Securities | Weighted Average Price per Share | |||||||||
Special Situations Fund | February 11, 2016 | 23,232 | (1) | $ | 2.9428 | (1) | ||||||
Fund advised by Investment Manager | February 11, 2016 | 3,168 | (1) | $ | 2.9428 | (1) |
(1) | The purchases were executed in multiple transactions ranging from $2.885 to $2.99. The Reporting Persons undertake to provide full information regarding the number of shares purchased at each separate price upon request by the staff of the Securities and Exchange Commission. The shares were allocated between the purchasing private investment funds pursuant to the Investment Managers trade allocation policy. |