Alto Ingredients Inc (ALTO)

[Rule_62]

I've thought about this a bit, and I think this is out of concern of someone possibly attempting a takeover.

Each party involved with the warrants is limited to holding a maximum 10% of outstanding shares, so they have to sell off anything in excess of that limit as they exercise them. However, even at that, they hold a pretty substantial combined balance of shares. If they were to work with another party interested in a takeover bid that also accumulated a sizable share count, they could hold a fair bit of power.

Correct me if I'm wrong, but the replacement value of the 4 plants is somewhere in the $400 - $500M price range, right?

Now consider that the company has effectively paid down $70M in debt in the past year. In addition they upgraded the Stockton plant, including bringing Edeniq's Cellunator technology and bringing corn oil production online, immediately after accomplishing the same at the Magic Valley plant:
http://ir.stockpr.com/pacificethanol/press-releases/detail/137/pacific-ethanol-begins-production-of-corn-oil-at-stockton-plant

and now brought the Madera plant back online. I think that's a pretty strong backwards looking, combined demonstration of the yearly earning power of PEIX.

So, what's the ability to generate $50-$100M in net income a year worth? Combine that with the current market cap, and I think that regardless of exactly how your numbers come out, you have to agree that the current market cap makes PEIX a very attractive takeover target.

That's why I think the changes were made.