Alto Ingredients Inc (ALTO)

[Rule_62]

I agree. While I'm not fond of the addition of $135M in debt, if and when healthy margins return they should be able to pay that down in a reasonable amount of time (12-18 months?). Meanwhile, it will add somewhere in the range of $4M/quarter in interest payments, once the merger is finalized. I think the market is also reacting to the current margin situation. I suspect at present it's adding debt to both the PEIX and Aventine books.

Of course there are options to clear that debt if they so choose. One over might be to sell off the Illinois assets and focus on the relationship between Nebraska and California. Of course I suspect the Illinois plants have the healthier margins, so that might not be a move they want to make, unless the current situation continues for an extended period of time.