Panda Ethanol Inc. announced May 12 that it has entered into a merger agreement and closed a private placement of common stock. The transactions give the company the opportunity to continue development of ethanol production, according to Todd Carter, chief executive officer and president of Panda Ethanol. "This cornerstone transaction will help allow Panda Ethanol to grow its portfolio of ethanol projects," he told EPM. "Our aim is to help the United States produce domestic supplies of clean, renewable fuel for the future."

The merger agreement is with a publicly held corporation that trades over the counter, according to Bill Pentak, director of communications for Panda Energy. "The company has asked that we not disclose their name at this time," he said, adding that the companies are now in a quiet period.

Over-the-counter securities are not traded on the stock exchange, Pentak explained. Brokers and dealers negotiate directly with each other by phone or computer, and their activities are monitored by the National Association of Securities Dealers.

Subject to certain requirements, the merger is expected to become effective this summer. It will operate under the name Panda Ethanol Inc.

The company also closed a private placement of about 14.9 million shares of its common stock. The sale of the stock will bring in a gross amount of about $90 million and will be used to help finance a 100 MMgy ethanol plant under construction in Hereford, Texas. The largest shareholder after the private placement will be Panda Energy International Inc., a privately held company.

Site work is completed at the Hereford location, Pentak said. The next step is to begin building the ethanol facility.

According to the Panda Energy Web site, construction began on that facility in February and is expected to be completed in July 2007. The plant will utilize manure and cotton gin burr for power generation.

The company is also working on plans to build two other 100 MMgy projects in Haskell County, Kan., and Yuma, Colo. Construction is anticipated to begin on the Haskell County facility in September, and the project should be completed by October 2007, according to the company's Web site. Manure and cotton gin burr will also be used for power generation at this facility. The beginning of construction at the Yuma project has yet to be announced, but the expected completion date is October 2007. Power generation, or fuel, is listed as gas.

Energy Capital Solutions LP acted as the placement agent for the private placement offering, according to the company press release. The release was not an offer to sell or the solicitation of an offer to buy.

Panda Ethanol, which is headquartered in Dallas, Texas, is currently developing facilities to produce ethanol, biodiesel and biomass in the United States. The company began as an independent energy company in 1892, according to the Web site. In the 1990s, it pursued international power generation and in 1983 became involved in the deregulated merchant electric power industry. For more information, visit www.pandaenergy.com.