Moody's rates Aventine note B3

Moody's Investors Service said it assigned a B3 (LGD5, 74%) rating to Aventine Renewable Energy Holdings, Inc.'s new $300 million senior unsecured notes due 2017 and affirmed the company's corporate family and probability-of-default ratings at B2 and its speculative grade liquidity rating at SGL-1.

The outlook is stable.

The notes are being issued to partially finance the firm's construction of two ethanol plants with a combined capacity of 226 million gallons per year.

The agency said the ratings reflect Aventine's modest leverage for the rating category, its significant cash balances, a supportive legislative environment and a strong demand environment for ethanol. The firm also benefits from continued expansion of its marketing alliance.

The ratings also consider the risks associated with the developing nature of the ethanol industry, industry economics that are driven by government legislation, low barriers to entry, aggressive competing capacity expansions that could lead to oversupply and lower ethanol prices and the presence of competitors with substantially greater resources, Moody's said.

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