**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

** **

**FORM 10-Q**

* *

**x        Quarterly report pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934**

**For the quarterly periodended March 31, 2007**

** **

**OR**

** **

**o        Transition report pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934**

**For the transition periodfrom***        * to *        *.

** **

**COMMISSION FILE NUMBER001-32922**

** **

**AVENTINE RENEWABLE ENERGY HOLDINGS, INC.**

(Exact name of registrantas specified in its charter)

| **Delaware**              | ** ** | **05-0569368**                     |
|---------------------------|------------|------------------------------------|
| (State of  Incorporation) |       | (IRS Employer  Identification No.) |

 

| **1300 South 2****nd Street**        | ** ** | ** ** |
|-------------------------------------------|------------|------------|
| **Pekin,  Illinois**                      | ** ** | **61554**  |
| (Address of  Principal Executive Offices) |       | (Zip Code) |

 

**(309) 347-9200**

(Registrant’s TelephoneNumber, including Area Code)

Indicate by checkmark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days. YES  x    NO  o

Indicate by checkmark whether the registrant is alarge accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer andlarge accelerated filer” in Rule 12b-2 of the Exchange Act.  (Check one):

| Large accelerated filer  o |   | Accelerated  o |   | Non-accelerated  filer  x |
|--------------------------------------|--------|--------------------------|--------|-------------------------------------|

 

Indicate by checkmark whether the registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act).  YES  o    NO  x

Indicate thenumber of shares outstanding of each class of Common Stock, as of the latestpracticable date

| **Class**                       | ** ** | **Outstanding as of May 9, 2007** |
|---------------------------------|------------|-----------------------------------|
| Common Stock,  $0.001 Par Value |       | 41,910,744  Shares                |

 

 

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**FORM 10-Q**

**QUARTERLY REPORT**

**TABLE OF CONTENTS**
|            | ** ** | ** **                                                                                                              | ** ** | **Page No.** | ** ** |
|------------|------------|-------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|
| ** ** |       | PART  I                                                                                                                 |       |              |       |
| Item  1.   |       | Financial  Statements                                                                                                   |       |              |       |
|       |       | Condensed  Consolidated Statements of Operations (Unaudited) —   Three-month periods ended March 31, 2007 and 2006 |       | 1                 |       |
|       |       | Condensed  Consolidated Balance Sheets — March 31, 2007 (Unaudited) and December 31,  2006                         |       | 2                 |       |
|       |       | Condensed  Consolidated Statements of Cash Flows (Unaudited) —   Three-months ended March 31, 2007 and 2006        |       | 3                 |       |
|       |       | Notes to Unaudited Condensed Consolidated Financial  Statements                                                         |       | 4                 |       |
|       |       |                                                                                                                    |       |              |       |
| Item 2.    |       | Management’s Discussion and Analysis of Financial  Condition and Results of Operations                             |       | 16                |       |
|       |       |                                                                                                                    |       |              |       |
| Item 3.    |       | Quantitative and Qualitative Disclosures About Market  Risk                                                             |       | 25                |       |
|       |       |                                                                                                                    |       |              |       |
| Item 4.    |       | Controls and Procedures                                                                                                 |       | 27                |       |
|       |       |                                                                                                                    |       |              |       |
| ** ** |       | PART  II                                                                                                                |       |              |       |
| ** ** |       |                                                                                                                    |       |              |       |
| Item  1.   |       | Legal  Proceedings                                                                                                      |       | 27                |       |
|       |       |                                                                                                                    |       |              |       |
| Item  1A.  |       | Risk  Factors                                                                                                           |       | 27                |       |
|       |       |                                                                                                                    |       |              |       |
| Item 2.    |       | Unregistered Sales of Equity Securities and Use of  Proceeds                                                            |       | 28                |       |
|       |       |                                                                                                                    |       |              |       |
| Item 3.    |       | Default Upon Senior Securities                                                                                          |       | 28                |       |
|       |       |                                                                                                                    |       |              |       |
| Item 4.    |       | Submission of Matters to a Vote of Security Holders                                                                     |       | 28                |       |
|       |       |                                                                                                                    |       |              |       |
| Item  5.   |       | Other  Information                                                                                                      |       | 28                |       |
|       |       |                                                                                                                    |       |              |       |
| Item 6.    |       | Exhibits                                                                                                                |       | 28                |       |

 

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**PART I.**                                                    FINANCIALINFORMATION

**Item 1.**                                                           FinancialStatements

**Aventine Renewable Energy Holdings, Inc. andSubsidiaries**Condensed Consolidated Statements of Operations(Unaudited)
| ** **                                                              | ** ** | **Three Months Ended  March 31,** | ** **  |
|-------------------------------------------------------------------------|------------|--------------------------------------------------|-------------|
| **(In thousands except per share amounts)**    | ** ** | **2007**                                         | ** **  | **2006** | ** ** |
| Net sales                                                               | ** ** | **$**                                            | **436,662** |   | $ | 313,520 |   |
| Cost of goods sold                                                      | ** ** | **408,247**                                      |        | 282,925 |   |
| Gross profit                                                            | ** ** | **28,415**                                       |        | 30,595 |   |
| Selling, general and  administrative expenses                           | ** ** | **9,598**                                        |        | 6,266 |   |
| Other (income)                                                          | ** ** | **(164**                                         | **)**       | (265 | ) |
| Operating income                                                        | ** ** | **18,981**                                       |        | 24,594 |   |
| Other income (expense):                                                 | ** ** | ** **                                       |        |   |   |
| Interest income                                                         | ** ** | **1,368**                                        |        | 655 |   |
| Interest expense                                                        | ** ** | **(336**                                         | **)**       | (4,365 | ) |
| Other  non-operating income (expense)                                   | ** ** | **3,869**                                        |        | 555 |   |
| Minority  interest                                                      | ** ** | **(518**                                         | **)**       | (1,266 | ) |
| Income before income  taxes                                             | ** ** | **23,364**                                       |        | 20,173 |   |
| Income tax expense                                                      | ** ** | **8,424**                                        |        | 7,986 |   |
| Net income                                                              | ** ** | **$**                                            | **14,940**  |   | $ | 12,187 |   |
|                                                                    | ** ** | ** **                                       |        |   |   |
| *Per share data:*                                                       | ** ** | ** **                                       |        |   |   |
| Income per common share  — basic:                                  | ** ** | **$**                                            | **0.36**    |   | $ | 0.35 |   |
| Basic weighted average  number of common shares                         | ** ** | **41,811**                                       |        | 34,684 |   |
| * *                                                                | ** ** | ** **                                       |        |   |   |
| Income per common share  — diluted:                                | ** ** | **$**                                            | **0.35**    |   | $ | 0.34 |   |
| Diluted weighted average number of common and common equivalent  shares | ** ** | **42,458**                                       |        | 36,019 |   |

 

*The accompanying notes are an integral part ofthese condensed consolidated financial statements.*

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**Aventine Renewable Energy Holdings, Inc. andSubsidiaries**Condensed Consolidated Balance Sheets
| **(In thousands except share amounts)**                                                                                                                                                                                                                        | ** ** | **March 31,  2007  (Unaudited)** | ** **  | **December 31,  2006** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------|-------------|-----------------------------|------------|
| **Assets**                                                                                                                                                                                                                                                                         | ** ** | ** **                            |        |                        |       |
| Current assets                                                                                                                                                                                                                                                                     | ** ** | ** **                            |        |                        |       |
| Cash and cash equivalents                                                                                                                                                                                                                                                          | ** ** | **$**                                 | **281,120** |                        | $          | 29,791 |   |
| Short-term investments                                                                                                                                                                                                                                                             | ** ** | **144,750**                           |        | 98,925                      |       |
| Accounts receivable                                                                                                                                                                                                                                                                | ** ** | **58,175**                            |        | 79,729                      |       |
| Inventories                                                                                                                                                                                                                                                                        | ** ** | **93,659**                            |        | 67,051                      |       |
| Income tax receivable                                                                                                                                                                                                                                                              | ** ** | **1,044**                             |        | 6,446                       |       |
| Prepaid expenses and other                                                                                                                                                                                                                                                         | ** ** | **7,611**                             |        | 4,549                       |       |
| Total current  assets                                                                                                                                                                                                                                                              | ** ** | **586,359**                           |        | 286,491                     |       |
| Property, plant  and equipment, net                                                                                                                                                                                                                                                | ** ** | **125,112**                           |        | 115,645                     |       |
| Net deferred tax  assets                                                                                                                                                                                                                                                           | ** ** | **2,415**                             |        | —                      |       |
| Other assets                                                                                                                                                                                                                                                                       | ** ** | **14,070**                            |        | 6,000                       |       |
| Total assets                                                                                                                                                                                                                                                                       | ** ** | **$**                                 | **727,956** |                        | $          | 408,136 |   |
| **Liabilities  and Stockholders’ Equity**                                                                                                                                                                                                                                     |       |                                  |        |                        |       |
| Current  liabilities                                                                                                                                                                                                                                                               |       |                                  |        |                        |       |
| Accounts payable                                                                                                                                                                                                                                                                   | ** ** | **$**                                 | **76,423**  |                        | $          | 77,442 |   |
| Accrued liabilities                                                                                                                                                                                                                                                                | ** ** | **2,900**                             |        | 3,679                       |       |
| Other current liabilities                                                                                                                                                                                                                                                          | ** ** | **4,198**                             |        | 2,123                       |       |
| Total current  liabilities                                                                                                                                                                                                                                                         | ** ** | **83,521**                            |        | 83,244                      |       |
| Senior unsecured  10% notes due April 2017                                                                                                                                                                                                                                         | ** ** | **300,000**                           |        | —                      |       |
| Minority  interest                                                                                                                                                                                                                                                                 | ** ** | **10,307**                            |        | 10,221                      |       |
| Net deferred  taxes liabilities                                                                                                                                                                                                                                                    | ** ** | **—**                            |        | 6,104                       |       |
| Other long-term  liabilities                                                                                                                                                                                                                                                       | ** ** | **13,065**                            |        | 4,404                       |       |
| Total  liabilities                                                                                                                                                                                                                                                                 | ** ** | **406,893**                           |        | 103,973                     |       |
| Stockholders’  equity                                                                                                                                                                                                                                                         |       |                                  |        |                        |       |
| Common stock, par value $0.001 per share;  185,000,000 shares authorized; 41,900,744 and 41,782,276 shares issued and  outstanding as of March 31, 2007 and December 31, 2006, respectively, net of  21,229,025 shares held in treasury as of March 31, 2007 and December 31, 2006 | ** ** | **42**                                |        | 42                          |       |
| Preferred stock, 50,000,000 shares authorized, no  shares issued or outstanding                                                                                                                                                                                                    | ** ** | **—**                            |        | —                      |       |
| Additional paid-in capital                                                                                                                                                                                                                                                         | ** ** | **276,019**                           |        | 274,307                     |       |
| Retained earnings                                                                                                                                                                                                                                                                  | ** ** | **46,076**                            |        | 30,888                      |       |
| Accumulated other comprehensive loss                                                                                                                                                                                                                                               | ** ** | **(1,074**                            | **)**       | (1,074                      | )          |
| Total  stockholders’ equity                                                                                                                                                                                                                                                   | ** ** | **321,063**                           |        | 304,163                     |       |
| Total liabilities and  stockholders’ equity                                                                                                                                                                                                                                   | ** ** | **$**                                 | **727,956** |                        | $          | 408,136 |   |

 

*Theaccompanying notes are an integral part of these condensed consolidatedfinancial statements.*

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**Aventine Renewable Energy Holdings, Inc. andSubsidiaries**Condensed Consolidated Statements of Cash Flows(Unaudited)
| ** **                                                                         | ** ** | **Three Months Ended March 31,** | ** **  |
|------------------------------------------------------------------------------------|------------|------------------------------------------------------|-------------|
| **(In thousands)**                                                            | ** ** | **2007**                                             | ** **  | **2006** | ** ** |
| **Operating  Activities**                                                          | ** ** | ** **                                           |        |   |   |
| Net income                                                                         | ** ** | **$**                                                | **14,940**  |   | $ | 12,187 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities: | ** ** | ** **                                           |        |   |   |
| Depreciation and amortization                                                      | ** ** | **2,950**                                            |        | 1,380 |   |
| Minority interest                                                                  | ** ** | **518**                                              |        | 1,266 |   |
| Stock-based compensation expense                                                   | ** ** | **1,594**                                            |        | 1,308 |   |
| Deferred income tax                                                                | ** ** | **645**                                              |        | (155 | ) |
| Other                                                                              | ** ** | **248**                                              |        | (195 | ) |
| Changes in operating assets and liabilities:                                       | ** ** | ** **                                           |        |   |   |
| Accounts receivable, net                                                           | ** ** | **26,957**                                           |        | 5,035 |   |
| Inventories                                                                        | ** ** | **(26,608**                                          | **)**       | (16,407 | ) |
| Accounts payable and other liabilities                                             | ** ** | **(419**                                             | **)**       | (1,062 | ) |
| Other changes in operating assets and liabilities                                  | ** ** | **(2,870**                                           | **)**       | 4,715 |   |
| Net cash  provided by operating activities                                         | ** ** | **17,955**                                           |        | 8,072 |   |
| ** **                                                                         | ** ** | ** **                                           |        |   |   |
| **Investing  Activities**                                                          | ** ** | ** **                                           |        |   |   |
| Additions to  property, plant and equipment, net                                   | ** ** | **(12,418**                                          | **)**       | (13,016 | ) |
| Investment in  short-term securities                                               | ** ** | **(45,825**                                          | **)**       | — |   |
| Increase in  restricted cash for investing activities                              | ** ** | **—**                                           |        | (597 | ) |
| Use of  restricted cash for plant expansion                                        | ** ** | **—**                                           |        | 13,674 |   |
| Net cash  provided by (used for) investing activities                              | ** ** | **(58,243**                                          | **)**       | 61 |   |
| ** **                                                                         | ** ** | ** **                                           |        |   |   |
| **Financing  Activities**                                                          | ** ** | ** **                                           |        |   |   |
| Proceeds from  issuance of senior unsecured notes                                  | ** ** | **300,000**                                          |        | — |   |
| Payment of debt  issuance costs                                                    | ** ** | **(8,070**                                           | **)**       | — |   |
| Proceeds from  stock option exercises                                              | ** ** | **173**                                              |        | — |   |
| Tax benefit of  stock option exercises                                             | ** ** | **(54**                                              | **)**       | — |   |
| Net repayments  on revolving credit facilities                                     | ** ** | **—**                                           |        | (1,514 | ) |
| Distributions to  minority shareholders                                            | ** ** | **(432**                                             | **)**       | (216 | ) |
| Net cash  provided by (used for) financing activities                              | ** ** | **291,617**                                          |        | (1,730 | ) |
| Net increase in  cash and cash equivalents                                         | ** ** | **251,329**                                          |        | 6,403 |   |
| Cash and cash  equivalents at beginning of period                                  | ** ** | **29,791**                                           |        | 3,750 |   |
| Cash and cash  equivalents at end of period                                        | ** ** | **$**                                                | **281,120** |   | $ | 10,153 |   |

 

*Theaccompanying notes are an integral part of these condensed consolidatedfinancial statements.*

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**Aventine Renewable EnergyHoldings, Inc. and Subsidiaries****Notes to Unaudited CondensedConsolidated Financial Statements**

**(1)           Basis of Reporting for InterimFinancial Statements**

The accompanying unaudited condensed consolidated financial statementsinclude the accounts of Aventine Renewable Energy Holdings, Inc. and itssubsidiaries, which are collectively referred to as “Aventine”,  the “Company”, “we”, “our” or “us”, unlessthe context otherwise requires.  Allsignificant intercompany transactions have been eliminated in consolidation.

We have prepared theunaudited condensed consolidated financial statements included herein pursuantto the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosuresnormally included in statements prepared in accordance with generally acceptedaccounting principles have been omitted pursuant to such rules and regulations,although we believe that the disclosures are adequate to make the informationpresented not misleading.  Thesefinancial statements should be read in conjunction with the financialstatements and notes thereto included in our Annual Report on Form 10-K for theyear ended December 31, 2006.

The accompanying condensed consolidated financial statements presentedherewith reflect all adjustments (consisting of only normal and recurringadjustments) which, in the opinion of management, are necessary for a fairpresentation of the results of operations for the three month periods endedMarch 31, 2007 and 2006.  The results ofoperations for interim periods are not necessarily indicative of results to beexpected for an entire year.

The preparation of financial statements in conformity with accountingprinciples generally accepted in the United States requires management to makeestimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues and expensesduring the reporting period.  Actualresults could differ materially from those estimates.

As of March 31, 2007, theCompany’s Summary of Critical Accounting Policies for the year ended December31, 2006, which are detailed in the Company’s Annual Report on Form 10-K, havenot changed from December 31, 2006, except for the adoption of FinancialAccounting Standards Board (“FASB”) Interpretation No. 48 (“FIN 48”), *Accounting for Uncertainty in Income Taxes*.  See Note 12 for additional informationregarding the adoption of FIN 48 by the Company.

**(2)           Recent Accounting Pronouncements**

In September 2006, the FASB issued Statement of Financial AccountingStandards No. 157 (“SFAS 157”), *Fair Value Measurements*.  SFAS 157 defines fair value, establishes aframework for measuring fair value, and expands disclosure about fair valuemeasurements.  The statement is effectivefor financial statements issued for fiscal years beginning afterNovember 15, 2007.  The Company iscurrently evaluating the effect that the adoption of SFAS 157 will have, ifany, on its consolidated results of operations, financial position and relateddisclosures.

In February 2007, The FASB issued Statement of Financial AccountingStandards No. 159 (“SFAS 159”), *The Fair Value Option forFinancial Assets and Financial Liabilities Including an amendment of FASBStatement No. 115*.  SFASNo. 159 permits a company to choose to measure many financial instrumentsand other items at fair value that are not currently required to be measured atfair value.  The objective is to improvefinancial reporting by providing a company with the opportunity to 

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mitigatevolatility in reported earnings caused by measuring related assets andliabilities differently without having to apply complex hedge accountingprovisions.  A company shall reportunrealized gains and losses on items for which the fair value option has beenelected in earnings at each subsequent reporting date.  SFAS No. 159 will be effective forfiscal years that begin after November 15, 2007.  We are currently assessing the impact SFASNo. 159 will have on our consolidated financial statements.

**(3)****                                ****Short-Term Securities**

We from time to time invest a portion of our cash intax-free municipal auction rate certificates which generally have contractualmaturities of greater than 20 years.  Weconsider these certificates as held for sale. These certificates are widely traded in the public markets and may besold as needed.  The interest rates onthese certificates reprice every 35 days to the then current market rate.  Generally, the carrying value of thesesecurities approximates the market value, and there is no gain or loss expectedfrom changes in market value.

**(4)           Inventories**

Inventories are as follows:

| (In thousands) | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** |
|---------------------|------------|--------------------------|------------|-----------------------------|------------|
| Finished  products  | ** ** | **$**                    | **85,668** |                        | $          | 61,775 |   |
| Work-in-process     | ** ** | **2,327**                |       | 1,106                       |       |
| Raw materials       | ** ** | **2,972**                |       | 2,070                       |       |
| Supplies            | ** ** | **2,692**                |       | 2,100                       |       |
| Totals              | ** ** | **$**                    | **93,659** |                        | $          | 67,051 |   |

 

**(5)           Prepaid Expenses and Other**

Prepaid expenses and other are as follows:

| (In thousands)                   | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** |
|---------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| Fair value of  derivative instruments | ** ** | **$**                    | **4,483**  |                        | $          | 1,503 |   |
| Prepaid  insurance                    | ** ** | **1,339**                |       | 1,280                       |       |
| Deferred income  taxes current        | ** ** | **1,032**                |       | 1,064                       |       |
| Other prepaid  expenses               | ** ** | **757**                  |       | 702                         |       |
| Totals                                | ** ** | **$**                    | **7,611**  |                        | $          | 4,549 |   |

 

**(6)           Other Assets**

Other assets are as follows:

| (In thousands)                | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** |
|------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| Deferred debt  issuance costs      | ** ** | **$**                    | **8,070**  |                        | $          | — |   |
| Investment in  marketing alliances | ** ** | **6,000**                |       | 6,000                       |       |
| Totals                             | ** ** | **$**                    | **14,070** |                        | $          | 6,000 |   |

 

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Deferred debt issuance costs are subject to amortization.  Deferred debt issuance costs of $7.2 millionrelated to our 10% senior unsecured notes will be amortized utilizing a methodwhich approximates the effective interest method over the remaining life of 10years, resulting in amortization expense of $0.5 million for 2007, and $0.7million yearly thereafter.  Deferred debtissuance costs of $0.9 million related to our secured revolving credit facilitywill be amortized utilizing a method which approximates the effective interestmethod over the five year remaining life, resulting in amortization expense of$0.1 million in 2007, and $0.2 million in each of the next four succeedingyears beginning in 2008.

**(7)           Debt**

Thefollowing table summarizes long-term debt:

| (In thousands)                        | ** ** | **March 31,  2007** | ** **  | **December 31,  2006** | ** ** |
|--------------------------------------------|------------|--------------------------|-------------|-----------------------------|------------|
| Senior unsecured  10% notes due April 2017 | ** ** | **$**                    | **300,000** |                        | $          | — |   |
| Secured  revolving credit facility         |       | —                   |        | —                      |       |
|                                       | ** ** | **300,000**              |        | —                      |       |
| Less short-term  borrowings                |       | —                   |        | —                      |       |
| Total                                      | ** ** | **$**                    | **300,000** |                        | $          | — |   |

 

*LiquidityFacility*

On March 23, 2007, we replaced our previous $30 million liquidityfacility with a new $200 million liquidity facility.  Our new liquidity facility consists of asecured revolving credit facility with JPMorgan Chase Bank, N.A. of up to $200million, subject to collateral availability, which, under certaincircumstances, can be increased up to $300 million.  We had no borrowings outstanding under oursecured revolving credit facility at March 31, 2007, and $1.2 million ofstandby letters of credit outstanding, leaving approximately $88.7 million inadditional borrowing availability under our secured revolving credit facilityas of that date.  As of December 31,2006, we had no borrowings outstanding under our previous secured revolvingcredit facility and $4.0 million of standby letters of credit outstanding,leaving approximately $26.0 million in additional borrowing availability underthe previous secured revolving credit facility as of that date.

A fixed asset component in an amount of $50 million may be added to theborrowing base on or prior to December 31, 2007 upon the satisfaction ofcertain requirements.  We are in theprocess of satisfying the requirements necessary in order to take advantage ofthis fixed asset component.

*SeniorNotes*

In March 2007, we issued $300 million aggregate principal amount ofsenior unsecured 10% fixed-rate notes due 2017 (“Notes”).  Our Notes were issued pursuant to anindenture, dated as of March 27, 2007, between us and Wells Fargo Bank, N.A.,as trustee.  The Notes are generalunsecured obligations of the Company and certain of its guarantor subsidiaries,initially limited to $300 million aggregate principal amount.  We may, subject to the covenants andapplicable law, issue additional notes under the indenture.  Any additional Notes would be treated as asingle class with the previously issued Notes for all purposes under theindenture.

Our Notes have interest payments due semi-annually on April 1 andOctober 1 of each year, and are redeemable after the dates and at prices(expressed in percentages of principal amount on the redemption date), as setforth below: 

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** **

| Year                          | ** ** | **Percentage** | ** ** |
|-------------------------------|------------|----------------|------------|
| April 1, 2012                 |       | 105.000        | %          |
| April 1, 2013                 |       | 103.330        | %          |
| April 1, 2014                 |       | 101.667        | %          |
| April 1, 2015 and  thereafter |       | 100.000        | %          |

 

In addition, at any time prior to April 1, 2010, we may redeem up to35% of the principal amount of the Notes from time to time originally issuedwith the net cash proceeds of one or more sales of qualifying capital stock ofthe Company at a redemption price of 100% of the principal amount, togetherwith accrued and unpaid interest to the redemption date, provided that at least65% of the aggregate principal amount of the Notes originally issued remainsoutstanding immediately after such redemption and notice of any such redemptionis mailed within 60 days of each such sale of capital stock.

We have agreed to register the Notes through a shelf registrationstatement in accordance with a registration rights agreement, and upon the shelfregistration statement being declared effective, to exchange the Notes for anissue of unsubordinated notes, with terms identical to the Notes.  If by October 23, 2007 we have notconsummated a registered exchange offer for the Notes or caused a shelfregistration statement with respect to resale of the Notes to be declaredeffective, the annual interest rate on the Notes will increase by 0.25% and by0.25% for each subsequent 90 day period, up to a maximum 1.00% over the statedfixed rate of the Notes.

**(8)           Other Long-Term Liabilities**

Other long-term liabilities are as follows:

| (In thousands)                                        | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** |
|------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| Reserve for  uncertain tax positions (See Note 12)         | ** ** | **$**                    | **8,503**  |                        | $          | — |   |
| Accrued interest  on Uncertain tax positions (See Note 12) | ** ** | **627**                  |       | —                      |       |
| Accrued pension  and postretirement                        | ** ** | **2,063**                |       | 2,427                       |       |
| Unearned  commissions                                      | ** ** | **1,872**                |       | 1,977                       |       |
| Totals                                                     | ** ** | **$**                    | **13,065** |                        | $          | 4,404 |   |

 

**(9)           Stock-Based Compensation Plans**

TheCompany values its share-based payment awards using the Black-Scholesoption-pricing model (“Black-Scholes model”). The determination of fair value of share-based payment awards on thedate of grant using the Black-Scholes model is affected by our stock price aswell as the input of other subjective assumptions.  The option-pricing model requires a number ofassumptions, of which the most significant are, expected stock pricevolatility, the expected pre-vesting forfeiture rate and the expected optionterm (the amount of time from the grant date until the options are exercised orexpire).  Expected volatility is normallycalculated based upon actual historical stock price movements over the expectedoption term.  Since we have no long-termhistory of stock price volatility as a public company, we calculate volatilityby considering, among other things, the expected volatilities of publiccompanies engaged in similar industries. Pre-vesting forfeitures are estimated using a 3% forfeiture rate.  The expected option term is calculated usingthe “simplified” method permitted by SAB 107. Our options have characteristics significantly different from those oftraded options, and changes in the assumptions can materially affect the fairvalue estimates.

7

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Pre-tax stock-based compensation expense for the three month periods endedMarch 31, 2007 and 2006 was approximately $1.6 million and $1.3 million,respectively, all of which was charged to selling, general and administrativeexpense.  This expense reduced earningsper share by $0.02 per basic and diluted share for each of the quarters endedMarch 31, 2007 and 2006.  The Companyrecognized a tax benefit on its condensed consolidated statement of income fromstock-based compensation expense in the amount of $0.6 million and $0.5 millionfor the three month periods ended March 31, 2007 and 2006, respectively.  The Company recorded pre-tax stock-basedcompensation expense for the three month periods ended March 31, 2007 and 2006as follows:

|                                    | ** ** | **Three Months Ended  March 31,** | ** ** |
|------------------------------------|------------|--------------------------------------------------|------------|
| **(in millions)**             | ** ** | **2007**                                         | ** ** | **2006** | ** ** |
| Stock-based  compensation expense: |       |                                             |       |   |   |
| Non-qualified stock options        |       | $                                                | 1.5        |   | $ | 1.3 |   |
| Restricted stock                   |       | $                                                | 0.1        |   | $ | — |   |
| Restricted stock  units            |       | $                                                | —     |   | $ | — |   |

 

As of March 31, 2007 and 2006, the Company had not yet recognizedcompensation expense on the following non-vested awards:

|                         | ** ** | **2007**                         | ** ** | **2006**                                                               | ** ** |
|-------------------------|------------|----------------------------------|------------|------------------------------------------------------------------------|------------|
| **(in millions)**  | ** ** | **Non-recognized  Compensation** | ** ** | **Weighted Average  Remaining  Recognition Period  (years)** | ** ** | **Non-recognized  Compensation** | ** ** | **Weighted Average  Remaining  Recognition Period  (years)** | ** ** |
| Non-qualified options   |       | $                                | 21.0       |                                                                   | 5.9        |   | $ | 15.9 |   | 5.0 |   |
| Restricted stock        |       | 1.2                              |       | 4.7                                                                    |       | — |   | — |   |
| Restricted stock  units |       | 0.2                              |       | 1.7                                                                    |       | — |   | — |   |
| Total                   |       | $                                | 22.4       |                                                                   | 5.8        |   | $ | 15.9 |   | 5.0 |   |

 

The Company granted stock options during the quarter ended March 31,2007.  The Company did not grant anystock options in the quarter ended March 31, 2006.  The determination of the fair value of thestock option awards, using the Black-Scholes model, incorporated theassumptions in the following table for stock options granted during the threemonth period ended March 31, 2007.  Therisk-free rate is based on the U.S. Treasury yield curve in effect at the timeof grant over the expected term. Expected volatility is calculated by considering, among other things,the expected volatilities of public companies engaged in similarindustries.  The expected option term iscalculated using the “simplified” method permitted by SAB 107.  Assumptions for options granted in the threemonth period ending March 31, 2007 are as follows:

| Expected stock price  volatility |   | 58.0 | %      |
|----------------------------------|--------|------|--------|
| Expected life  (in years)        |   | 6.5  |   |
| Risk-free  interest rate         |   | 4.6  | %      |
| Expected  dividend yield         |   | 0.0  | %      |
| Weighted average fair  value     |   | $    | 9.27   |   |
|                                  |        |      |        |  |

 

8

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 The following table summarizes stock options outstanding and changesduring the three month period ended March 31, 2007:

|                                             | ** ** | **Shares  (in thousands)** | ** ** | **Weighted  Average  Exercise  Price** | ** ** | **Weighted  Average  Remaining  Life**(years) | ** ** | **Aggregate  Intrinsic Value**(in thousands) | ** ** |
|---------------------------------------------|------------|---------------------------------|------------|----------------------------------------|------------|-----------------------------------------------|------------|--------------------------------------------------------|------------|
| Options  outstanding — January 1, 2007 |       | 3,265                           |       | $                                      | 6.57       |                                          | 8.1        |                                                   | $          | — |   |
| Granted                                     |       | 200                             |       | 15.26                                  |       | 9.9                                           |       | —                                                 |       |
| Exercised                                   |       | 53                              |       | 3.27                                   |       | —                                        |       | —                                                 |       |
| Cancelled or  expired                       |       | —                          |       | —                                 |       | —                                        |       | —                                                 |       |
| Options  outstanding — March 31, 2007  |       | 3,412                           |       | $                                      | 7.13       |                                          | 7.9        |                                                   | $          | 37,839 |   |
| Options exercisable —  March 31, 2007  |       | 690                             |       | $                                      | 1.41       |                                          | 7.0        |                                                   | $          | 11,599 |   |

 

The range of exercise prices of the exercisable options and outstandingoptions at March 31, 2007 are as follows:

| Weighted Average Exercise Price | ** ** | **Number of  Exercisable  Options** | ** ** | **Number of  Outstanding  Options** | ** ** | **Weighted  Average  Remaining  Life**(years) | ** ** |
|------------------------------------------------|------------|------------------------------------------|------------|------------------------------------------|------------|-----------------------------------------------|------------|
| $0.23                                          |       | 429                                      |       | 1,080                                    |       | 6.3                                           |       |
| $2.36 - $2.92                                  |       | 157                                      |       | 744                                      |       | 8.2                                           |       |
| $4.35                                          |       | 104                                      |       | 718                                      |       | 8.5                                           |       |
| $15.26                                         |       | —                                   |       | 200                                      |       | 9.9                                           |       |
| $22.15 - $22.50                                |       | —                                   |       | 630                                      |       | 9.0                                           |       |
| $43.00                                         |       | —                                   |       | 40                                       |       | 9.3                                           |       |
| Totals                                         |       | 690                                      |       | 3,412                                    |       | 7.9                                           |       |

 

Restricted stock award activity for the three months ended March 31,2007 is summarized below:

|                                                          | ** ** | **Shares  (in thousands)** | ** ** | **Weighted  Average Grant  Date Fair  Value per  Award** | ** ** |
|----------------------------------------------------------|------------|---------------------------------|------------|-------------------------------------------------------------------------|------------|
| Unvested  Restricted stock awards — January 1, 2007 |       | 8.1                             |       | $                                                                       | 27.92      |   |
| Granted                                                  |       | 65.5                            |       | 15.26                                                                   |       |
| Vested                                                   |       | —                          |       | —                                                                  |       |
| Cancelled or  expired                                    |       | —                          |       | —                                                                  |       |
| Restricted stock awards  — March 31, 2007           |       | 73.6                            |       | $                                                                       | 16.65      |   |

 

Restricted stock unit award activity for the three months ended March31, 2007 is summarized below:

9

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|                                                               | ** ** | **Shares  (in thousands)** | ** ** | **Weighted  Average Grant  Date Fair  Value per  Award** | ** ** |
|---------------------------------------------------------------|------------|---------------------------------|------------|-------------------------------------------------------------------------|------------|
| Unvested  Restricted stock unit awards — January 1, 2007 |       | —                          |       | $                                                                       | —     |   |
| Granted                                                       |       | 10.6                            |       | 16.90                                                                   |       |
| Vested                                                        |       | —                          |       | —                                                                  |       |
| Cancelled or  expired                                         |       | —                          |       | —                                                                  |       |
| Restricted stock unit  awards — March 31, 2007           |       | 10.6                            |       | $                                                                       | 16.90      |   |

 

** (10)        InterestExpense**

The following table summarizes interest expense:

|                                               | ** ** | **Three Months Ended  March 31,** | ** ** |
|-----------------------------------------------|------------|--------------------------------------------------|------------|
| **(in thousands)**                       | ** ** | **2007**                                         | ** ** | **2006** | ** ** |
| Interest expense                              | ** ** | **$**                                            | **336**    |   | $ | 4,245 |   |
| Amortization of  deferred debt issuance costs | ** ** | **—**                                       |       | 334 |   |
| Capitalized  interest                         | ** ** | **—**                                       |       | (214 | ) |
| Interest expense, net                         | ** ** | **$**                                            | **336**    |   | $ | 4,365 |   |

 

**(11)         Pension Expense**

*DefinedContribution Plans*

We have 401(k) plans covering substantially all of our employees.  We recorded expense with respect to theseplans for the three month periods ended March 31, 2007 and 2006 of $0.4 millionand $0.3 million, respectively. Contributions made under our defined contribution plans include a match,at the Company’s discretion, of employee contributions to the plans.

### *Qualified Retirement Plan*

The Company provides a non-contributory qualified defined benefitpension plan for its unionized employees at our Pekin, IL productionfacilities.  The following tablesummarizes the components of net periodic pension cost for the qualifiedpension plan:

|                                      | ** ** | **Three Months Ended  March 31,** | ** ** |
|--------------------------------------|------------|--------------------------------------------------|------------|
| **(In thousands)**              | ** ** | **2007**                                         | ** ** | **2006** | ** ** |
| Service cost                         | ** ** | **$**                                            | **88**     |   | $ | 71 |   |
| Interest cost                        | ** ** | **124**                                          |       | 108 |   |
| Expected return  on plan assets      | ** ** | **(180**                                         | **)**      | (128 | ) |
| Amortization of  prior service costs | ** ** | **11**                                           |       | — |   |
| Amortization of  net actuarial loss  | ** ** | **6**                                            |       | 12 |   |
| Net periodic pension  cost           | ** ** | **$**                                            | **49**     |   | $ | 63 |   |

 

10

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### *Postretirement BenefitObligation*

We sponsor a healthcare plan that provides postretirement medicalbenefits to certain “grandfathered” unionized employees.  The plan is contributory, with contributionsrequired at the same rate as active employees. Benefit eligibility under the plan terminates at age 65.

The following table summarizes the components of the net periodic costsfor postretirement benefits:

|                                     | ** ** | **Three Months Ended  March 31,** | ** ** |
|-------------------------------------|------------|--------------------------------------------------|------------|
| **(In thousands)**             | ** ** | **2007**                                         | ** ** | **2006** | ** ** |
| Service cost                        | ** ** | **$**                                            | **38**     |   | $ | 54 |   |
| Interest cost                       | ** ** | **34**                                           |       | 44 |   |
| Amortization of  prior service cost | ** ** | **—**                                       |       | 15 |   |
| Net periodic  postretirement cost   | ** ** | **$**                                            | **72**     |   | $ | 113 |   |

 

**(12)        ****Income Taxes**

In July 2006, the FASB issued FIN 48. This interpretation clarified the accounting for uncertainty in incometaxes recognized in the financial statements in accordance with FASB StatementNo. 109, *Accounting for Income Taxes*.  FIN 48 prescribes a recognition threshold andmeasurement of a tax position taken or expected to be taken in a taxreturn.  This interpretation alsoprovides guidance on de-recognition, classification, interest and penalties,accounting in interim periods, and disclosure.

We adopted the provisions of FIN 48 on January 1,2007.  As a result of the adoption, werecognized a $0.7 million decrease in our reserves for uncertain tax positionsand a $0.5 million increase in accrued interest on uncertain tax positions,resulting in a net $0.2 million increase in retained earnings.  We also reclassified $8.1 million betweendeferred income taxes and other long-term liabilities to conform to the balancesheet presentation requirements of FIN 48.

As of January 1, 2007, we had $8.5 million of uncertain taxbenefits.  All of our unrecognized taxbenefits, if recognized in future periods, would impact the Company’s effectivetax rate.  For the three months endedMarch 31, 2007, our liability for unrecognized tax benefits increased by $0.4million, to $8.9 million.

We include interest expense or income, as well aspotential penalties on unrecognized tax benefits, as a component of income taxexpense in the condensed consolidated statement of operations.  The total amount of accrued interest relatedto uncertain tax positions at January 1, 2007 was $0.5 million, netof the deferred tax benefit, and is included in other long-termliabilities.  For the three months endedMarch 31, 2007, we increased our accrual for interest related to uncertain taxpositions by $0.1 million, net of the deferred tax benefit, to $0.6 million,net of deferred tax benefit, within income tax expense.

Our federal income tax returns for 2003 to 2006 are open taxyears.  We file in numerous statejurisdictions with varying statutes of limitation open from 2002 through 2006depending on each jurisdiction’s statute of limitation.  In 2006, the IRS commenced an examination ofour U.S. income tax return.  The Companydoes not expect this examination to be concluded and settled within the next 12months, and as such the final outcome is not yet determinable.

11

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Based on the outcome of these examinations, or as a result of theexpiration of statute of limitations for specific jurisdictions, ourunrecognized tax benefits for tax positions taken on previously filed taxreturns may materially change from the unrecognized tax benefits recorded as otherlong-term liabilities in our financial statements at January 1, 2007.  In addition, the outcome of theseexaminations may impact the valuation of certain deferred tax assets in futureperiods.  As a result, based on thestatus of these examinations, and the protocol of finalizing audits by therelevant tax authorities, which could include formal legal proceedings, it isnot possible to estimate the impact of any amount of such changes, if any, topreviously recorded uncertain tax positions. 

**(13)         EarningsPer Share**

Basic earnings per shareare computed by dividing net income by the weighted average number of commonshares outstanding during each period. Diluted earnings per share are calculated using the treasury stockmethod in accordance with SFAS 128, and includes the effect of all dilutivesecurities, including non-qualified stock options and restricted stock units (“RSU’s”).

The following table sets forth the computation of basic and dilutedearnings per share:

|                                                                    | ** ** | **Three Months Ended  March 31,** | ** ** |
|--------------------------------------------------------------------|------------|--------------------------------------------------|------------|
| **(In thousands, except per share data)** | ** ** | **2007**                                         | ** ** | **2006** | ** ** |
| Net income                                                         | ** ** | **$**                                            | **14,940** |   | $ | 12,187 |   |
|                                                               | ** ** | ** **                                       |       |   |   |
| Weighted average  shares and share equivalents outstanding:        | ** ** | ** **                                       |       |   |   |
| Basic shares                                                       | ** ** | **41,811**                                       |       | 34,684 |   |
| Dilutive  non-qualified stock options and RSU’s               | ** ** | **647**                                          |       | 1,335 |   |
| Diluted weighted  average shares and share equivalents             | ** ** | **42,458**                                       |       | 36,019 |   |
|                                                               | ** ** | ** **                                       |       |   |   |
| Income per  common share - basic:                                  | ** ** | **$**                                            | **0.36**   |   | $ | 0.35 |   |
| Income per common share  - diluted:                                | ** ** | **$**                                            | **0.35**   |   | $ | 0.34 |   |

 

We had additional potential dilutivesecurities outstanding representing 430,000 common shares for the three monthperiod ended March 31, 2007 that were not included in the computation ofpotentially dilutive securities because the options’ exercise prices weregreater than the average market price of the common shares.

**(14)         Industry Segment**

The Company operates in one reportable business segment, themanufacture and marketing of fuel-grade ethanol.

** (15)        Litigation**

Our facilities and operations are subject to extensive environmentallaws and regulations, and we are currently involved in various proceedingsrelating to environmental matters.  Weare not involved in any legal proceedings that we believe could have a materialadverse effect upon our business, operating results or financial condition.

12

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**(16)         Condensed Consolidating FinancialInformation**

The following tables present condensed consolidating financialinformation for: (a) Aventine Renewable Energy Holdings, Inc. (the “Parent”) ona stand-alone basis; (b) on a combined basis, the guarantors of the 10% seniorunsecured Notes (“Subsidiary Guarantors”), which include Aventine RenewableEnergy, LLC; Aventine Renewable Energy, Inc.; Aventine Power, LLC; AventineRenewable Energy — Aurora West, LLC; and Aventine Renewable Energy — Mt.Vernon, LLC; and (c) the Non-Guarantor Subsidiary, Nebraska Energy, LLC.  Each Subsidiary Guarantor is wholly-owned byAventine Renewable Energy Holdings, Inc. The guarantees of each of the Subsidiary Guarantors are full,unconditional, joint and several. Accordingly, separate financial statements of the wholly-ownedSubsidiary Guarantors are not presented because the Subsidiary Guarantors arejointly, severally and unconditionally liable under the guarantees, and theCompany believes that separate financial statements and other disclosuresregarding the Subsidiary Guarantors are not material to investors.  Furthermore, there are no significant legalrestrictions on the Parent’s ability to obtain funds from its subsidiaries bydividend or loan.

**Aventine RenewableEnergy Holdings, Inc. and SubsidiariesCondensed Consolidating Statements of OperationsFor the Three Months Ended March 31, 2007**(Unaudited)
| **(In thousands)**                       | ** ** | **Parent** | ** ** | **Subsidiary  Guarantors** | ** ** | **Non-Guarantor  Subsidiary** | ** ** | **Eliminations** | ** ** | **Consolidated** | ** ** |
|-----------------------------------------------|------------|------------|------------|----------------------------|------------|-------------------------------|------------|------------------|------------|------------------|------------|
| Net sales                                     | ** ** | **$**      | **—** | ** **                 | **$**      | **439,376**                   | ** ** | **$**            | **21,923** | ** **       | **$**      | **(24,637** | **)** | **$** | **436,662** | ** ** |
| Cost of goods sold                            | ** ** | **—** | ** ** | **413,936**                | ** ** | **18,698**                    | ** ** | **(24,387**      | **)**      | **408,247**      | ** ** |
| Gross profit                                  | ** ** | **—** | ** ** | **25,440**                 | ** ** | **3,225**                     | ** ** | **(250**         | **)**      | **28,415**       | ** ** |
| Selling, general and  administrative expenses | ** ** | **163**    | ** ** | **8,919**                  | ** ** | **766**                       | ** ** | **(250**         | **)**      | **9,598**        | ** ** |
| Other expense (income)                        | ** ** | **—** | ** ** | **(164**                   | **)**      | **—**                    | ** ** | **—**       | ** ** | **(164**         | **)**      |
| Operating income (loss)                       | ** ** | **(163**   | **)**      | **16,685**                 | ** ** | **2,459**                     | ** ** | **—**       | ** ** | **18,981**       | ** ** |
| Other income (expense):                       | ** ** | ** ** | ** ** | ** **                 | ** ** | ** **                    | ** ** | ** **       | ** ** | ** **       | ** ** |
| Interest income                               | ** ** | **—** | ** ** | **1,342**                  | ** ** | **26**                        | ** ** | **—**       | ** ** | **1,368**        | ** ** |
| Interest expense                              | ** ** | **(120**   | **)**      | **(216**                   | **)**      | **—**                    | ** ** | **—**       | ** ** | **(336**         | **)**      |
| Investment in  subsidiaries                   | ** ** | **23,647** | ** ** | **2,447**                  | ** ** | **—**                    | ** ** | **(26,094**      | **)**      | **—**       | ** ** |
| Other non-operating  income (expense)         | ** ** | **—** | ** ** | **3,389**                  | ** ** | **480**                       | ** ** | **—**       | ** ** | **3,869**        | ** ** |
| Minority  interest                            | ** ** | **—** | ** ** | **—**                 | ** ** | **—**                    | ** ** | **(518**         | **)**      | **(518**         | **)**      |
| Income before income  taxes                   | ** ** | **23,364** | ** ** | **23,647**                 | ** ** | **2,965**                     | ** ** | **(26,612**      | **)**      | **23,364**       | ** ** |
| Income tax expense                            | ** ** | **8,424**  | ** ** | **9,459**                  | ** ** | **—**                    | ** ** | **(9,459**       | **)**      | **8,424**        | ** ** |
| Net income                                    | ** ** | **$**      | **14,940** | ** **                 | **$**      | **14,188**                    | ** ** | **$**            | **2,965**  | ** **       | **$**      | **(17,153** | **)** | **$** | **14,940** | ** ** |

 

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**Aventine RenewableEnergy Holdings, Inc. and SubsidiariesCondensed Consolidating Balance SheetsMarch 31, 2007**(Unaudited)
| **(In thousands)**                         | ** ** | **Parent**  | ** **  | **Subsidiary  Guarantors** | ** ** | **Non-Guarantor   Subsidiary** | ** ** | **Eliminations** | ** ** | **Consolidated** | ** ** |
|-------------------------------------------------|------------|-------------|-------------|----------------------------|------------|-------------------------------------|------------|------------------|------------|------------------|------------|
| **Assets**                                      |       |        |        |                       |       |                                |       |             |       |             |       |
| Current assets                                  |       |        |        |                       |       |                                |       |             |       |             |       |
| Cash and cash  equivalents                      | ** ** | **$**       | **—**  | ** **                 | **$**      | **277,606**                         | ** ** | **$**            | **3,514**  | ** **       | **$**      | ** ** | ** ** | **$** | **281,120** | ** ** |
| Short-term  investments                         | ** ** | **—**  | ** **  | **144,750**                | ** ** | **—**                          | ** ** | ** **       | ** ** | **144,750**      | ** ** |
| Accounts  receivable, net                       | ** ** | **—**  | ** **  | **57,690**                 | ** ** | **485**                             | ** ** | ** **       | ** ** | **58,175**       | ** ** |
| Inventories                                     | ** ** | **—**  | ** **  | **91,748**                 | ** ** | **1,911**                           | ** ** | ** **       | ** ** | **93,659**       | ** ** |
| Income tax  receivable                          | ** ** | **—**  | ** **  | **1,044**                  | ** ** | **—**                          | ** ** | ** **       | ** ** | **1,044**        | ** ** |
| Other assets                                    | ** ** | **—**  | ** **  | **6,598**                  | ** ** | **1,013**                           | ** ** | ** **       | ** ** | **7,611**        | ** ** |
| Total current assets                            | ** ** | **—**  | ** **  | **579,436**                | ** ** | **6,923**                           | ** ** | ** **       | ** ** | **586,359**      | ** ** |
|                                            | ** ** | ** **  | ** **  | ** **                 | ** ** | ** **                          | ** ** | ** **       | ** ** | ** **       | ** ** |
| Property, plant and  equipment, net             | ** ** | **—**  | ** **  | **106,277**                | ** ** | **18,835**                          | ** ** | ** **       | ** ** | **125,112**      | ** ** |
| Investment in  subsidiaries                     | ** ** | **758,414** | ** **  | **39,838**                 | ** ** | **—**                          | ** ** | **(798,252**     | **)**      | **—**       | ** ** |
| Net deferred tax assets                         | ** ** | **—**  | ** **  | **2,415**                  | ** ** | **—**                          | ** ** | ** **       | ** ** | **2,415**        | ** ** |
| Other assets                                    | ** ** | **7,131**   | ** **  | **6,939**                  | ** ** | **—**                          | ** ** | ** **       | ** ** | **14,070**       | ** ** |
| Total assets                                    | ** ** | **$**       | **765,545** | ** **                 | **$**      | **734,905**                         | ** ** | **$**            | **25,758** | ** **       | **$**      | **(798,252** | **)** | **$** | **727,956** | ** ** |
| ** **                                      |       |        |        |                       |       |                                |       |             |       |             |       |
| **Liabilities and Stockholders’ Equity**   |       |        |        |                       |       |                                |       |             |       |             |       |
| Current liabilities                             |       |        |        |                       |       |                                |       |             |       |             |       |
| Accounts payable                                | ** ** | **$**       | **1,049**   | ** **                 | **$**      | **71,875**                          | ** ** | **$**            | **3,499**  | ** **       | **$**      | **—** | ** ** | **$** | **76,423** | ** ** |
| Accrued  liabilities                            | ** ** | **334**     | ** **  | **2,344**                  | ** ** | **222**                             | ** ** | ** **       | ** ** | **2,900**        | ** ** |
| Other current  liabilities                      | ** ** | **—**  | ** **  | **4,036**                  | ** ** | **162**                             | ** ** | ** **       | ** ** | **4,198**        | ** ** |
| Intercompany  balances                          | ** ** | **143,099** | ** **  | **(142,076**               | **)**      | **(1,023**                          | **)**      | ** **       | ** ** | **—**       | ** ** |
| Total current  liabilities                      | ** ** | **144,482** | ** **  | **(63,821**                | **)**      | **2,860**                           | ** ** | ** **       | ** ** | **83,521**       | ** ** |
|                                            | ** ** | ** **  | ** **  | ** **                 | ** ** | ** **                          | ** ** | ** **       | ** ** | ** **       | ** ** |
| Long-term debt                                  | ** ** | **300,000** | ** **  | **—**                 | ** ** | **—**                          | ** ** | ** **       | ** ** | **300,000**      | ** ** |
| Minority interest                               | ** ** | **—**  | ** **  | **—**                 | ** ** | **10,307**                          | ** ** | ** **       | ** ** | **10,307**       | ** ** |
| Other long-term  liabilities                    | ** ** | **—**  | ** **  | **13,065**                 | ** ** | **—**                          | ** ** | ** **       | ** ** | **13,065**       | ** ** |
| Total liabilities                               | ** ** | **444,482** | ** **  | **(50,756**                | **)**      | **13,167**                          | ** ** | ** **       | ** ** | **406,893**      | ** ** |
| Stockholders’ equity                       | ** ** | **321,063** | ** **  | **785,661**                | ** ** | **12,591**                          | ** ** | **(798,252**     | **)**      | **321,063**      | ** ** |
| Total liabilities and stockholders’ equity | ** ** | **$**       | **765,545** | ** **                 | **$**      | **734,905**                         | ** ** | **$**            | **25,758** | ** **       | **$**      | **(798,252** | **)** | **$** | **727,956** | ** ** |

 

14

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**Aventine RenewableEnergy Holdings, Inc. and SubsidiariesCondensed Consolidating Statements of Cash FlowsFor the Three Months Ended March 31, 2007**(Unaudited)
| **(In thousands)**                               | ** ** | **Parent**   | ** ** | **Subsidiary  Guarantors** | ** ** | **Non-Guarantor  Subsidiary** | ** ** | **Eliminations** | ** ** | **Consolidated** | ** ** |
|-------------------------------------------------------|------------|--------------|------------|----------------------------|------------|-------------------------------|------------|------------------|------------|------------------|------------|
| **Operating  Activities**                             |       |         |       |                       |       |                          |       |             |       |             |       |
| Net cash provided  by (used for) operating activities | ** ** | **$**        | **(496**   | **)**                      | **$**      | **15,670**                    | ** ** | **$**            | **2,781**  | ** **       | **$**      | **—** | ** ** | **$** | **17.955** | ** ** |
|                                                  | ** ** | ** **   | ** ** | ** **                 | ** ** | ** **                    | ** ** | **—**       | ** ** | ** **       | ** ** |
| **Investing  Activities**                             | ** ** | ** **   | ** ** | ** **                 | ** ** | ** **                    | ** ** | **—**       | ** ** | ** **       | ** ** |
| Additions to  property, plant and equipment           | ** ** | **—**   | ** ** | **(12,340**                | **)**      | **(78**                       | **)**      | **—**       | ** ** | **(12,418**      | **)**      |
| Investment in  short-term securities                  | ** ** | **—**   | ** ** | **(45,825**                | **)**      | **—**                    | ** ** | **—**       | ** ** | **(45,825**      | **)**      |
| Net cash used  for investing activities               | ** ** | **—**   | ** ** | **(58,165**                | **)**      | **(78**                       | **)**      | **—**       | ** ** | **(58,243**      | **)**      |
|                                                  | ** ** | ** **   | ** ** | ** **                 | ** ** | ** **                    | ** ** | ** **       | ** ** | ** **       | ** ** |
| **Financing  Activities**                             | ** ** | ** **   | ** ** | ** **                 | ** ** | ** **                    | ** ** | ** **       | ** ** | ** **       | ** ** |
| Proceeds from  issuance of senior unsecured notes     | ** ** | **300,000**  | ** ** | **—**                 | ** ** | **—**                    | ** ** | **—**       | ** ** | **300,000**      | ** ** |
| Payment of debt  issuance costs                       | ** ** | **(8,070**   | **)**      | **—**                 | ** ** | **—**                    | ** ** | **—**       | ** ** | **(8,070**       | **)**      |
| Intercompany  capital contributions                   | ** ** | **(291,607** | **)**      | **292,174**                | ** ** | **(567**                      | **)**      | **—**       | ** ** | **—**       | ** ** |
| Proceeds from  stock option exercises                 | ** ** | **173**      | ** ** | **—**                 | ** ** | **—**                    | ** ** | **—**       | ** ** | **173**          | ** ** |
| Tax benefit of  stock option exercises                | ** ** | **—**   | ** ** | **(54**                    | **)**      | **—**                    | ** ** | **—**       | ** ** | **(54**          | **)**      |
| Distribution to  minority stockholders                | ** ** | **—**   | ** ** | **1,568**                  | ** ** | **(2,000**                    | **)**      | **—**       | ** ** | **(432**         | **)**      |
| Net cash  provided by (used for) financing activities | ** ** | **496**      | ** ** | **293,688**                | ** ** | **(2,567**                    | **)**      | **—**       | ** ** | **291,617**      | ** ** |
| Net decrease in  cash and cash equivalents            | ** ** | **—**   | ** ** | **251,193**                | ** ** | **136**                       | ** ** | **—**       | ** ** | **251,329**      | ** ** |
| Cash and cash  equivalents at beginning of period     | ** ** | **—**   | ** ** | **26,413**                 | ** ** | **3,378**                     | ** ** | **—**       | ** ** | **29,791**       | ** ** |
| Cash and cash  equivalents at end of period           | ** ** | **$**        | **—** | ** **                 | **$**      | **277,606**                   | ** ** | **$**            | **3,514**  | ** **       | **$**      | **—** | ** ** | **$** | **281,120** | ** ** |

 

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**Item 2.                    Management’s Discussion and Analysis of FinancialCondition and Results of Operations**

*This report contains forward-looking statements madepursuant to the safe harbor provisions of the Private Securities LitigationReform Act of 1995.  Forward-lookingstatements include all statements that do not relate solely to current orhistorical fact, but address events or developments that we anticipate willoccur in the future.  Forward-lookingstatements include statements regarding our goals, beliefs, plans or currentexpectations, taking into account the information currently available to ourmanagement.  When we use words such as “anticipate,”“intend,” “expect,” “believe,” “plan,” “may,” “should” or “would” or otherwords that convey uncertainty of future events or outcome, we are makingforward-looking statements.  Statementsrelating to future sales, earnings, operating performance, restructuringstrategies, capital expenditures and sources and uses of cash, for example, areforward-looking statements.*

*These forward-looking statements are subject tovarious risks and uncertainties which could cause actual results to differmaterially from those stated or implied by such forward-lookingstatements.  We undertake no obligationto publicly release any revision of any forward-looking statements containedherein to reflect events and circumstances occurring after the date hereof, orto reflect the occurrence of unanticipated events.  Information concerning risk factors iscontained under Item “1A - Risk Factors” in our Annual Report on Form 10-K forthe year ended December 31, 2006.  Youshould carefully consider all of the risks and all other information containedin or incorporated by reference in this report and in our filings with theSEC.  These risks are not the only oneswe face.   Additional risks anduncertainties not presently known to us, or which we currently considerimmaterial, also may adversely affect us. If any of these risks actually occur, our business, financial conditionand results of operations could be materially and adversely affected.*

**Company Overview**

Aventine is a leading producer and marketer of ethanol.  Through our own production facilities,marketing alliances with other ethanol producers and our purchase/resaleoperations, we market and distribute ethanol to many of the leading energycompanies in the U.S.  We have acomprehensive national distribution network utilizing trucks, a leased railcarand barge fleet and a terminal network at critical points on the nation’stransportation grid where our ethanol is blended with our customers’gasoline.  Aventine is also a marketerand distributor of biodiesel.  Inaddition to producing ethanol, our facilities also produce several co-productsincluding: corn gluten feed and meal, corn germ, condensed corn distillerssolubles, dried distillers grain with solubles, wet distillers grain withsolubles, carbon dioxide and brewers’ yeast.

**Results of Operations**

The following discussionsummarizes the significant factors affecting the consolidated operating resultsof the Company for the three-month periods ended March 31, 2007 and 2006.  This discussion should be read in conjunctionwith the unaudited condensed consolidated financial statements and notes to theunaudited condensed consolidated financial statements contained in Item 1above, and the consolidated financial statements and related notes for the yearended December 31, 2006 included in the Company’s Annual Report on Form 10-K.

Our revenues are principallyderived from the sale of ethanol and from the sale of co-products (corn glutenfeed and meal, corn germ, condensed corn distillers solubles, carbon dioxide,dry distillers grain with solubles (“DDGS”), wet distillers grains withsolubles (“WDGS”) and brewers’ yeast) that we 

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produce as by-productsduring the production of ethanol at our plants, which we refer to as co-productrevenues.  We sell ethanol obtained fromthe following sources:

·                  Ethanol we manufacture at our plants;

·                  Ethanol we purchase from our marketingalliance partners; and

·                  Ethanol we purchase on the spot market.

Wemarket and sell ethanol without regard to whether we produced it, are marketingit for our marketing alliance partners or purchased it on the spot market forresale.  In addition to ethanol, we alsopurchase and market biodiesel.

*Executive Summary*

We generated net income****of $14.9million, or $0.35 per diluted share in the first quarter of 2007, as comparedto net income of $12.2 million, or $0.34 per diluted share, in the firstquarter of 2006.  Net income increasedapproximately 22% year over year.  Wewere able to achieve both increased earnings and improved operating performancein a difficult and volatile commodity environment.  Revenue in the first quarter of 2007 was$436.7 million, an increase of $123.2 million, or 39.3%, over first quarter2006 revenue of $313.5 million.  Theincrease is mainly the result of an increase in gallons sold, along withpricing gains caused by the significant year over year rise in the price pergallon of ethanol and from an increase in co-product sales.  The average sales price per gallon of ethanolin the first quarter of 2007 was $2.10 per gallon, up from $1.79 per gallon inthe same quarter in 2006.

Gallons of ethanol sold in the first quarter of 2007 increased 17.2% to193.2 million gallons, as compared to 164.9 million gallons in the firstquarter of 2006.  Ethanol production inthe quarter was a record 48.9 million gallons, up from 36.7 million gallons inthe first quarter of 2006.  In January2007, our new Pekin dry mill began full production, and we began to realize thebenefits from the production capacity increase.

Gross profit totaled $28.4 million in the first quarter of 2007, adecrease of $2.2 million, or 7.2%, from the first quarter of 2006.  The decline in gross profit was principallythe result of a lower commodity spread caused by higher corn prices.  Our corn costs during the first quarter of2007 averaged $3.58 per bushel, significantly higher than our first quarter2006 cost of $2.12 per bushel.

We issued $300 million in fixed-rate, unsecured notes, as well asestablished a new $200 million secured revolving credit facility.

*For theThree Months Ended March 31, 2007 Compared to the Three Months Ended March 31,2006*

Total gallons sold in the first quarter of 2007 were 193.2 milliongallons, versus 164.9 million gallons sold in the first quarter of 2006, anincrease of 28.3 million gallons or 17.2%. Gallons sourced were as follows:

|                                                                | ** ** | **For the Three Months  Ended March 31,** | ** ** | **Increase/** | ** ** | **% Increase/** | ** ** |
|----------------------------------------------------------------|------------|--------------------------------------------------------------------|------------|---------------|------------|----------------------|------------|
| **(In thousands, except for percentages)** | ** ** | **2007**                                                           | ** ** | **2006**      | ** ** | **(Decrease)**       | ** ** | **(Decrease)** | ** ** |
| Equity  production                                             | ** ** | **48,907**                                                         |       | 36,676        |       | 12,231               |       | 33.3 | % |
| Marketing  alliance purchases                                  | ** ** | **134,709**                                                        |       | 120,612       |       | 14,097               |       | 11.7 | % |
| Purchase/resale                                                | ** ** | **21,528**                                                         |       | 14,424        |       | 7,104                |       | 49.3 | % |
| Decrease/(increase)  in inventory                              | ** ** | **(11,956**                                                        | **)**      | (6,859        | )          | (5,097               | )          | N.M.* |   |
| Total                                                          | ** ** | **193,188**                                                        |       | 164,853       |       | 28,335               |       | 17.2 | % |

----

*                    N.M.— not meaningful

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Net sales in the first quarter of 2007 increased 39.3% from the firstquarter of 2006.  Net sales were $436.7million in the first quarter of 2007 versus $313.5 million in the first quarterof 2006.  Overall, the increase in netsales was the result of a combination of an increase in the number of gallonssold and an increase in the average sales price of ethanol.  The average gross selling price of ethanol inthe first quarter of 2007 was $2.10 per gallon, up from the $1.79 received inthe first quarter of 2006.  Demand forethanol continued to outpace supply, resulting in continued higher ethanolprices.

Co-product revenue for the first quarter of 2007 totaled $23.1 million,an increase of $8.3 million or 56.1%, from the first quarter of 2006 total of$14.8 million.  Co-product revenueincreased during the first quarter of 2007 principally from higher averageselling prices and also, to a lesser extent, from an increase in co-producttonnage sold as a result of the DDGS produced from the new dry millproduction.  In the first quarter of2007, we sold 267.1 thousand tons, versus 248.3 thousand tons in the firstquarter of 2006.  Co-product returns, asa percentage of the price of corn, were 35.7% during the first quarter of 2007,versus 50.7% in the first quarter of 2006. Co-product returns, as a percentage of the price of corn, decreased inthe first quarter of 2007 as compared to 2006 as the result of increases in theprice of corn continuing to outpace the increase in co-product pricing, andfrom the mix of co-products produced. Due to the addition of the new dry mill in Pekin, the increase in DDGSproduction increased the percentage of the lower value DDGS to the overall mixof available co-products.

Cost of goods sold for the quarter ended March 31, 2007 was $408.2million, compared to $282.9 million for the quarter ended March 31, 2006, anincrease of $125.3 million or 44.3%. Cost of goods sold consists of the cost to produce ethanol at our ownfacilities, the cost of purchasing ethanol from our marketing alliance partnersand from unaffiliated producers and marketers, freight and logistics costs andthe cost of motor fuel taxes which have been billed to customers.  The increase in cost of goods sold isprincipally the result of higher costs for purchased ethanol and increased corncosts.

Purchased ethanol in the first quarter of 2007 totaled $300.9 million,versus $223.6 million in the first quarter of 2006.  The increase in purchased ethanol resultsfrom an increase in both the number of gallons of ethanol purchased, along withincreases in the cost per gallon of ethanol. In the first quarter of 2007, we purchased 156.2 million gallons ofethanol at an average cost of $1.93 per gallon as compared to 135.0 milliongallons of ethanol at an average cost of $1.66 in the first quarter of 2006.

Production costs include corn costs, conversion costs (defined as thecost of converting the corn into ethanol, and includes production salaries,wages and stock compensation costs, fringe benefits, utilities (including coaland natural gas), maintenance, denaturant, insurance, materials and suppliesand other miscellaneous production costs) and depreciation andamortization.  Corn costs in the firstquarter of 2007 totaled $64.7 million or $3.58 per bushel, versus $29.2million, or $2.12 per bushel in the first quarter of 2006.  The increase in corn costs is principally theresult of a perceived increased demand by the marketplace as a result ofexpected new ethanol production facilities being built.  Conversion costs for the first quarter of2007 increased to $27.0 million from $20.3 million for the first quarter of2006.  The total dollars spent onconversion costs increased year over year as a result of the new Pekin dry millproduction.  However, the conversion costper gallon remained constant year over year at $0.55 per gallon.

Depreciation in the first quarter of 2007 totaled $2.9 million, versus$1.0 million in the first quarter of 2006. The increase in depreciation expense is the result of the new Pekin drymill beginning production.  Motor fueltaxes were $6.2 million in the first quarter of 2007 versus $1.6 million in thefirst quarter of 2006.  The cost of motorfuel taxes are recovered through billings to customers.

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Freight/logistics costs in the first quarter of 2007 increased to $30.2million, or approximately $0.16 per gallon, from $20.8 million, or $0.13 pergallon in the first quarter of 2006.  Theincrease in freight/logistics cost is the result of higher transportationexpenses, fuel surcharges and from the expansion of our distribution systemfootprint.

Selling, general and administrative expenses (“SG&A”)expenses were $9.6 million in the first quarter of 2007, compared to $6.3million in the first quarter of 2006. SG&A expenses increased as a result of increased costs related tobeing a public company, and from costs associated with the expansion and growthof our business.  Year over yearincreases in SG&A costs are primarily due to increased costs related tolegal and other professional fees associated with our being a public company,including increased legal fees related to our capacity expansion efforts, thecosts of complying with Section 404 of Sarbanes-Oxley Act of 2002, higherinsurance costs related to directors and officers insurance, and increasedpersonnel costs, including increased non-cash stock-based compensation expenseand fringe benefits.

Interest income in the first quarter of 2007 was$1.4 million, versus $0.7 million in the first quarter of 2006.  The increase in interest income is due to acombination of a higher average level of funds available to invest as a resultof cash received from our initial public offering and our recent Note offering,along with better operating results. This was offset by increased short-term investment rates due toincreases in interest rates in general.

Interest expense in the first quarter of 2007 was$0.3 million, as compared to $4.4 million in the first quarter of 2006.  Interest expense was lower in the firstquarter of 2007 due to the July 2006 repurchase of $160 million aggregateprincipal amount of our notes, versus the first quarter of 2006 when all $160million of the notes were still outstanding. The interest expense in the first quarter of 2007 relates to the $300million of 10% fixed-rate unsecured notes issued in late March 2007.

The minority interest for the quarter ended March 31, 2007 was a $0.5million charge to income compared to $1.3 million charge to income for thequarter ended March 31, 2006.  Thisdecrease reflects the reduced operating performance of our Nebraska subsidiarycaused primarily by the year over year significant increase in corn costs.

Other non-operating income for the first quarter of2007 includes $3.9 million of realized and unrealized gains on corn derivativecontracts, including the effect of marking to market derivative contracts,versus gains in the first quarter of 2006 of $0.6 million.  Other non-operating income is impacted by theCBOT prices for derivative contracts.

The income tax rate for the first quarter of 2007was 36.1% versus a rate of 39.6% in the first quarter of 2006.  The lower rate in the first quarter of 2007resulted from lower state rates now being accrued as compared to the firstquarter of 2006.  The income tax rate forthe first quarter of 2007 also includes a component for interest expenserelated to uncertain tax positions in accordance with FASB Interpretation No.48, *Accounting for Uncertainty in Income Taxes- aninterpretation of FASB Statement No. 109*.

**Trends and Factors that May Affect Future Operating Results**

*Ethanol Pricing*

As of March 31, 2007, we hadcontracts for delivery of ethanol totaling 199.1 million gallons for deliverythroughout the remainder of 2007, which represents approximately 36% of ourexpected ethanol shipments for the remainder of the year.  These commitments were for 40.6 milliongallons at an average 

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fixed price of $1.96, 31.6million gallons at an average positive spread to wholesale gasoline of $0.43(based upon the NYMEX, Chicago and NY harbor indices), and 126.9 milliongallons at spot prices (using various Platt, OPIS and AXXIS indices).  Although these contracts are for deliverythroughout 2007, they are heavily weighted towards the second and third quartersof 2007.

*Corn Pricing*

Based on our current hedges and current marketconditions, we estimate our corn costs for the second quarter of 2007 will bein the $3.95 to $4.00 per bushel range, and our third quarter 2007 corn costswill be in the $3.90 to $3.95 per bushel range, excluding any effects of markto market adjustments on our hedge positions.

*Marketing Alliance*

During the first quarter of2007, we signed seven new alliance partner agreements with planned projectstotaling 656 million gallons of production capacity when completed.  The new alliance partner agreements includethe two new plants associated with an affiliate of Sir Richard Branson’s VirginGroup and Bioverda International Holdings Limited (Indiana Bio-Energy andEthanol Grain Processors), two new proposed Panda Energy plants (Yuma, Coloradoand Haskell County, Kansas), two new proposed E Energy plants (Auburn, Nebraskaand Broken Bow, Nebraska), and a new proposed ethanol plant in Dadeville,Alabama.

As of April 1, 2007, VeraSunEnergy Corporation is no longer part of our marketing alliance.  In the second quarter of 2007, we expect twonew marketing alliance partner plants to begin producing ethanol, adding approximately74 million gallons of ethanol annually to our existing marketing alliancevolume.  As of April 1, 2007, ourmarketing alliance partners have nameplate capacity to produce 287 milliongallons of ethanol annually.  We havealso signed contracts to market an additional 1.4 billion gallons of ethanolfrom existing and new marketing alliance partners who have projects currentlyunder construction, and for projects which have been proposed.  325 million gallons of this amount iscurrently under construction.  We believethese plants currently under construction will be completed and we expect tomarket these additional gallons.  Theseplants are expected to come online between April 2007 and December 2008.  In addition, we have also signed marketingagreements for another 1.1 billion gallons of annual capacity for proposedprojects.  Construction of these proposedprojects has not commenced, and there can be no assurances that these projectswill be commenced or completed on a timely basis, or at all.

*Supply and Demand*

It is expectsed that annual ethanol production capacity in the U.S.will total in excess of 7.5 billion gallons annually by the end of 2007, whichis the amount required by the existing renewable fuel standard for 2012.  Ethanol produced in the United Statescompetes with sugar-based ethanol produced in Brazil.  This additional capacity, along with imports,may cause supply to exceed demand.  Ifadditional demand for ethanol is not created, either through additions todiscretionary blending (through increased penetration rates in areas that blendethanol today or through the establishment of new markets where little or noethanol is blended today), or through additional governmental mandates ateither the federal or state level, the excess supply may cause ethanol pricesto decrease, perhaps substantially.

*Expansion*

We have announcedplans to expand capacity by up to an aggregate of 565 million gallons.  We are currently negotiating engineering,procurement and construction (“EPC”) contracts for 113 million 

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gallon facilities at eachof Mount Vernon, Indiana and Aurora, Nebraska. We expect the cost to build the first 113 million gallon phases of theseprojects to be $2.00 to $2.10 per gallon. We also plan to spend another $15 million at each site as part of thefirst 113 million gallon phases in preparation for the second 113 millionexpansion phases.  We have not yetreceived permits to begin construction at any of the proposed sites, althoughpermit applications have been filed.  Thetiming of such expansions and the final terms of the EPC contracts may have amaterial affect on our results of operations. In addition, we may have to pay penalties or damages under certaincontracts related to such capacity expansions. For a discussion of these potential penalties and damages see “Liquidityand Capital Resources — Overview and Outlook” below.

*Bio-Diesel*

In March 2007, we announcedthat we had entered the biodiesel marketing business.  We have launched a marketing program for biodiesel similar to ourethanol marketing program.  We shipped biodiesel to customers in the firstquarter of 2007.

**Liquidity and Capital Resources**

*Overviewand Outlook*

The following table sets forth selected information concerning ourfinancial condition:

| (In thousands)        | ** ** | **March 31, 2007  (Unaudited)** | ** **  | **December 31,  2006** | ** ** |
|----------------------------|------------|-------------------------------------------|-------------|-----------------------------|------------|
| Cash and cash  equivalents | ** ** | **$**                                     | **281,120** |                        | $          | 29,791 |   |
| Short-term  investments    | ** ** | **144,750**                               |        | 98,925                      |       |
| Working capital            | ** ** | **502,838**                               |        | 203,247                     |       |
| Total debt                 | ** ** | **300,000**                               |        | —                      |       |
| Current ratio              | ** ** | **7.02**                                  |        | 3.44                        |       |
|                            |            |                                           |             |                             |            |  |  |

 

In March 2007, we completeda private placement of $300 million of senior unsecured notes due 2017.  These 10-year notes have a fixed interestrate of 10%.

On March 23, 2007, theCompany, through certain of its indirect subsidiaries (Aventine Renewable Energy,Inc., Aventine Renewable Energy — Mt Vernon, LLC and Aventine Renewable Energy —Aurora West, LLC), established a new five-year $200 million senior securedrevolving credit facility that may, under certain circumstances, increase inamount up to $300 million.  The facilitywill be funded by a consortium of banks, led by JPMorgan Chase Bank, N.A.

With our current cash balances, amounts available under our securedrevolving credit facility and anticipated cash flow from operations, we believethat we will be able to satisfy existing anticipated working capital needs,debt service obligations, capital expenditure and other anticipated cashrequirements for the remainder of the year.

**Theamount of capital expenditures necessary to build our proposed 113 milliongallon dry mill expansion in Pekin, Illinois, our proposed 226 million gallonplant adjacent to our Nebraska facility and our proposed 226 million gallonplant in Mount Vernon, Indiana, is currently estimated to be between $1.90 and$2.00 per denatured gallon of capacity, or a total of approximately $1.1billion. **We are contractually obligated, subject to certain conditions,including obtaining necessary permits, to develop both a 113 million gallonplant adjacent to our Nebraska facility (using commercially reasonable bestefforts to obtain a permit for 226 million gallon capacity) and a 226 milliongallon plant in Mount 

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**Vernon, Indiana.  Ifwe do not meet certain specified milestones, we will be subject topenalties.  The contract to complete the226 million gallon expansion adjacent to our Nebraska facility provides forliquidated damages not exceeding $5 million if specified milestones are not metor we do not construct a facility with a capacity of at least 110 milliongallons.  If such penalties are not paid,the counterparty to the contract has the right to repurchase the property atcost (subject to adjustment for any expenses, which we have paid with respectto infrastructure construction).  Incertain cases, the counterparty can agree to an extension and limited curerights for payments.  The contract forcompletion of the 226 million gallon plant in Mount Vernon, Indiana providesthat, if we do not meet certain milestones, subject to specified extensionrights and cure periods, we will be in default under our lease with the IndianaPort Commission.  The State of Indianamay complete construction of the plant at our expense if we fail to do so.  The contract does not provide for liquidateddamages as an alternative.  In addition,we would also be subject to certain other penalties provided for in the lease**.  Notwithstanding the above,if, despite our diligent efforts, we are unable to obtain permits for the Mt.Vernon facility by a certain date, we can negotiate a waiver of thecompliance date and establish a new date for compliance.  If we do not reach an agreement, either theMount Vernon lessor or we can terminate the Mount Vernon lease.  Accordingly, we cannot estimatethe amount of damages we could be liable for.

In March 2007, we signed a $102million contract with Delta-T Corporation for the purchase of long lead-timeequipment for the proposed Mount Vernon and Aurora West facilities.  We also signed a $12 million contract withKiewit Energy Company for initial site work at Aurora West.  We expect to have the engineering,procurement and construction contracts for these facilities executed shortly,and expect to begin construction of 113 million gallon plants at each of MountVernon, Indiana and in Aurora, Nebraska this summer.

*Sourcesof Liquidity*

Our principal sources of liquidity are cash, short-term investments,cash provided by operations, and cash available under our secured revolvingcredit facility.

*Cash and short-term investments.*  Forthe first three months of 2007, cash and short-term investments increased by$297.2 million.  Cash and short-terminvestments as of March 31, 2007 and December 31, 2006 were $425.9 million and$128.7 million, respectively.   Theincrease in cash and short-term investments is principally the result of cashreceived from the private placement of $300 million aggregate principal amountof senior unsecured 10% fixed rate notes, net of fees, and from cash providedby operations.

C*ash provided by operations.*  Net cash provided by operating activities inthe first three months of 2007 was $18.0****million, ascompared to cash provided by operating activities of $8.1 million for the firstthree months of 2006.  The increase incash provided by operations in 2007 versus 2006 is primarily the result ofimproved earnings and a reduction in accounts receivable, offset by growth ininventory.  In the first quarter of 2006,cash provided by operations was negatively affected by increases in inventorythat grew faster than reductions in receivables.  Cash on our balance sheet, along with thecash received from the issuance of the $300 million of 10% senior unsecurednotes, along with continued strong pricing and demand for ethanol, hassignificantly helped our working capital position.

*Cash available under our liquidity facility*. During the first quarter of 2007, we put into place a new five-year$200 million senior secured revolving liquidity facility that may, undercertain circumstances, increase in amount up to $300 million.  We had no borrowings outstanding under our securedrevolving credit facility at March 31, 2007 and $1.2 million of standby lettersof credit outstanding, leaving approximately $88.7 million in additionalborrowing availability thereunder as of that date.  As of December 31, 2006, we had no borrowingsoutstanding under our previous secured 

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revolvingcredit facility and $4.0 million of standby letters of credit outstanding,leaving approximately $26.0 million in additional borrowing availability underthe previous secured revolving credit facility as of that date.  A fixed asset component in an amount of $50million may be added to the borrowing base under our new senior securedrevolving liquidity facility on or prior to December 31, 2007 upon thesatisfaction of certain requirements.  Weare in the process of satisfying the requirements necessary in order to takeadvantage of this fixed asset component.

*Uses ofLiquidity*

Our principal uses of liquidity are capital expenditures, paymentsrelated to our outstanding debt and liquidity facility, and the repurchase ofshares of our common stock.

*Capital expenditures.*  In the first three months of2007, capital expenditures (excluding expansion related expenditures) totaled$2.7 million versus $1.0 million in the first three months of 2006.  Capital expenditures include assetreplacement, environmental and safety compliance and cost reduction andproductivity improvement items.  Ourcapital spending plan for all of 2007, excluding our expansion projects, isforecasted to be between $20 and $22 million.

Capital expenditures related to our announced expansion projectstotaled $9.7 million in the first three months of 2007.  In addition, we announced on March 20, 2007 that we had enteredinto two contracts related to expansion of our capacity at Mount Vernon, Indianaand Aurora, Nebraska.  We entered into anAdvance Work Agreement in the amount of $102 million, effective as of March 12,2007, with Delta-T Corporation, for the purchase of plant equipment in advanceof the completion of negotiations of an engineering, procurement andconstruction (“EPC”) agreement with Kiewit Energy Company (“Kiewit”).  The $102 million in payments will be madebetween March 2007 and May 2008.  Inaddition, we also announced on March 20, 2007 an agreement with Kiewit for Pre-EPC consulting and contracting servicesin the amount of $12.0 million in order to expedite the performance of certaintasks related to the design and construction of our proposed Aurora, Nebraskaethanol facility.  Payments under theKiewit contract will begin in March 2007 and continue until August 2007.

We expect to spend approximately $250 million in total during 2007 oncapacity related expenditures.

*Payments related to our outstanding debt and liquidity facility.*  Inthe first three months of 2007, we did not make any interest payments on ourdebt and our liquidity facility.   In thefirst three months of 2006, we paid $4.2 million in interest payments on ourdebt and liquidity facility.

*Repurchase of shares of common stock.*  Inthe first quarter of 2007, we did not repurchase any shares of our common stockunder the share repurchase program approved by our Board of Directors.  The share repurchase program allows therepurchase of up to $50 million of our outstanding common stock, although thereare no minimum share purchase requirements. There is approximately $48.8 million available to be repurchased underthis program.

**EnvironmentalMatters**

We are subject to extensive federal, state and local environmentallaws, regulations and permit conditions (and interpretations thereof),including those relating to the discharge of materials into the air, water andground, the generation, storage, handling, use, transportation and disposal ofhazardous materials, and the health and safety of our employees.  These laws, regulations, and permits requireus to incur significant capital and other costs, including costs to obtain andmaintain expensive pollution control equipment. They may also require us to make operational changes to limit actual orpotential 

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impactsto the environment.  A violation of theselaws, regulations or permit conditions can result in substantial fines, naturalresource damages, criminal sanctions, permit revocations and/or facilityshutdowns.  In addition, environmentallaws and regulations (and interpretations thereof) change over time, and anysuch changes, more vigorous enforcement policies or the discovery of currentlyunknown conditions may require substantial additional environmentalexpenditures.

We are also subject to potential liability for the investigation andcleanup of environmental contamination at each of the properties that we own oroperate and at off-site locations where we arranged for the disposal ofhazardous wastes.  From time to time, hazardous material spills haveoccurred at our facilities or properties, which we investigate and remediate asnecessary.  Also, soil and groundwatercontamination has been identified in the past at our Pekin, Illinois campus. Ifsignificant contamination is identified at our properties in the future, coststo investigate and remediate this contamination as well as any costs toinvestigate or remediate associated natural resource damages could besignificant.  If any of these sites are subject toinvestigation and/or remediation requirements, we may be responsible underCERCLA or other environmental laws for all or part of the costs of suchinvestigation and/or remediation, and for damages to natural resources.  We may also be subject to related claims byprivate parties alleging property damage or personal injury due to exposure tohazardous or other materials at or from such properties.  We have not accrued any amounts forenvironmental matters as of March 31, 2007. The ultimate costs of any liabilities that may be identified or thediscovery of additional contaminants could adversely impact our results ofoperation or financial condition.

In addition, the hazards and risks associated withproducing and transporting our products (such as fires, natural disasters,explosions, abnormal pressures and spills) may result in spills or releases ofhazardous substances, and may result in claims from governmental authorities orthird parties relating to actual or alleged personal injury, property damage,or damages to natural resources.  Wemaintain insurance coverage against some, but not all, potential losses causedby our operations. Our coverage includes, but is not limited to, physicaldamage to assets, employer’s liability, comprehensive general liability,automobile liability and workers’ compensation. We do not carry environmental insurance. We believe that our insurance is adequate for our industry, but lossescould occur for uninsurable or uninsured risks or in amounts in excess ofexisting insurance coverage.  Theoccurrence of events which result in significant personal injury or damage toour property, natural resources or third parties that is not covered byinsurance could have a material adverse impact on our results of operations andfinancial condition.

Our air emissions are subject to the federal Clean Air Act, the federalClean Air Act Amendments of 1990 and similar state laws which generally requireus to obtain and maintain air emission permits for our ongoing operations aswell as for any expansion of existing facilities or any new facilities.  Obtaining and maintaining those permitsrequires us to incur costs, and any future more stringent standards may resultin increased costs and may limit or interfere with our operating flexibility.  In addition, the permits ultimately issuedmay impose conditions which are more costly to implement than we hadanticipated.  These costs could have amaterial adverse affect on our financial condition and results ofoperations.  Because other ethanolmanufacturers in the U.S. are and will continue to be subject to similar lawsand restrictions, we do not currently believe that our costs to comply withcurrent or future environmental laws and regulations will adversely affect ourcompetitive position.  However, becauseethanol is produced and traded internationally, these costs could adverselyaffect us in our efforts to compete with foreign producers not subject to suchstringent requirements.

Federal and state environmental authorities have been investigatingalleged excess VOC emissions and other air emissions from many U.S. ethanolplants, including our Illinois and Nebraska facilities.  The matter relating to our Illinois wet millfacility is still pending, and we could be required to 

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installadditional air pollution control equipment or take other measures to controlair pollutant emissions at that facility. If authorities require us to install controls, we would anticipate thatcosts would be higher than the costs we incurred for this matter at ourNebraska facility due to the larger size of the Illinois wet millfacility.  In addition, if theauthorities determine our emissions were in violation of applicable law, wewould likely be required to pay fines that could be material.

We have made, and expect to continue making,significant capital expenditures on an ongoing basis to comply withincreasingly stringent environmental laws, regulations and permits.  We have included in our capital budget for2007 approximately $10.8 million for projects relating to environmental, healthand safety matters, including for the installation of air pollution controlequipment and for wastewater discharge improvements at our Illinois wet millfacility.  As of March 31, 2007, we havespent approximately $0.2 of this amount. The majority of the 2007 environmental capital budget relates tocompliance with the EPA’s final National Emissions Standard for Hazardous AirPollutants, or NESHAP, under the federal Clean Air Act for industrial,commercial and institutional boilers and process heaters.  This NESHAP will require us to implementmaximum achievable control technology at our Illinois wet mill facility toreduce hazardous air pollutant emissions from certain of our boilers andprocess heaters by September 13, 2007. Based on engineering conducted to date and currently availableinformation, we have budgeted $7.4 million to comply with this NESHAP in2007.  Due to various reasons, includingequipment delivery delays, however, we may not be able to meet the September2007 deadline.  We are continuing todiscuss a deadline extension with the state authorities.  If an extension is not granted, and we do notmeet the September 2007 deadline, fines and penalties could be imposed on us,which could be substantial.

We currently generate revenue from the sale ofcarbon dioxide, which is a co-product of the ethanol production process at eachof our Illinois and Nebraska facilities. New laws or regulations relating to the production, disposal oremissions of carbon dioxide may require us to incur significant additionalcosts and may also adversely affect our ability to continue generating revenuefrom carbon dioxide sales.

**Item 3.                    Quantitative and Qualitative Disclosures AboutMarket Risk**

We are exposed to various market risks, including changes in commodityprices and interest rates.  Market riskis the potential loss arising from adverse changes in market rates andprices.  In the ordinary course ofbusiness, we enter into various types of transactions involving financialinstruments to manage and reduce the impact of changes in commodity prices andinterest rates.  We do not enter intoderivatives or other financial instruments for trading or speculative purposes.

***Commodity Price Risks***

We are subject to market risk with respect to the price andavailability of corn, the principal raw material we use to produce ethanol andethanol by products.  In general, risingcorn prices result in lower profit margins and, therefore, representunfavorable market conditions.  This isespecially true when market conditions do not allow us to pass along increasedcorn costs to our customers.  Theavailability and price of corn is subject to wide fluctuations due tounpredictable factors such as weather conditions, farmer planting decisions,governmental policies with respect to agriculture and international trade andglobal demand and supply.  Our weightedaverage gross corn costs for the three months ended March 31, 2007 and 2006 was$3.58 and $2.12 per bushel, respectively.

We have firm-price purchase commitments with some of our corn suppliersunder which we agree to buy corn at a price set in advance of the actualdelivery of that corn to us.  At March31, 2007, 

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wehad commitments to purchase approximately 21.3 million bushels of corn throughDecember 2009 at an average price of $4.05 per bushel from these cornsuppliers.  Under these arrangements, weassume the risk of a price decrease in the market price of corn between thetime this price is fixed and the time the corn is delivered.  In order to reduce our market exposure toprice decreases, at the time we enter into a firm-price purchase commitment, wealso often enter into commodity forward contracts to sell a like amount of cornat the then-current price for delivery to the counterparty at a laterdate.  We account for these transactionsunder Statement of Financial Accounting Standard No. 133, *Accountingfor Derivative Instruments and Hedging Activities*, as amended byStatement of Financial Accounting Standard No. 138, *Accountingfor Certain Derivative Instruments and Certain Hedging Activities*,and by Statement of Financial Accounting Standard No. 149, *Amendment ofStatement 133 on Derivative Instruments and Hedging Activities*,(hereinafter collectively referred to as “SFAS 133”).  These forward contracts are not designated ashedges and, therefore, are marked to market each period, with correspondinggains and losses recorded in other non-operating income.  The fair value of these derivative assets isrecognized in other current assets in the Condensed Consolidated Balance Sheet,net of any cash received from the brokers. Information on this type of derivative transaction is as follows:

| (In millions)                                  | ** ** | **March 31,2007** | ** ** |
|-----------------------------------------------------|------------|------------------------|------------|
| Realized and  unrealized gains included in earnings | ** ** | **$**                  | **1.1**    | ** ** |
|                                                     |            |                        |            |  |

 

| (In millions)                                                                                             | ** ** | **March 31, 2007** | ** ** |
|----------------------------------------------------------------------------------------------------------------|------------|------------------------------|------------|
| Net bushels sold                                                                                               | ** ** | **10.5**                     | ** ** |
| Aggregate  notional value of derivatives outstanding                                                           | ** ** | **$**                        | **40.8**   | ** ** |
| Period through  which derivative positions currently exist                                                     | ** ** | **December 2009**            | ** ** |
| Unrealized gain  on the fair value of outstanding derivative positions                                         | ** ** | **$**                        | **0.7**    | ** ** |
| The change in fair  value due to the effect of a 10% adverse change in commodity prices to  current fair value | ** ** | **$**                        | **(4.3**   | **)** |

 

We have also sold put contracts on corn to protect ourselves shouldcorn prices fall.  We account for thesetransactions under SFAS 133.  These putcontracts are not designated as hedges and, therefore, are marked to marketeach period, with corresponding gains and losses recorded in othernon-operating income.  The fair value ofthese derivative assets is recognized in other current assets in the CondensedConsolidated Balance Sheet, net of any cash received from the brokers.  Information on this type of derivativetransaction at March 31, 2007 is as follows:

| (In millions)                                  | ** ** | **March 31, 2007** | ** ** |
|-----------------------------------------------------|------------|------------------------------|------------|
| Realized and  unrealized gains included in earnings | ** ** | **$**                        | **2.8**    | ** ** |
|                                                     |            |                              |            |  |

 

| (In millions, except premium paid and strike price)                         | ** ** | **March 31, 2007** | ** ** |
|----------------------------------------------------------------------------------------------------------------|------------|------------------------------|------------|
| Net bushels  covered by puts                                                                                   | ** ** | **8.6**                      | ** ** |
| Average premium  paid for puts (in cents per bushel)                                                           | ** ** | **11.4**                     | ** ** |
| Strike price of  put positions                                                                                 | ** ** | **$**                        | **3.80**   | ** ** |
| Period through  which derivative positions currently exist                                                     | ** ** | **July 2007**                | ** ** |
| Unrealized gains  on the fair value of outstanding put positions                                               | ** ** | **$**                        | **1.3**    | ** ** |
| The change in fair  value due to the effect of a 10% adverse change in commodity prices to current  fair value | ** ** | **$**                        | **(0.4**   | **)** |

 

***Material Limitations***

The disclosures with respect to the above noted risks do not take intoaccount the underlying commitments or anticipated transactions.  If the underlying items were included in theanalysis, the gains 

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orlosses on the futures contracts may be offset. Actual results will be determined by a number of factors that are notgenerally under our control and could vary significantly from those factorsdisclosed.

We are exposed to credit losses in the event of nonperformance bycounterparties on the above instruments, as well as credit or performance riskwith respect to our hedged commitments. Although nonperformance is possible, wedo not anticipate nonperformance by any of these parties.

**Item 4.                    Controls and Procedures**

**Evaluation of Disclosure Controls and Procedures**

Under the supervision of, and with the participation of management,including our Chief Executive Officer, Ronald H. Miller, and our ChiefFinancial Officer, Ajay Sabherwal, the Company carried out an evaluation of theeffectiveness of our disclosure controls and procedures (as defined inRules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934,as amended (the “Exchange Act”)) as of the end of the period covered by thisreport.  Based upon that evaluation,Messrs. Miller and Sabherwal have concluded that, as of the end of theperiod covered by this report, the Company’s disclosure controls and procedureshave been designed and are effective to provide reasonable assurance thatinformation required to be disclosed in the reports filed or submitted underthe Exchange Act is recorded, processed, summarized and reported within thetime periods specified in the rules and forms of the Securities and ExchangeCommission.  These disclosure controlsand procedures include, without limitation, controls and procedures designed toprovide reasonable assurance that information required to be disclosed in suchreports is accumulated and communicated to our management, includingMessrs. Miller and Sabherwal, as appropriate to allow timely decisionsregarding the required disclosure.  Thedesign of any system of controls is based in part upon certain assumptionsabout the likelihood of future events. There can be no assurance that any design will succeed in achieving itsstated goal under all potential future conditions, regardless of how remote.

**Changes in Internal Control over Financial Reporting**

Based upon evaluation by our management, which was conducted with theparticipation of Messrs. Miller and Sabherwal, there has been no change inour internal control over financial reporting during the period covered by thisreport that has materially affected, or is reasonably likely to materiallyaffect, our internal control over financial reporting.

**PART II.****                OTHER INFORMATION**

**Item 1.                    Legal Proceedings**

**                                None**

**Item 1A.                 Risk Factors**

The Company has included in its Annual Report on Form 10-K as ofDecember 31, 2006 a description of certain risks and uncertainties that couldaffect the Company’s business, future performance or financial condition (“RiskFactors”).  Those Risk Factors are herebyincorporated in Part II, Item 1A of this Form 10-Q.

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**Item 2.            Unregistered Sales of Equity Securities and Use ofProceeds**

**None**

**Item 3.            Defaults Upon Senior Securities**

**None**

**Item 4.            Submission of Matters to a Vote of Security Holders**

**None**

**Item 5.            Other Information**

**None**

**Item 6.            Exhibits**

(a)          Exhibits

4.1                                 Indenture, dated as of March 27, 2007, amongthe Company, the subsidiary guarantors named therein, and Wells Fargo Bank,N.A. and the form of note (incorporated by reference to Exhibit 4.1 to theCompany’s Current Report on Form 8-K filed on April 2, 2007).

10.1                           Advance Work Agreement, dated as of March 12,2007, between the Company and Delta-T Corporation, for the purchase of plantequipment in advance of the completion of negotiations of an engineering,procurement and construction agreement with Kiewit Energy Company.

10.2                           Pre-engineering, procurement and constructionconsulting and contracting services contract, dated as of March 17, 2007,between the Company and Kiewit Energy Company, for the performance of certaintasks related to the design and construction of the Company’s proposed Aurora,Nebraska ethanol facility.

10.3                           Form of Performance Stock Unit AwardAgreement (2003 Stock Incentive Plan) (incorporated by reference to Exhibit10.1 to the Company’s Current Report on Form 8-K filed on February 27, 2007).

10.4                           Form of Stock Option Agreement (2003 StockIncentive Plan) (incorporated by reference to Exhibit 10.2 to the Company’sCurrent Report on Form 8-K filed on February 27, 2007).

10.5                           Form of Restricted Stock Agreement (2003Stock Incentive Plan) (incorporated by reference to Exhibit 10.3 to the Company’sCurrent Report on Form 8-K filed on February 27, 2007).

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10.6                           Form of Non-employee Director RestrictedStock Agreement (2003 Stock Incentive Plan (incorporated by reference toExhibit 10.4 to the Company’s Current Report on Form 8-K filed on February 27,2007).

10.7                            PurchaseAgreement, dated as of March 21, 2007, among the Company, the subsidiaryguarantors named therein and J.P. Morgan Securities, Inc., as representative ofseveral initial purchasers (incorporated byreference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed onMarch 27, 2007).

10.8                           Credit Agreement,dated as of March 23, 2007, by and among Aventine Renewable Energy, Inc.,Aventine Renewable Energy — Mt Vernon, LLC and Aventine Renewable Energy —Aurora West, LLC, the other Loan Parties thereto, the lenders thereto andJPMorgan Chase Bank, N.A., as administrative agent (incorporatedby reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filedon March 26, 2007).

10.9                           RegistrationRights Agreement, dated as of March 27, 2007, among the Company, the subsidiaryguarantors named therein and Wells Fargo Bank, N.A. (incorporated by reference to Exhibit 10.1 tothe Company’s Current Report on Form 8-K filed on April 2, 2007).

10.10                     Form of Aventine Renewable Energy Holdings, Inc. 2003Stock Incentive Plan (Amended and Restated as of April 16, 2007) (incorporated by reference to Exhibit 10.1 tothe Company’s Current Report on Form 8-K filed on April 16, 2007).

31.1                           Certification of the Chief Executive Officerpursuant to Section 302 of the Sarbanes- Oxley Act of 2002.

31.2                           Certification of the Chief Financial Officerpursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1                           Certification of the Chief Executive Officerpursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002.

32.2                           Certification of the Chief Financial Officerpursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002.

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# **SIGNATURE**

Pursuant to the requirements of the Securities Exchange Act of 1934,the registrant has duly caused this report to be signed on its behalf by theundersigned thereto duly authorized.

|                    |   | AVENTINE RENEWABLE ENERGY  HOLDINGS, INC. |
|--------------------|--------|-------------------------------------------|
|               |   |                                      |   |
|               |   |                                      |   |
| Dated: May 9, 2007 |   | By:                                       | /s/ | William J. Brennan |
|               |   | Name:                                     | William J. Brennan |
|               |   | Title:                                    | Principal Accounting Officer |

 

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