EXHIBIT 99.1
Press Release
Penn Octane Corporation Announces Appointment Of New Chief Executive Officer
Company Implements Steps To Improve Cash Flow
PALM DESERT, CA - JUNE 28, 2005. Penn Octane Corporation (NASDAQ: POCC), a
supplier of LPG for distribution to Northeast Mexico, announced today that
Charles C. Handly was appointed as President and Chief Executive Officer of Penn
Octane effective June 23, 2005. Mr. Handly replaces Richard Shore, Jr. who
resigned from all positions with Penn Octane on June 22, 2005. Mr. Handly, has
served as an executive officer of Penn Octane since August 2002. Before joining
Penn Octane, Mr. Handly worked at Exxon Corporation (now Exxon Mobil
Corporation) for 38 years. Based on his extensive experience, Mr. Handly is
expected to provide the requisite leadership for Penn Octane as it seeks to
implement steps to improve cash flows. These steps may include reduction of
operating costs, restructuring of certain obligations, and raising additional
debt and/or equity capital. Under Mr. Handly's leadership, Penn Octane is also
actively pursuing discussions regarding a possible sale of all or a portion its
LPG assets.
In its Form 8-K filed with the Securities and Exchange Commission on June 9,
2005, Penn Octane described its expected operating cash shortfalls during the
summer months of 2005 in connection with the new agreement between its
affiliate, Rio Vista Energy Partners L.P. ("Rio Vista") and P.M.I. Trading
Limited ("PMI") for sales of liquefied petroleum gas ("LPG") for the period June
4, 2005 through March 31, 2006. This agreement provides the Company with
greater certainty regarding future volume commitments than during the previous
14 months when the Company was operating on month to month arrangements (other
than the period January 2005 through March 2005 when there was a three month
arrangement). Any additional volumes of LPG purchased by PMI over minimum
contract volumes described in the Form 8-K would generate additional cash flow
to Penn Octane. In addition, the volume commitments during the winter periods
are expected to provide Penn Octane with positive operating cash flow.
About Penn Octane Corporation
Penn Octane historically has been a leading supplier of Liquefied Petroleum Gas
(LPG) to Northeastern Mexico until the recent transfer of its physical assets to
Rio Vista Energy Partners L.P. (Rio Vista). Penn Octane continues to lease a
132-mile, six-inch pipeline which connects from a gas plant in Kleberg County,
Texas, to its terminal facility in Brownsville, Texas. The Brownsville terminal
facility was recently transferred to Rio Vista. Penn Octane supplies Rio Vista
with all of the LPG which Rio Vista supplies to Northeastern Mexico. Penn Octane
also utilizes a 12-inch propane pipeline which connects certain refineries and
other supply sources in Corpus Christi, Texas, to the gas plant in Kleberg
County. Penn Octane's network is further enhanced by 155 miles of pipeline owned
by Seadrift Pipeline Corporation that Penn Octane has the ability to access to
transport LPG to and from Markham, Texas, that enhances Penn Octane's ability to
deliver LPG to Rio Vista for potential further
distribution to Northeastern Mexico. Penn Octane has recently begun operations
of its gasoline and diesel fuel reseller business. By allocating portions of
certain pipeline and terminal space located in California, Arizona, Nevada and
Texas to Penn Octane, Penn Octane is able to sell gasoline and diesel fuel at
rack loading terminals and through bulk and transactional exchanges.
Forward-Looking Statements
Certain of the statements in this news release are forward-looking statements,
including statements regarding efforts to improve of cash flows, reduction of
operating costs, restructuring of certain obligations, raising additional debt
and/or equity capital, exploring alternatives regarding a possible sale of
assets, future LPG volumes, and prospects for the LPG business and the gasoline
and diesel fuel reseller business. Although these statements reflect Penn
Octane's beliefs, they are subject to uncertainties and risks that could cause
actual results to differ materially from expectations. These risks include lower
than expected demand and reduced margins for Penn Octane's products and the
ability of Penn Octane to continue to receive allocation of pipeline and
terminal space. There is no assurance that Penn Octane's cost reduction measures
will be adequate or that a sale of assets can be completed on terms satisfactory
to Penn Octane, if at all. In addition, there is a risk that Penn Octane may
not be able to obtain adequate financing to finance the purchase of its
products. If Penn Octane is not able to obtain adequate financing or to continue
to generate sales of its products at profitable levels, Penn Octane would suffer
material adverse consequences to its LPG and/or Fuel Sales business which would
adversely impact Penn Octane's financial condition and results of operations.
Additional information regarding risks affecting Penn Octane's business may be
found in Penn Octane's most recent reports on Form 8-K, Form 10-Q and Form 10-K
and Rio Vista's Form 10-Q, Form 10-K and Form 10 filed with the Securities and
Exchange Commission.
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Contact:
Penn Octane Corporation
Charles C. Handly / Ian T. Bothwell, 760-772-9080
or
CEOcast, Inc. for Penn Octane Corporation
Ed Lewis, 212-732-4300