Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

Amendment No. 1

for the quarterly period ended March 31, 2012

OR

for the transition period from              to             .

COMMISSION FILE NUMBER 001-32922

AVENTINE RENEWABLE ENERGY HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

(214) 451-6750

(Registrant’s Telephone Number, including Area Code)

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

(Note: As a voluntary filer, not subject to the filing requirements of the Exchange Act of 1934, the registrant has filed all reports under Section 13 or 15(d) of the Exchange Act of 1934 for the preceding 12 months)

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)  YES x  NO o

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

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

Indicate by checkmark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by the court. YES x NO o

Indicate the number of shares outstanding of each class of Common Stock, as of the latest practicable date

Table of Contents

FORM 10-Q

QUARTERLY REPORT

TABLE OF CONTENTS

Table of Contents

EXPLANATORY NOTE

Aventine Renewable Energy Holdings, Inc. (the “Company”) is filing this amendment (the “Form 10-Q/A”) to its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2012 (the “Form 10-Q”), filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 9, 2012, to correct a calculation error in the amount disclosed for both the basic and diluted weighted-average number of common and common equivalent shares outstanding as well as both the basic and diluted loss per common share amounts for the three month period ended March 31, 2012.  These errors occurred in the Company’s Condensed Consolidated Statement of Operations as well as in Note 3 of the Notes to the Condensed Consolidated Financial Statements.  The calculation error resulted in the amount disclosed for both the basic and diluted weighted-average number of common and common equivalent shares outstanding to be overstated by approximately 1.1 million shares, thus causing both the basic and diluted loss per common share amounts to be understated by approximately ($0.29) for the three months ended March 31, 2012.  The Condensed Consolidated Statement of Operations and Note 3 of the Notes to the Condensed Consolidated Financial Statements disclosed in this Form 10-Q/A are presented with the correct amounts.

This error was also reflected in the Company’s earnings release that was issued on May 9, 2012 and furnished to the SEC on that date.  The calculation error had no impact on the Company’s Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Cash Flows or any disclosures included in the Notes to the Condensed Consolidated Financial Statements (other than Note 3) and Management’s Discussion and Analysis of Financial Condition and Results of Operations.

In addition to the adjustments to the Condensed Consolidated Statement of Operations and Note 3 of the Notes to the Condensed Consolidated Financial Statements, the Company restated Item 4 - Controls and Procedures to reflect a material weakness identified in financial reporting controls related to these adjustments.  The Company also added an additional disclosure in the first table in Note 3 of the Notes to the Condensed Consolidated Financial Statements related to the number of warrants that were outstanding in the respective periods that could potentially dilute basic loss per share in the future but are currently antidilutive.

This Form 10-Q/A should be read in conjunction with the original Form 10-Q, which continues to speak as of the date of the Form 10-Q. Except as specifically noted above, this Form 10-Q/A does not modify or update disclosures in the original Form 10-Q. Accordingly, this Form 10-Q/A does not reflect events occurring after the filing of the Form 10-Q or modify or update any related or other disclosures.

Table of Contents

Aventine Renewable Energy Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

See notes to the condensed consolidated financial statements.

F-1

Table of Contents

Aventine Renewable Energy Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

See notes to the condensed consolidated financial statements.

F-2

Table of Contents

Aventine Renewable Energy Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

See notes to the condensed consolidated financial statements.

F-3

Table of Contents

Aventine Renewable Energy Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

See notes to the condensed consolidated financial statements.

F-4

Table of Contents

Aventine Renewable Energy Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

See notes to the condensed consolidated financial statements.

F-5

Table of Contents

Aventine Renewable Energy Holdings, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1.                            BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements include the accounts of Aventine Renewable Energy Holdings, Inc. and its subsidiaries, which are collectively referred to as “Aventine” or the “Company”, unless the context otherwise requires.  All significant intercompany transactions have been eliminated in consolidation.

The Company has prepared the condensed consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).  Certain information and footnote disclosures normally included in statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.  These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.  As of March 31, 2012, the Company’s Summary of Critical Accounting Policies for the year ended December 31, 2011, which are detailed in the Company’s Annual Report on Form 10-K, have not changed.

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Areas involving significant judgments and estimates include depreciation, income taxes, and fair value measurements.  Actual results could differ from those estimates.

The accompanying condensed consolidated financial statements presented herewith reflect all adjustments (consisting of only normal and recurring adjustments unless otherwise disclosed) which, in the opinion of management, are necessary for a fair presentation of the results of operations for the three months ended March 31, 2012 and 2011, respectively.  The results of operations for interim periods are not necessarily indicative of results to be expected for an entire year.

2.                            RECENT ACCOUNTING PRONOUNCEMENTS

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“IFRS”) (“ASU 2011-04”), which changes certain fair value measurement and disclosure requirements, clarifies the application of existing fair value measurement and disclosure requirements and provides consistency to ensure that GAAP and IFRS fair value measurement and disclosure requirements are described in the same way.  ASU 2011-04 is effective for interim and annual periods beginning after December 15, 2011.  The Company adopted this ASU on January 1, 2012 and it did not have a material impact on its consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income (“ASU 2011-05”) which changes the presentation requirements of comprehensive income to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income.  ASU 2011-05 requires that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 is effective for interim and annual periods

F-6

Table of Contents

beginning after December 15, 2011.  The Company adopted this ASU on January 1, 2012 and it did not have a material impact on its consolidated financial statements.

3.                            NET LOSS PER SHARE

Basic loss per share excludes any dilution and is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. The dilution from each of these instruments is calculated using the treasury stock method. Outstanding equity instruments that could potentially dilute basic loss per share in the future but were not included in the computation of diluted loss per share because they were antidilutive are as follows:

The Company used the two-class method to compute basic and diluted loss per share for all periods presented. The reconciliation of the net loss, net loss attributable to common shareholders and the weighted average number of share and share equivalents used in the computations of basic and diluted loss per share for the three months ended March 31, 2012 and 2011 are as follows:

Subsequent to the Company’s filing of its Form 10-Q with the SEC on May 9, 2012, management determined that the weighted average shares and share equivalents disclosed in its quarterly and annual reports from June 30, 2011 through March 31, 2012 had been improperly calculated, resulting in the amount of shares previously disclosed being overstated and causing the Company’s basic and diluted loss per share to be understated.  The only period that was materially impacted by the improper calculations was the three month period ended March 31, 2012.  In the Company’s Form 10-Q filed with the SEC on May 9, 2012, the Company disclosed weighted average shares and share equivalents outstanding of approximately 9.89 million shares and basic and diluted loss per share of $2.28.  The Company has restated its Consolidated Statement of Operations for the three months ended March 31, 2012 to correct the error.  The corrected weighted average shares and share equivalents outstanding was approximately 8.76 million shares and basic and diluted loss per share is $2.57.

For the three months ended March 31, 2012 and 2011, 0.4 million shares and 1.1 million shares, respectively, contemplated by the First Amended Joint Plan of Reorganization (as modified, the ‘‘Plan’’) under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) of Aventine and all of its direct and indirect subsidiaries (collectively, the ‘‘Debtors’’), filed on January 13, 2010, confirmed by order

F-7

Table of Contents

entered by the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) on February 24, 2010, and effective on March 15, 2010 (the “Effective Date”), to be distributed to holders of allowed general, unsecured claims are included in the calculation of basic loss per share.

4.                            FAIR VALUE MEASUREMENTS

In accordance with Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures, the Company categorizes its investments and certain other assets and liabilities recorded at fair value into a three-level fair value hierarchy as follows:

·                  Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

·                  Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

·                  Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

Fair Value Hierarchy on a Recurring Basis

The following tables summarize the valuation of the Company’s financial instruments which are carried at fair value at March 31, 2012 and December 31, 2011.

The Company did not hold any financial assets requiring the use of Level 2 or Level 3 inputs at March 31, 2012 or December 31, 2011.

Realized and unrealized gains (losses)

The Company recorded a net loss of $89 thousand and a net gain of $890 thousand for the three months ended March 31, 2012 and 2011, respectively, related to the change in the fair value of its derivative transactions.  Such gains were recorded in “Gain (loss) on derivative transactions, net” on the condensed consolidated statements of operations.

F-8

Table of Contents

The Company’s available for sale securities at March 31, 2012 and December 31, 2011 consists of shares of Imperial Petroleum, Inc. (“Imperial”) stock received in a legal settlement.  The Company records the fair value of its Imperial stock using unadjusted quoted market prices, and accordingly, discloses these investments in Level 1 of the fair value hierarchy.

At December 31, 2011, the Company had short-term investments in Renewable Identification Numbers (“RINs”), which were held for investment purposes.  In order to monitor the mandated increase in renewable energy production, the Environmental Protection Agency (the “EPA”) requires each gallon of renewable fuel produced to have a unique serial number, a RIN, attached to it. Petroleum refiners then turn these RINs in to the EPA each year to prove that the petroleum refiners have blended the required amount of renewable fuel into their gasoline.  For the three months ended March 31, 2012 and 2011, the Company recorded net unrealized losses on RINs held for trading purposes of $22 thousand and $27 thousand, respectively, which were recorded in “Other non-operating income (expense)” on the Company’s condensed consolidated statement of operations.

Financial Instruments Not Reported at Fair Value

The carrying value of other financial instruments, including accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short maturities or variable-rate nature of the respective balances.  The following table presents the other financial instruments that are not carried at fair value, but which require fair value disclosure at March 31, 2012 and December 31, 2011.

The term loan is at a variable rate and therefore the carrying value approximates the fair value.

5.                            INVENTORY

Inventories primarily consist of agricultural and energy-related commodities, including corn, ethanol, and coal, and were as follows at March 31, 2012 and December 31, 2011:

6.                            DERIVATIVE INSTRUMENTS AND HEDGING

The Company’s operations and cash flows are subject to fluctuations due to changes in commodity prices.  As such, the Company has historically used various derivative financial instruments to minimize the effects of the volatility of commodity price changes primarily related to corn, natural gas, and ethanol.  The Company monitors and manages its exposure as part of its overall risk management policy.  As such, the Company seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results. The Company may take derivative positions in these commodities as one way to mitigate risk.

The Company is subject to market risk with respect to the price and availability of corn, the principal

F-9

Table of Contents

raw material it uses to produce ethanol and ethanol by-products.  In general, rising corn prices result in lower profit margins and, therefore, represent unfavorable market conditions.  This is especially true when market conditions do not allow the Company to pass along increased corn costs to its customers.  The availability and price of corn is subject to wide fluctuations due to unpredictable factors such as weather conditions, farmer planting decisions, governmental policies with respect to agriculture and international trade and global demand and supply.  From time to time, the Company may have firm-price purchase commitments with some of its corn suppliers under which the Company agrees to buy corn at a price set in advance of the actual delivery of that corn.  Under these arrangements, the Company assumes the risk of a price decrease in the market price of corn between the time this price is fixed and the time the corn is delivered.  The Company accounts for these transactions as normal purchases under ASC 815, Derivatives and Hedging (“ASC 815”), and accordingly, it does not mark these transactions to market.

The Company is also subject to market risk with respect to ethanol pricing.  The Company’s ethanol sales are priced using contracts that can either be fixed, based upon the price of wholesale gasoline plus or minus a fixed amount or based upon a market price at the time of shipment.  The Company sometimes fixes the price at which it sells ethanol using fixed price physical delivery contracts.  The Company has elected to account for these transactions as normal sales transactions under ASC 815, and accordingly, it has not marked these transactions to market.

Derivative instruments not designated as hedging instruments under ASC 815 at March 31, 2012 and December 31, 2011 were as follows:

The realized and unrealized effect on the Company’s condensed consolidated statement of operations for derivatives not designated as hedging instruments under ASC 815 for the three months ended March 31, 2012 and 2011 were as follows:

7.                            SHORT-TERM BORROWINGS

Senior Secured Revolving Credit Facility with PNC Bank

Pursuant to the Plan, on the Effective Date,  the Company and its subsidiaries, as borrowers, entered into a Revolving Credit and Security Agreement (the “Revolving Credit Agreement”) with PNC Bank, National Association, as lender and as agent (“PNC”), providing for a $20 million revolving credit facility (the “Revolving Facility”).  On February 28, 2011, the Company amended the Revolving Facility which increased the maximum loan amount to $30 million.

On July 20, 2011, the Revolving Credit Agreement with PNC was terminated and replaced with a revolving credit facility (the “New Revolving Facility”) with Wells Fargo Capital Finance, LLC (“Wells Fargo”).  As a result, the Company paid a $0.6 million termination fee.

F-10

Table of Contents

New Revolving Facility with Wells Fargo

On July 20, 2011, the Company and each of its subsidiaries, as co-borrowers (collectively, the “Borrowers”), entered into the New Revolving Facility with the lenders party thereto (the “Lenders”), and Wells Fargo as Lender and as agent for the Lenders (as amended, and as may be amended, supplemented or otherwise modified from time to time, the “New Revolving Facility Agreement”), with a $50 million commitment (the “Commitments”).  The New Revolving Facility has a borrowing base that is principally supported by accounts receivable and inventory of the Borrowers.  The Company capitalized $2.9 million in debt issuance costs for the year ended December 31, 2011, related to the New Revolving Facility Agreement.  These costs will be amortized using the straight-line method over the term of the New Revolving Facility Agreement.   The Company recognized $0.2 million of expense for the amortization of debt issuance costs related to the New Revolving Facility Agreement during the three months ended March 31, 2012.

The loans under the New Revolving Facility will mature on the earlier of (a) July 20, 2015, and (b) the date that is six (6) months before the maturity date of the indebtedness under the Term Loan Agreement (as defined below) (or if the indebtedness under the Term Loan Agreement is fully refinanced or replaced, the maturity date of such refinanced or replaced indebtedness).  The New Revolving Facility has a borrowing base principally supported by the inventory and accounts receivable of the Borrowers.

The rights and obligations of the Lenders under the Revolving Credit Agreement have been assigned from PNC to Wells Fargo under the New Revolving Facility Agreement.  The New Revolving Facility Agreement includes a grant of liens on substantially all of the assets of the Borrowers.  The security interests granted under the New Revolving Facility in the assets (including inventory and accounts receivable) other than substantially all of Borrowers’ fixed assets will be first priority in nature, subject to customary exceptions, and the security interests in the collateral constituting substantially all of the Borrowers’ fixed assets will be second priority in nature, and subject to customary liens and the first priority lien on such assets under Aventine’s senior secured term loan credit agreement dated as of December 22, 2010 by and among Aventine, as borrower, Citibank, N.A., as administrative agent and collateral agent (in such capacity, the “Term Loan Agent”), the lenders party thereto and certain other persons (as amended, and as may be amended, supplemented or otherwise modified from time to time, the “Term Loan Agreement”).

Borrowings under the New Revolving Facility Agreement will bear interest at (i) the London Interbank Offered Rate (“LIBOR”) plus 3.0% to 3.5% or (ii) the alternate base rate plus 2.0% to 2.5%.     The applicable margin on loans under the New Revolving Facility will be re-determined on the first day of each fiscal quarter of Aventine by calculating the average amount that the Borrowers are entitled to borrow under the New Revolving Facility (after giving effect to any outstanding borrowings thereunder) as a proportion of the Commitments (as decreased by the amount of reductions in the Commitments pursuant to the New Revolving Facility).  The alternate base rate will be calculated based on the greater of (A) the Federal funds rate plus 1/2 of 1.0%, (B) the LIBOR rate (calculated based upon an interest period of three months and determined on a daily basis) plus 1.0%, and (C) the rate of interest announced, from time to time, by Wells Fargo Bank, National Association, as its “prime rate”.

The New Revolving Facility Agreement requires mandatory prepayment of the obligations thereunder in the event that the amount of (i) outstanding revolving loans under the New Revolving Facility plus (ii) the aggregate undrawn amount of all outstanding letters of credit issued by certain Lenders exceeds the Borrowing Base (as defined in the New Revolving Facility Agreement).

The New Revolving Facility Agreement contains customary affirmative and negative covenants concerning the conduct of Aventine’s business operations, such as limitations on the incurrence of indebtedness, the granting of liens, maintenance of operations, mergers, consolidations and dispositions of assets, restricted payments and the payment of dividends, investments and transactions with affiliates.

F-11

Table of Contents

The New Revolving Facility Agreement contains a financial covenant that will require Aventine to maintain minimum liquidity levels of $25 million in 2013 and thereafter.  The New Revolving Facility Agreement also includes customary events of default, including, but not limited to, failure to pay principal or interest, failure to pay or default under other material debt, misrepresentation or breach of warranty, violation of certain covenants, a change of control, the commencement of a bankruptcy proceeding, any of the Borrowers’ insolvency and the rendering of a judgment or judgments against any of the Borrowers’ in excess of a specified amount individually or in the aggregate.  Upon the occurrence of an event of default, Aventine’s obligations under the New Revolving Facility Agreement may be accelerated and all indebtedness thereunder would become immediately due and payable.  The Company was in compliance with all of the covenants related to the New Revolving Facility Agreement at March 31, 2012.

At March 31, 2012, the Company had no short-term borrowings and $9.2 million in letters of credit outstanding under the New Revolving Facility.

8.                            LONG-TERM DEBT

The following table summarizes the Company’s outstanding long-term debt:

Senior Secured Term Loan Credit Agreement

On December 22, 2010, the Company entered into the Term Loan Agreement with Citibank, N.A., as administrative agent and as collateral agent, the lenders party thereto, Citigroup Global Markets Inc. and Jefferies Finance LLC, as joint lead arrangers and joint book-runners, and Citibank, N.A. and Jefferies Finance LLC, as co-syndication agents.  Under the Term Loan Agreement, the lenders provided to the Company an aggregate principal amount $200 million term loan facility (the “Term Loan Facility”).  The Term Loan Facility was issued net of original issue discount of $8 million.

Also on December 22, 2010, the Company gave notice of redemption pursuant to the indenture dated as of the Effective Date among the Company, each of the Company’s direct and indirect wholly-owned subsidiaries, as guarantors, and Wilmington Trust FSB, as trustee and collateral agent, providing that it would redeem all $155 million aggregate principal amount of its 13% senior secured notes due 2015 (the “Notes”)  at a redemption price of 105% of the principal amount thereof, plus accrued and unpaid interest to, but not including, the redemption date. Concurrently with the closing of the Term Loan Agreement, the Company irrevocably deposited in trust with the trustee for the Notes, $164.8 million of the proceeds from the Term Loan Facility, funds sufficient to pay the redemption price for all $155 million aggregate principal amount of the Notes. The Company redeemed such Notes on January 21, 2011.  In connection with the redemption, the Company paid $164.8 million, of which $155 million related to the principal amount of the Notes, $7.8 million related to a prepayment penalty on the Notes and $2 million related to interest on the Notes.

On April 7, 2011, the Company entered into an incremental amendment (the “Incremental Amendment”) with Citibank, N.A., as administrative agent for the lenders under the Term Loan Agreement, and Macquarie Bank Limited, as lender (“Macquarie”), to the Company’s Term Loan Agreement.  Pursuant to the Incremental Amendment, Macquarie loaned an aggregate principal amount

F-12

Table of Contents

equal to $25 million, net of $1.3 million in fees, to the Company.  The loan under the Incremental Amendment has substantially the same terms as the existing loans under the Term Loan Agreement, including seniority, ranking in right of payment and of security, maturity date, applicable margin and interest rate floor.  The Company continues to be subject to all other terms and restrictions contained in the original Term Loan Agreement.

Borrowings under the Term Loan Agreement bear interest at (i) LIBOR plus 8.5% per annum or (ii) the alternate base rate plus 7.5% per annum.  The LIBOR rate is subject to a 2% floor.  The alternate base rate will be calculated based on the greater of (i) 3% per annum and (ii) the highest of (A) the Federal funds rate plus 1/2 of 1%, (B) the LIBOR rate for an interest period of one month plus 1%, (C) the three-month certificate of deposit rate plus 1/2 of 1%, or (D) Citibank, N.A.’s prime rate.

On July 20, 2011, the Company entered into an amendment (“Citi Amendment”) to the Term Loan Agreement with the lenders party thereto and the Term Loan Agent.  Under the terms of the Citi Amendment, the amount of indebtedness that the Company is permitted to incur under the New Revolving Facility Agreement (including bank products and hedging obligations) is capped at $58 million. The Citi Amendment reduces the Company’s minimum liquidity covenant for 2012 from $25 million to $15 million. The Citi Amendment also includes certain technical amendments to permit the New Revolving Facility Agreement.

Liquidity

The Company’s ability to maintain adequate liquidity depends in part upon industry conditions and general economic, financial, competitive, regulatory, and other factors beyond its control. The Company expects its earnings and cash flow to vary significantly from year to year due to the cyclical nature of its industry. As a result, the amount of debt the Company can manage in some periods may not be appropriate for the Company in other periods. Additionally, the Company’s future cash flow may be insufficient to meet its debt obligations and commitments. Any insufficiency could negatively impact the Company’s business.

Under the Company’s Term Loan Agreement, the Company is required to maintain a minimum liquidity position comprised of available cash and borrowing capacity under its New Revolving Facility Agreement of $15 million in 2012 and $25 million in 2013 and thereafter.  The New Revolving Facility requires the same minimum liquidity position as the Term Loan Agreement.  If the Company does not generate enough cash flow from operations to satisfy its principal uses of liquidity, it may have to undertake alternative financing plans, such as refinancing or restructuring its debt, selling assets, reducing or delaying capital investments or raising additional capital. In addition, under the Term Loan Agreement, the Company is required to maintain a debt to total capitalization ratio of no greater than 0.65 to 1.0.  The debt to total capitalization ratio is measured as of the most recently completed four fiscal quarters of the Company.  As of March 31, 2012, the Company was in compliance with this ratio; however, if the Company continues to incur significant operating losses during the year, there is a risk that the Company may be in default under the Term Loan Agreement and/or the New Revolving Facility for failure to maintain this debt to total capitalization ratio as measured during one or more of the remaining fiscal quarters in 2012.  If there is an event of default that occurs and is continuing under the Term Loan Agreement or the New Revolving Facility, amounts outstanding under these facilities may be declared immediately due and payable.  If the Company’s qualifying inventory and accounts receivable decline such that its borrowing base is limited, the Company may not have sufficient funds available to repay such borrowings, and the Company may be unable to obtain additional financing to fund its operations.

In the event that the Company defaults on any of its outstanding debt agreements during 2012, there are additional avenues that the Company may pursue to remedy the default.  These avenues include, but are not limited to, refinancing or restructuring the respective debt agreement(s), obtaining a waiver of default by the lenders and/or raising additional capital.  However, there is no assurance that these avenues or the

F-13

Table of Contents

alternative financing plans referenced above will be available or could be consummated on terms acceptable to the Company, or at all, and there is no assurance that undertaking any alternative financing plans, if necessary, would allow the Company to meet its debt obligations.

9.                            INTEREST EXPENSE

The following table summarizes interest expense:

During the three months ended March 31, 2012, the Company recorded $0.6 million of capitalized interest related to its capital improvement projects. During the three months ended March 31, 2011, the Company recorded $1.9 million of capitalized interest related to its capacity expansion projects.

10.                     COMMITMENTS AND CONTINGENCIES

Environmental Remediation and Contingencies

The Company is subject to extensive federal, state and local environmental laws, regulations and permit conditions (and interpretations thereof), including those relating to the discharge of materials into the air, water and ground, the generation, storage, handling, use, transportation and disposal of hazardous materials, and the health and safety of the Company’s employees.  These laws, regulations, and permits require the Company to incur significant capital and other costs, including costs to obtain and maintain expensive pollution control equipment.  They may also require the Company to make operational changes to limit actual or potential impacts to the environment.  A violation of these laws, regulations or permit conditions can result in substantial fines, natural resource damages, criminal sanctions, permit revocations and/or facility shutdowns.  In addition, environmental laws and regulations (and interpretations thereof) change over time, and any such changes, more vigorous enforcement policies or the discovery of currently unknown conditions may require substantial additional environmental expenditures. As such, the Company has not accrued any amounts for environmental matters at March 31, 2012.

Federal and state environmental authorities have been investigating alleged excess volatile organic compounds emissions and other air emissions from many U.S. ethanol plants, including the Company’s Illinois facilities. The investigation relating to the Illinois wet mill facility is still pending, and the Company could be required to install additional air pollution control equipment or take other measures to control air pollutant emissions at that facility. If authorities require such controls to be installed, the Company anticipates that costs would be considerably higher than the approximate $3.4 million incurred in connection with a similar matter at the Nebraska facility due to the larger size of the Illinois wet mill facility. The Company has not yet established reserves for possible costs it may incur in connection with the Illinois facility investigation. In addition, if the authorities determine the Company’s emissions were in violation of applicable law, it would likely be required to pay fines that could be material.

The Company has made, and expects to continue making, significant capital expenditures on an ongoing basis to comply with increasingly stringent environmental laws, regulations and permits, including

F-14

Table of Contents

compliance with the EPA’s National Emissions Standard for Hazardous Air Pollutants (“NESHAP”) for industrial, commercial and institutional boilers and process heaters (also known as “Boiler MACT”).  This NESHAP was issued but subsequently vacated in 2007.  The vacated version of the rule required the Company to implement maximum achievable control technology at its Illinois wet mill facility to reduce hazardous air pollutant emissions from its boilers.  The EPA issued a new Boiler MACT rule on March 21, 2011, but on May 18, 2011 it published a notice delaying the effective date of the new rule to allow the agency to reconsider its effect.  On December 2, 2011, the EPA released proposed amendments to the new Boiler MACT rule, and the public comment period closed on February 21, 2012.  The proposed rule is more stringent than the vacated version depending on boiler sizes, whether the source is new or existing, and it sets work practice standards for various emissions.  On January 9, 2012, the District Court for the District of Columbia vacated the May 2011 action by the EPA, which delayed the implementation of the new Boiler MACT.  The effect of the vacatur is that the revisions to the Boiler MACT became immediately effective.  Notwithstanding the vacatur, the EPA issued a “No Action Assurance Letter” to establish that it will exercise its enforcement discretion to not pursue enforcement action for violations of certain notification deadlines in the final Major Source Boiler MACT rule. The EPA intends to issue the final reconsideration rule prior to any of the compliance dates for existing sources.  In the absence of a final EPA NESHAP for industrial, commercial and institutional boilers and process heaters, the Company is working with state authorities to determine what technology will be required at its Illinois wet mill facility and when such technology must be installed.  The Company currently cannot estimate the amount that will be needed to comply with federal or possible state technology requirement regarding air emissions from its boilers.

Litigation Matters

On November 6, 2008, the Company commenced an action against JP Morgan Securities, Inc. and JP Morgan Chase Bank, N.A. (hereinafter collectively referred to as ‘‘JP Morgan’’) in the Tenth Judicial Circuit in Tazewell County, Illinois. The Company’s complaint relates to losses incurred of approximately $31.6 million as a result of investments in Student Loan Auction Rate Securities purchased through JP Morgan.   This state court litigation is currently under a stay by the Circuit Court, which has prevented further prosecution of this dispute in that forum, and the Company is evaluating how to proceed with its claims.  At this time, the Company is unable to determine the impact such litigation will have on our business, operating results, financial condition and cash flows.

On April 7, 2009, Aventine and the Debtors filed voluntary petitions with the Bankruptcy Court to reorganize under Chapter 11 of the Bankruptcy Code.  The Plan was confirmed by order entered by the Bankruptcy Court on February 24, 2010 and became effective on March 15, 2010, the date on which the Company emerged from protection under Chapter 11 of the Bankruptcy Code.  Since March 15, 2010, certain of the Debtors’ cases have been closed by order of the Bankruptcy Court, effective December 20, 2010; however, the cases of Aventine Renewable Energy, Inc. and Nebraska Energy, L.L.C. remain open, wherein certain creditor claims remain subject to dispute and further adjudication, as do certain claims and potential claims by the Debtors against various third parties.  At this time, the Company is unable to determine the impact such litigation will have on its business, operating results, financial condition and cash flows.

On April 19, 2011, the Company was notified of the EPA’s intent to file an administrative complaint against Aventine Renewable Energy, Inc. for a release which occurred in March 2008.  The EPA noted that they would be seeking a penalty of approximately $193 thousand.  The Company has responded stating that its position is that such claims are barred by the bankruptcy proceedings.  At this time, the Company is unable to determine the impact such litigation will have on its business, operating results, financial condition and cash flows.

The Company initiated a civil action against E-Biofuels, LLC (“E-Biofuels”) in 2009 related to breach of agreement, and asked for not less than $3 million in compensation.  This suit was later transferred

F-15

Table of Contents

to the Bankruptcy Court and subsequently settled in the Company’s favor on July 6, 2011.  Under the terms of the settlement, the Company received $0.2 million in cash and 425,000 shares of Imperial (E-Biofuels’ parent company) stock.   The stock was valued at $0.7 million on the date of receipt of July 6, 2011 and $0.1 million at March 31, 2012.  The Company also had previously recorded a liability related to tax credits of $0.7 million which was relieved by the settlement.  The stock was booked as available for sale securities which are classified as short-term investments on the condensed consolidated balance sheet.  For the quarter ended March 31, 2012, the Company recorded a loss on available for sale securities of $0.1 million related to the decrease in the current trading price of the stock, which is included in other non-operating income (expense) on the condensed consolidated statement of operations, as the amount is considered an other than temporary impairment.

On September 3, 2009, Union Tank Car Company (“Union Tank”) filed notice of a claim against the Company with the Bankruptcy Court for a general unsecured claim in the amount of $82.6 million for certain estimated end charges including railcar cleaning cost and unpaid rental payments for leased railcars.  Union Tank also filed an administrative claim against the Company in the amount of $0.1 million for the alleged use of railcars after the effective date of the rejection of the leases for such railcars.  The Company disputed both of these claims.  On September 30, 2011, the Court ruled that the claim shall be allowed in the amount of $27.6 million.  Partial distribution of shares on account was made October 31, 2011, in accordance with the terms of the Plan and at such time as the distribution was made to other holders of claims in classes five and six that were allowed as of September 30, 2011.  As a result of the settlement on September 30, 2011, the Company reversed the related reserve for this matter of $0.1 million through other non-operating income (expense) on the condensed consolidated statements of operations.

From time to time, the Company is involved in various legal proceedings, including legal proceedings relating to the extensive environmental laws and regulations that apply to the Company’s facilities and operations. The Company is not involved in any legal proceedings, other than those described herein, that it believes could have a material adverse effect upon the Company’s business, operating results, financial condition or cash flows.

11.                     RETIREMENT AND PENSION PLANS

The Company has a defined benefit pension plan (the “Retirement Plan”) that is noncontributory and covers unionized employees at its Pekin, Illinois facility who fulfill minimum age and service requirements.  Benefits are based on a prescribed formula based upon the employee’s years of service.  On October 29, 2010, the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industry and Service Workers International Union, Local 7-662 (the “Union”) ratified a new collective bargaining agreement with the Company for its hourly production workers in Pekin, Illinois.  This new agreement was effective November 1, 2010.  The agreement states that, among other things, employees hired after November 1, 2010 will not be eligible to participate in the Retirement Plan.  The Company uses a December 31 measurement date for its Retirement Plan.

A summary of the components of net periodic pension cost for the Retirement Plan is as follows:

F-16

Table of Contents

12.                     POSTRETIREMENT BENEFIT OBLIGATION

The Company sponsors a health care plan and life insurance plan (“Postretirement Plan”) that provides postretirement medical benefits and life insurance to certain “grandfathered” unionized employees.  Employees hired after December 31, 2000 are not eligible to participate in the Postretirement Plan. The plan is contributory, with contributions required at the same rate as active employees.  Benefit eligibility under the plan reduces at age 65 from a defined benefit to a defined dollar cap based upon years of service.

A summary of the components of net periodic postretirement cost for the Postretirement Plan is as follows:

13.                     INCOME TAXES

The provision for income taxes for the three months ended March 31, 2012 and 2011 consists of the following:

The difference between the effective tax rate accrued and the statutory rate is principally due to the impact of state taxes (net of federal benefit), increases in valuation allowances, and other permanent differences between book and tax.

The Company records a valuation allowance on its deferred tax assets to reduce the deferred tax assets to the amount that management believes is more likely than not to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. Management considered the scheduled reversal of deferred tax liabilities and tax planning strategies in making this assessment. Due to the Company’s history of losses, allowances have been established for all deferred benefits except for deferred benefits available to offset certain deferred tax liabilities that will reverse over time.

In connection with the consummation of the Plan in 2010, the Company generated an “ownership change” as defined in Section 382 of the Internal Revenue Code, which limits the Company’s ability to utilize certain carryover tax attributes. The Company’s net unrealized built in losses may be limited by Section 382 which could potentially result in the significant acceleration of tax payments. The Company’s state net operating loss carryforwards are also subject to similar, but varying, restrictions on their future use.

At March 31, 2012, the Company had $0.1 million of uncertain tax benefits.  All of the Company’s unrecognized tax benefits, if recognized in future periods, would impact the Company’s effective tax rate.

F-17

Table of Contents

At March 31, 2012, the Company’s liability for unrecognized tax benefits is included in other long-term liabilities on the condensed consolidated balance sheet.  There is a reasonable possibility that these unrecognized tax benefits could reverse within the next 12 months.

14.                     STOCK-BASED COMPENSATION PLANS

Pre-tax stock-based compensation expense for the three months ended March 31, 2012 and 2011 was approximately $(0.3) million and $1.7 million, respectively, which was charged to selling, general and administrative expense in the condensed consolidated statement of operations.

Equity Awards

During the three months ended March 31, 2012, the Company awarded 45,156 stock options to certain employees.  These awards have a graded vesting schedule in which one-third of the awards will vest each year on each of the first 3 anniversaries of the grant date.  The determination of the fair value of the stock option awards, using the Black Scholes Option Pricing Model, is based on the assumptions in the following table.  The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant over the expected term.  Expected volatility is calculated by considering the expected volatilities of public companies engaged in similar industries.  The Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term of the options. As a result, the expected option term is calculated using the “simplified” method permitted by Staff Accounting Bulletin 110.  Assumptions for options granted during the three months ended March 31, 2012 are as follows:

Certain stock options held by our Chief Executive Officer were modified in February 2012.  Of the 100,000 stock options that were granted to the executive in 2010, 77,519 were modified to reduce the exercise price of the options from $43.75 to $3.55.  The Company recognized an incremental fair value amount of $0.1 million in pre-tax stock-based compensation expense related to the modification for the three months ended March 31, 2012.

On March 19, 2012, the Company’s Senior Vice President, Commodity Risk Management resigned.  Pursuant to the separation agreement, the executive forfeited certain unvested equity awards.  The Company recognized a reduction in pre-tax stock-based compensation expense of $0.6 million related to these forfeitures during the three months ended March 31, 2012.

15.                     SUBSEQUENT EVENTS

On April 10, 2012, Aventine executed an agreement with Green Plains Renewable Energy, Inc. and its subsidiaries (“GPRE”) as settlement of a pending litigation between the companies.  Pursuant to the settlement agreement, the parties agreed to the settlement and release of all claims and a dismissal of the litigation.  Under the terms of the settlement agreement, GPRE agreed to make a cash payment of approximately $3.0 million to Aventine, which is expected to be made during the second quarter of 2012.  In addition, GPRE will also purchase a minimum of 5 million gallons of ethanol from the Company per month from May to August 2012 at prices set forth in the settlement agreement.

F-18

Table of Contents

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

In this Quarterly Report on Form 10-Q, the terms the “Company”, “we”, “our”, and “us” refer to Aventine Renewable Energy Holdings, Inc. and its subsidiaries on a consolidated basis, unless the context otherwise requires.

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements include all statements that do not relate solely to current or historical fact, but address events or developments that we anticipate will occur in the future.  Forward-looking statements include statements regarding our goals, beliefs, plans or current expectations, taking into account the information currently available to our management.  When we use words such as “anticipate,” “intend,” “expect,” “believe,” “plan,” “may,” “should” or “would” or other words that convey uncertainty of future events or outcome, we are making forward-looking statements.  Statements relating to future sales, earnings, operating performance, restructuring strategies, plant expansions, capital expenditures and sources and uses of cash, for example, are forward-looking statements.

These forward-looking statements are subject to various risks and uncertainties which could cause actual results to differ materially from those stated or implied by such forward-looking statements.  We undertake no obligation to publicly release any revision of any forward-looking statements contained herein to reflect events and circumstances occurring after the date hereof, or to reflect the occurrence of unanticipated events.  Information concerning risk factors is contained under Part I, Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2011.   You should carefully consider all of the risks and all other information contained in or incorporated by reference in this report and in our filings with the Securities and Exchange Commission (the “SEC”).  These risks are not the only ones we face.   Additional risks and uncertainties not presently known to us, or which we currently consider immaterial, also may adversely affect us.  If any of these risks actually occur, our business, financial condition and results of operations could be materially and adversely affected.

Business Summary

We are a producer and marketer of ethanol.  Through our production facilities, we market and distribute ethanol to many of the leading energy companies in the United States (the “U.S.”).  Our revenues are principally derived from the sale of ethanol and from the sale of co-products and bio-products that we produce as by-products during the production of ethanol at our plants.

Recent Developments

In mid-February 2012, we temporarily brought down the Mt. Vernon facility in order to perform needed maintenance.  Margins at Mt. Vernon have been under pressure due to strong corn basis in that region which could not be passed on to our customers.  When margins return, we will be prepared to bring this plant back on line and continue its progress to full rate.

On March 19, 2012, we entered into a separation agreement (the “Separation Agreement”) with Ben Borgen (“Mr. Borgen”), Senior Vice President, Commodity Risk Management, pursuant to which Mr. Borgen resigned from all positions held with us and our affiliates.  Under the terms of the Separation Agreement, Mr. Borgen received, among other things, (i) a termination payment of $700,000, which was paid to Mr. Borgen within thirty (30) days following his departure and (ii) 22,596 shares of our common stock, which were delivered to Mr. Borgen within thirty (30) days following his departure.  In addition, Mr. Borgen will receive 26,666 shares of our common stock in respect of his previously-vested restricted stock units, which will be settled six (6) months following his departure.  Mr. Borgen has previously vested in 42,750 stock options, which remained exercisable for thirty (30) days following his departure.  Mr. Borgen’s unvested stock options and all hybrid equity units, whether vested or unvested, have terminated.

1

Table of Contents

Business Environment

The following discussion includes trends and factors that may affect future operating results.

Commodity Pricing

Our operations are highly dependent on commodity prices, especially prices for ethanol, corn and natural gas.

Ethanol. During the first quarter of 2012, ethanol prices averaged approximately $2.23 per gallon compared to an average price of $2.43 per gallon during the first quarter of 2011.  At March 31, 2012, we had contracts for delivery of ethanol totaling 38.8 million gallons through December 2012, of which 2 million gallons were based on fixed-price contracts and 36.8 million were at spot prices using Platts and Oil Price Information Service (“OPIS”) indices.

Corn. During the first quarter of 2012, corn prices averaged approximately $6.41 per bushel compared to an average price of $6.70 per bushel during the first quarter of 2011, a decrease of approximately 4%.

We continuously purchase corn for physical delivery from suppliers using forward purchase contracts in order to assure supply. As we do this, we have in the past often shorted a like amount of Chicago Board of Trade (“CBOT”) corn futures with similar dates to lock in the basis differential. We have also occasionally used CBOT futures contracts to lock in the price of corn by taking long positions in CBOT contracts in order to reduce our risk of price increases. Exchange traded forward contracts for commodities are marked to market each period. Our forward physical purchases of corn are not marked to market.  At March 31, 2012, we had fixed the price of 1.5 million bushels of corn through April 30, 2012 and we had future contracts to purchase 50 thousand bushels of corn.

Natural Gas. Natural gas is an important input in our ethanol and co-product production process. We use natural gas primarily to dry distillers grains for storage and transportation over longer distances. This allows us to market distillers grains to broader livestock markets in the U.S. The price fluctuation in natural gas prices over the first three months of 2012, based on the New York Mercantile Exchange daily futures data, has ranged from a high of $3.10 per MMBtu at the beginning of January to a low of $2.13 per MMBtu at the end of March.  Our current natural gas usage is approximately 400,000 MMBtus per month.  The price fluctuation in natural gas prices over the first three months of 2011, based on the New York Mercantile Exchange daily futures data, ranged from a high of $4.74 per MMBtu at the end of January to a low of $3.78 per MMBtu at the beginning of March.

Financial Statement Overview

The following general factors should be considered in analyzing our results of operations:

Results of Operations

The following discussion summarizes the significant factors affecting our consolidated operating results for the three months ended March 31, 2012 and 2011. This discussion should be read in conjunction with our condensed consolidated financial statements and notes to our condensed consolidated financial statements contained herein and the consolidated financial statements and related notes for the year ended December 31, 2011 in our Annual Report on Form 10-K.

2

Table of Contents

Overview

For the three months ended March 31, 2012 and 2011, we incurred net losses of $22.5 million and $19.3 million, respectively. The loss in the three months ended March 31, 2012 as compared to the loss for the three months ended March 31, 2011 is due primarily to a decreased spread between ethanol prices and corn costs.  CBOT spreads between ethanol and corn were positive for the three months ended March 31, 2011 at an average of approximately $0.03 per gallon compared to an average negative spread of approximately ($0.09) per gallon for the three months ended March 31, 2011.  In addition, the three months ended March 31, 2011 included a $9.4 million loss incurred on the early extinguishment of the Notes.  See Note 8 in the accompanying condensed consolidated financial statements.

Total gallons of ethanol marketed and distributed were as follows:

The decrease in equity production of 3.6 million gallons for the three months ended March 31, 2012 compared to the same period in 2011 is primarily the result of the shutdown of the Mt. Vernon facility in early 2012.  The majority of the production decline due to the Mt. Vernon facility shutdown was offset by increased production at our Pekin, Illinois and Nebraska facilities.  The increase in gallons marketed and distributed of 4.7 million is primarily attributable to the additional gallons purchased of 6.2 million and the additional decrease in inventory of 2.1 million gallons, partially offset by the decreased production due to the shutdown of our Mt. Vernon facility.  We purchased 6.9 million gallons for resale in the first quarter of 2012 in order to fulfill sales contracts during the shutdown of our Mt. Vernon facility.

The Three Months Ended March 31, 2012 Compared With the Three Months Ended March 31, 2011