Pacific Ethanol units file bankruptcy
May 20, 2009
Pacific Ethanol Inc.’s five ethanol-producing units filed for Chapter 11 bankruptcy protection, sending the parent company’s shares tumbling 44 percent in after-hours trading, according to Business Wire. Pacific Ethanol and its marketing division did not file for bankruptcy. The Sacramento, Calif.-based company, has been battling a critical cash crunch, with high corn prices and lower ethanol prices greatly affecting the bottom line. The company has warned about the possibility of bankruptcy in recent weeks. Pacific Ethanol closed three of its four production plants this year as it tried to renegotiate loan terms. It operates a plant that can make 40 million gallons per year. Pacific Ethanol, like many ethanol producers nationwide, has been attempting to refinance loans, receiving an extension in March that expired in April. The action prompted the company’s ethanol-producing units to file the voluntary bankruptcy petition in Delaware. The company’s marketing subsidiaries — Kinergy Marketing LLC and Pacific Ag Products LLC — have not filed for bankruptcy. West LB and other creditors have agreed to debtor-in-possession financing of $20 million. “We have worked with our creditors to develop a plan that we believe allows us to continue operations and meet our commitments to our customers and vendors,” Pacific Ethanol CEO Neil Koehler said in a news release. “While the market environment for the ethanol industry has been challenging over the last several quarters, we remain confident that a restructured company will grow and prosper as the demand for low-carbon fuels increase.” The company has closed three of its four production plants this year as it tried to renegotiate loan terms. The company has plants in Madera, Stockton, Boardman, Ore., and Burley, Idaho. Pacific Ethanol moved its headquarters to Sacramento in January 2007. The company attracted the attention of many environmentally friendly investors, including Microsoft Corp. chairman and founder Bill Gates, who has since sold his shares.