Pacific Ethanol announces bankruptcy reorganization plan
Energy company Pacific Ethanol Holding Co. revealed Monday that it had filed a bankruptcy reorganization plan after being hit hard by fluctuating prices for the biofuel and its main source, corn.
The subsidiary of Sacramento-based Pacific Ethanol Inc. would restructure its $293.5 million of debt into a combination of equity and $115 million in debt. The company would relinquish ownership of its four plants to lenders led by European bank West LB AG while continuing to staff, manage and operate the factories.
The plan, filed in a bankruptcy court in Delaware on Friday, also allows for a $35-million credit line for plant operations that could help reopen the company’s facilities in Stockton and Madera. The plants, including others in Oregon and Idaho, entered Chapter 11 bankruptcy in May.
Creditors and the bankruptcy judge must first approve the reorganization proposal for the unit.
The parent Pacific Ethanol once was an industry golden child that boasted of an $84-million investment from Microsoft Corp. Chairman Bill Gates. Gates’ Cascade Investment firm has since sold its 21% stake in the company.
Pacific Ethanol Holding expects to exit bankruptcy around the end of the second quarter, but if negotiations result in an acquisition agreement with the lenders, the company said it would modify its reorganization plan.
The parent company's stock plunged 41% on Monday to $1.17. It was trading off another 5 cents to $1.12 at about 10:10 a.m. PDT Tuesday.
-- Tiffany Hsu