Sacramento-based Pacific Ethanol Inc., which operates a plant in south central Idaho, on March 29 announced that subsidiary Pacific Ethanol Holding Co. LLC and its four wholly owned ethanol production facilities filed a plan of reorganization, and a related draft disclosure statement, with the U.S. Bankruptcy Court in Delaware. The filing was made in cooperation with WestLB AG and other secured lenders.
Emergence from bankruptcy is expected near the end of the second quarter, Pacific Ethanol Inc. said in a release.
Pacific Ethanol employs about 35 at its Magic Valley plant in Burley. Company Vice President Paul Koehler, based in Portland, told the Idaho Business Review that the plan will benefit the Magic Valley plant – which is operating “very well” – and company shareholders. The company mothballed the Idaho plant in February 2009 but resumed production there at the start of this year.
“The plan of reorganization is there to help support continued operations of the Magic Valley facility as the plants emerge from bankruptcy,” he said. The plant is operating at full capacity, he said.
Pacific Ethanol Inc. said the proposed plan provides for up to $35 million in a new line of credit to support current and future plant operations and restructures the $293.5 million of secured debt of the plant subsidiaries to a combination of equity and $115 million of secured and subordinated debt. Ownership of the plant subsidiaries would be transferred to a newly formed holding company, lender-owned New PEH. Pacific Ethanol Inc. would continue to staff, manage and operate the plants under the terms of an amended and restated asset management agreement and would continue to market all the ethanol and distillers’ grains produced by the plants.
Neil Koehler, Pacific Ethanol’s CEO and president, said the plan will “significantly improve the balance sheets of the company and its plant subsidiaries by reducing debt and providing new working capital. We believe the combined companies will be well positioned to continue as the leading producer and marketer of low carbon renewable fuels in the Western United States.”