PRODUCTION
FACILITY SUBSIDIARIES
FILE
FOR CHAPTER 11 BANKRUPTCY PROTECTION;
EXISTING
LENDERS AGREE IN PRINCIPLE TO $20 MILLION DIP FINANCING;
KINERGY
AMENDS $10M CREDIT FACILITY WITH WACHOVIA
Sacramento, CA, May 18, 2009 –
Pacific Ethanol, Inc. (the “Company”) (NASDAQ GM: PEIX), announced today that its subsidiaries which own its
four wholly-owned ethanol production facilities (“Plant Subsidiaries”) have
filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the
District of Delaware in an effort to restructure their
indebtedness.
The
Company and its marketing subsidiaries, Kinergy Marketing LLC (“Kinergy”) and
Pacific Ag. Products, LLC (“PAP”), have not filed for Chapter 11 bankruptcy
protection. The Company is expected to continue to manage the Plant
Subsidiaries under an Asset Management Agreement and Kinergy and PAP are
expected to continue to market and sell the Plant Subsidiaries’ ethanol and feed
production under existing Marketing Agreements.
The
Plant Subsidiaries and WestLB AG and certain other lenders under the Credit
Agreement dated February 27, 2007 have agreed in principle to first priority
secured debtor-in-possession (“DIP”) financing in a maximum amount of $20
million that is intended to enable the Plant Subsidiaries to continue to satisfy
customary obligations associated with their ongoing operations. The
Plant Subsidiaries and the lenders have negotiated a proposed DIP Credit
Agreement. The DIP financing is subject to approval by the bankruptcy
court and final documentation as well as numerous other conditions to
closing.
Kinergy
has renegotiated and amended its credit facility with Wachovia Capital Finance
Corporation. Wachovia has agreed to continue providing up to $10
million for Kinergy’s working capital needs. The term of the amended
credit facility extends through October 2010. Kinergy’s business is expected to
continue uninterrupted.
Neil
Koehler, Pacific Ethanol’s CEO and President said, “We have worked well with our
creditors to develop a plan that we believe allows us to continue operations and
meet our commitments to our customers and vendors. We are unwavering
in our vision of being a leading producer and marketer of low carbon fuels in
the Western United States. 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 increases.”
About Pacific Ethanol,
Inc.
Pacific
Ethanol is the largest West Coast-based marketer and producer of
ethanol. Pacific Ethanol has ethanol plants in Madera and Stockton,
California; Boardman, Oregon; and Burley, Idaho. Pacific Ethanol also owns
a 42% interest in Front Range Energy, LLC which owns an ethanol plant in
Windsor, Colorado. Central to Pacific Ethanol’s growth strategy is
its destination business model, whereby each respective ethanol plant achieves
lower process and transportation costs by servicing local markets for both fuel
and feed. Pacific Ethanol has achieved its goal of 220 million
gallons per year of ethanol production capacity in 2008. In addition,
Pacific Ethanol is working to identify and develop other renewable fuel
technologies, such as cellulose-based ethanol production and
bio-diesel.
Safe Harbor Statement under
the Private Securities Litigation Reform Act of 1995
With the
exception of historical information, the matters discussed in this press release
are forward-looking statements that involve a number of risks and
uncertainties. The actual future results of Pacific Ethanol could
differ from those statements. Factors that could cause or contribute
to such differences include, but are not limited to, the ability of the Plant
Subsidiaries to close on the DIP financing as currently contemplated; the
ability of the Plant Subsidiaries to remain in compliance with the terms of any
debtor-in-possession financing; the ability of Pacific Ethanol and Kinergy to
remain in compliance with the terms of the Wachovia credit facility; the ability
of Pacific Ethanol to obtain additional debt or equity financing, or both,
including additional working capital financing, and the ability of Pacific
Ethanol to reschedule or restructure its indebtedness; the price of ethanol
relative to the price of corn and other production inputs; the price of ethanol
relative to the price of gasoline; and the factors contained in the “Risk
Factors” section of Pacific Ethanol’s Form 10-K filed with the Securities and
Exchange Commission on March 31, 2009 and Pacific Ethanol’s Form 10-Q to be
filed with the Securities and Exchange Commission on May 18, 2009.
####
2