Pacific Ethanol Files for Bankruptcy Protection for Four Plants

By Jeff St. John

Pacific Ethanol (PEIX) is seeking bankruptcy protection for four of its ethanol plant subsidiaries, making it the latest maker of corn-based ethanol to face insolvency.

The Sacramento-based company has not filed for bankruptcy itself, nor is it seeking bankruptcy protection for its marketing subsidiaries, Kinergy Marketing and Pacific Ag Products.

In March, Pacific Ethanol reported that it was in default on $250 million in loans and was seeking to renegotiate terms with its creditors. It had already shut down three of its five ethanol plants and reported a $151 million loss for 2008, compared to a 2007 loss of $18.6 million.

Pacific Ethanol has held out longer than many of its competitors, however. After boom times earlier this decade, makers of corn-based ethanol have been suffering, as high prices for corn and energy have eked away at their margins and falling gasoline prices have dragged down prices for the fuel they make.

Aventine Renewable Energy (AVR) declared bankruptcy last month after reporting a 2008 loss of $47.1 million, compared to a profit of $33.8 million in 2007.

And VeraSun Energy Corp. (VSUNQ.PK) filed for bankruptcy in October (see VeraSun Files for Bankruptcy). In March, top U.S. oil refiner Valero bought out VeraSun's plants.

Comments

[JET1C:]

Yes, and there's another fine mess we can all thank Bush for. What a jerk!

May 20 10:10 AM

[Christopher...:]

yeah JET thats right, blame bush for the democrats and enviromentalitsts agenda. Seeking Alpha needs an intellectual honesty filter for comments.

May 20 10:25 AM

[Dave12345:]

Does anyone see a way that PEIX itself can survive, or is this the end of the road for PEIX? Any thoughts would help.

May 21 10:31 PM

[lails:]

Yet another fine example on why corn ethanol is just not financially sound.

But do investors EVER think about SUGARCANE ethanol? Do they care that an ENTIRE country uses it for over 30 years (Brazil) and is largely responsible for its oil import independence? And that it has an energy ratio of 8 to 1 instead of 1,3 to 1 like corn?

No, they don´t.

Because it hurts too much to know that a 3rd world country managed to attain something that america is not being able to accomplish.

So let us continue investing in technologies that are unproven and seeing these bankrupcies soar. Heck, it´s just money! :)

Sep 27 09:40 PM