Calif. Ethanol Co. Goes From Fast Lane To Fumes

Wednesday, Apr 1, 2009  |  Updated 12:48 PM PDT
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Calif. Ethanol Co. Goes From Fast Lane To Fumes

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Pacific Ethanol is in default on $250 million in loans.

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A Sacramento company that once was among the nation's fastest-growing ethanol producers says it could run out of cash within a month.

Pacific Ethanol Inc. said in a Securities and Exchange Commission filing Tuesday that it may not be able to continue past April 30 without renegotiating its debts or finding new sources of cash.

The company said filing for bankruptcy protection is a possibility.

It also revealed that it borrowed $2 million from its chairman, former California Secretary of State Bill Jones, and president and chief executive Neil Koehler.

Corn is selling at about $5 a bushel and ethanol at $1.55 a gallon, so "the spread between ethanol and corn is really too narrow to make money," Joel Karlin, a commodities analyst at Western Milling in Goshen in Tulare County, told the Sacramento Bee.

After a period of growth in which it built plants in three states, Pacific Ethanol is in default on $250 million in loans. Rising prices for corn have squeezed the margins for many ethanol companies.

Pacific Ethanol shares closed at 33 cents Tuesday on the Nasdaq index.

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