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Gates reduces his stake in Pacific Ethanol stock
By Dale Kasler - dkasler@sacbee.com
Published 12:00 am PDT Thursday, May 8, 2008
Story appeared in BUSINESS section, Page D3
Shizuo Kambayashi / Associated Press Bill Gates, shown Wednesday in Tokyo, now owns 18.5 percent of Pacific Ethanol common stock.
Bill Gates, whose early investment in Pacific Ethanol Inc. was a big boost for the promising startup, has reduced his stake in the now-struggling Sacramento company.
Gates' Cascade Investment LLC sold about 890,000 shares of Pacific Ethanol common stock over the past two weeks, lowering his investment to 18.5 percent. Cascade had controlled 20.27 percent, according to filings with the Securities and Exchange Commission.
The filings made no explanation for the stock sales, which were made at prices ranging from $3.10 to $3.85 a share. Michael Larson, the business manager of Cascade, couldn't be reached for comment.
Neil Koehler, the president and chief executive of Pacific Ethanol, said "there is nothing to indicate that they have lost faith in us."
Cascade controls two seats on Pacific Ethanol's board of directors, although one of the seats has been vacant since October.
Pacific Ethanol was an up-and-coming pioneer in the West Coast biofuels movement when Gates, the co-founder of Microsoft Corp., agreed in November 2005 to buy $84 million worth of preferred stock. Shares in the company, then based in Fresno, jumped 10 percent on the news.
The past year has brought tough times. Profits have been depressed by a supply glut and the rising price of corn – the main ingredient in ethanol – and the company was staggered by millions in construction cost overruns. In March, Pacific Ethanol reported a $14.7 million fourth-quarter loss and was forced to sell $40 million in preferred shares to a contractor to ease a cash squeeze.
Nonetheless, the company has said it's still optimistic about ethanol's long-term outlook and is forging ahead with a plan to lock up the Western U.S. market. It recently opened its third wholly owned plant, in Idaho. A fourth plant, in Stockton, is under construction.
Gates' firm owns a mix of common and preferred shares in Pacific Ethanol. Each preferred share can be converted into two shares of common. Pacific Ethanol shares closed Wednesday at $3.18, down 12 cents.
About the writer:
- Call The Bee's Dale Kasler, (916) 321-1066.
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