Pacific Ethanol Inc. said Tuesday it has trimmed another $14.7 million in debt from its production plants, another step in the company’s comeback from a devastating slump.
The Sacramento ethanol producer purchased $14.7 million worth of debt from a lender. Pacific Ethanol paid $17 million for the debt, a premium, although President and Chief Executive Neil Koehler said the lender agreed to a smaller premium than it was owed.
By absorbing the debt into the parent company, Koehler said, Pacific Ethanol has effectively retired the loan. There’s now $20.5 million worth of debt left on the four production plants, down from nearly $300 million when the company nearly spun out of control in 2009.
“We want to clean up the balance sheet once and for all and get it behind us,” Koehler said in an interview.
In 2009, after ethanol prices collapsed, Pacific Ethanol ran short on cash and idled three of its four plants. All four plants were put into Chapter 11 bankruptcy reorganization. The bankruptcy case ended with lenders forgiving about $200 million in debt but taking controlling interest in the plants away from Pacific Ethanol.
Since then, the ethanol market has recovered, the plants have resumed production, and Pacific Ethanol has gradually bought back controlling interest in the facilities. Today the company owns 91 percent of the equity in the plants.
Pacific Ethanol shares closed at $13.82, down 32 cents, on the Nasdaq market.
Call The Bee’s Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.