Pacific Ethanol Inc. is running out of gas.
The troubled Sacramento ethanol producer said Tuesday that its cash could run out in a month. Once among the fastest-growing ethanol producers, the company said in a Securities and Exchange Commission filing that there's "substantial doubt" that it can continue beyond April 30 unless it can renegotiate its debts or find new sources of cash.
It said it might have to file for bankruptcy protection.
Company officials couldn't be reached for comment.
Pacific Ethanol is in default on $250 million in loans. Although its creditors agreed once again Tuesday not to take legal action on the defaults, the agreement expires April 30. As it is, the company has only $4 million in cash and $4.7 million in available credit, and probably can't keep going beyond that date.
As part of the latest agreement, Pacific Ethanol revealed that it had to borrow $2 million from its chairman, former California Secretary of State Bill Jones, and President and Chief Executive Neil Koehler.
The company also disclosed heavy fourth-quarter losses: $33.9 million, or 61 cents a share. That compared with a loss of $14.7 million, or 39 cents a share, a year earlier.
Sales grew 23 percent to $160.4 million. But Pacific Ethanol, like its competitors, has been squeezed by shrinking margins as ethanol prices failed to keep up with the rising cost of corn, the main ingredient used in making the fuel additive.
With corn at $5 a bushel and ethanol at $1.55 a gallon, "the spread between ethanol and corn is really too narrow to make money," said Joel Karlin, a commodities analyst at Western Milling in Goshen in Tulare County.
In addition, the wholesale price of gas has fallen below that of ethanol, Karlin said. As a result, refiners have no incentive to use more ethanol beyond the mandated minimums. That curbs demand.
Last fall one of the nation's biggest ethanol makers, VeraSun Energy of Sioux Falls, S.D., filed for Chapter 11 bankruptcy.
After a period of rapid growth in which it built plants in three states, Pacific Ethanol has been furiously downsizing. It suspended production at three of its plants in recent months and is operating at one-quarter capacity.
Pacific Ethanol stock closed at 33 cents a share Tuesday, unchanged, on the Nasdaq market.
Call The Bee's Dale Kasler, (916) 321-1066. Read his blog on the economy, Home Front, at www.sacbee.com/blogs.
About Comments
Reader comments on Sacbee.com are the opinions of the writer, not The Sacramento Bee. If you see an objectionable comment, click the "report abuse" button below it. We will delete comments containing inappropriate links, obscenities, hate speech, and personal attacks. Flagrant or repeat violators will be banned. See more about comments here.