May 19, 2009 (FinancialWire) — Pacific Ethanol, Inc. (NASDAQ: PEIX) subsidiaries, which own its four wholly-owned ethanol production facilities, have filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the district of Delaware in an effort to restructure their indebtedness.

The company and its marketing subsidiaries, Kinergy Marketing LLC and Pacific Ag. Products, LLC, have not filed for Chapter 11 bankruptcy protection. The company is expected to continue to manage the plant subsidiaries under an asset management agreement and Kinergy and PAP are expected to continue to market and sell the plant subsidiaries’ ethanol and feed production under existing marketing agreements.

The plant subsidiaries and WestLB AG and other lenders under the credit agreement dated February 27, 2007 have agreed in principle to first priority secured debtor-in-possession financing in a maximum amount of $20 million that is intended to enable the plant subsidiaries to continue to satisfy customary obligations associated with their ongoing operations. The plant subsidiaries and the lenders have negotiated a proposed DIP credit agreement. The DIP financing is subject to approval by the bankruptcy court and final documentation as well as numerous other conditions to closing.

Kinergy has renegotiated and amended its credit facility with Wachovia Capital Finance Corp. Wachovia has agreed to continue providing up to $10 million for Kinergy’s working capital needs. The term of the amended credit facility extends through October 2010. Kinergy’s business is expected to continue uninterrupted.

Pacific Ethanol is the largest West Coast-based marketer and producer of ethanol, with ethanol plants in Madera and Stockton, California; Boardman, Oregon; and Burley, Idaho.

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