New York (Platts)--1Apr2009

US West Coast ethanol producer Pacific Ethanol, which has shut three of
its four plants to conserve cash, can only fund its operations through April
30, something that may force it to seek bankruptcy protection, according to a
securities filing late Tuesday.

"We have sufficient working capital to continue operations only until
approximately April 30, 2009 at the latest unless we successfully restructure
our debt, experience a significant improvement in margins and obtain other
sources of liquidity," the company said.

"If we cannot restructure our debt and obtain sufficient liquidity in the
very near term, we may need to seek to protection under the U.S. Bankruptcy
Code," said Pacific in its filing.

Pacific said in a statement late Tuesday it had won a one-month reprieve
from lenders through forbearance agreements as it continues to negotiate new
loan terms.

The company has ethanol plants in Madera and Stockton, California (40
million gal/yr and 60 million gal/yr, respectively); Boardman, Oregon (40
million gal/yr); and Burley, Idaho (60 million gal/yr). In late February,
Pacific said all but the Boardman plant had suspended operations because of
unfavorable market conditions and that is still the case, company spokesman
Joseph Hansen said Tuesday in an brief interview.

Pacific on Tuesday also reported a fourth quarter 2008 net loss of $36.7
million, down from a $5.4 million loss a year earlier. The net loss per share
for the respective fourth quarters were 61 cents in Q4 2008 and 39 cents in Q4
2007.

In its securities filing, Pacific noted "prolonged negative operating
margins" for ethanol that has led to "severe working capital and liquidity
shortages." It said the current spread between corn and ethanol prices is is
"at or near break-even cash margins," and that those levels "cannot support
the long-term viability of the U.S. ethanol industry in general or us in
particular."

The company cited overall ethanol industry production cuts now taking
place, along with a string of bankruptcies that could actually increase
competition.

"[O]ur competition may change in the near term by either further
declining production or entrance by others in the marketplace, for example,
through purchases of facilities through liquidation. These competitors may
even be some of our current customers," the company said.

Big US refiner Valero Energy recently bought several of the plants that
were owned by bankrupt VeraSun and has said it plans to run all of them near
capacity.

Calling Pacific's liquidity update "bleak to say the least," Raymond
James analyst Pavel Molchanov said in a report Wednesday he expects the
company to file for bankruptcy. "Since securing additional capital under
current circumstances seems highly unlikely, we view a Chapter 11 filing as
likely," he said.

--Beth Evans, beth_evans@platts.com
--Katharine Fraser, katharine_fraser@platts.com