Pacific Ethanol, subsidiaries secure loan, promissory note default forbearances

By Caroline Salls

Pittsburgh, March 4 - Pacific Ethanol, Inc. and several of its wholly owned subsidiaries have secured forbearance agreements from the lenders on three credit agreements, according to an 8-K filed Wednesday with the Securities and Exchange Commission.

Pacific Ethanol and Kinergy Marketing, LLC entered into a forbearance agreement with Wachovia Bank NA in connection with Kinergy's $40 million credit agreement.

The forbearance agreement, which was originally scheduled to expire on Feb. 28, has been extended to March 31.

In addition, Pacific Ethanol and indirect wholly owned subsidiaries Pacific Ethanol Holding Co. LLC, Pacific Ethanol Madera LLC, Pacific Ethanol Columbia, LLC, Pacific Ethanol Stockton, LLC and Pacific Ethanol Magic Valley, LLC, secured a waiver and forbearance agreement from WestLB AG.

Under that forbearance, WestLB and the companies' senior secured lenders have agreed not to act on any credit agreement defaults until the earliest of March 31, the occurrence of a new event of default and upon repayment in full or termination of the credit agreement.

The WestLB agreement also waives the Pacific Ethanol entities' requirement to make their interest payments due Feb. 27 and allows them to withdraw $3 million of funds otherwise required to be kept in a debt service reserve account.

Also, Pacific Ethanol, Pacific Ag Products, LLC and Pacific Ethanol California, Inc. entered into a forbearance agreement with Lyles United, LLC, which runs through the earliest of March 31, the date of a forbearance agreement default and the date on which all of the obligations of the Lyles promissory note and related documents have been paid in full.

According to the 8-K, the Pacific Ethanol parties were unable to make principal and interest payments due in March on the Lyles note, triggering a payment default.

Pacific Ethanol is a Sacramento, Calif.-based ethanol provider.

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