Pacific Ethanol subsidiaries given interim OK of $7 million DIP loan

By Caroline Salls

Pittsburgh, May 19 - Pacific Ethanol Inc.'s bankrupt plant subsidiaries have been granted interim access to $7 million of their $20 million debtor-in-possession financing from their existing lenders, including WestLB AG, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

The final hearing is scheduled for June 3.

The company said the financing will enable the plant subsidiaries to continue to satisfy customary obligations associated with their operations.

The structure of the financing is such that borrowings are available only to particular operating subsidiaries and not to Pacific Ethanol, Inc. or its other subsidiaries for general corporate purposes.

The DIP facility will also include a roll up amount that will be a 1:50 to 1:00 conversion of an amount not to exceed $30 million. A total of $10.5 million of the roll-up amount will be available on an interim basis.

Interest on the revolving portion of the loan will be Libor plus 1,000 basis points.

Interest on the DIP roll-up loans will accrue at the pre-bankruptcy rate.

The revolving portion of the DIP loan will mature on the earliest of six months after the closing date, the acceleration of obligations under the facility, the first business day on which the interim order expires and a final order has not been entered, conversion of any of the Chapter 11 cases to Chapter 7 unless consented to by the DIP lenders and agent, case dismissal unless consented to by the DIP lenders and agent and the effective date of the company's plan of reorganization.

The DIP roll-up loans may not be required to be repaid in cash on the maturity date.

Pacific Ethanol, a Sacramento, Calif., marketer and producer of ethanol, filed for bankruptcy on May 18. Its Chapter 11 case number is 09-11713.

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