Pacific Ethanol ( PEIX - Get Report), the troubled ethanol marketer and producer, became another victim of the rough and tumble corn-ethanol game Monday. Subsidiaries of the Sacramento-based company, which house its four production facilities, filed for bankruptcy protection. Pacific Ethanol was quick to add that its two marketing arms -- Kinergy Marketing and Pacific Ag. Products -- will not follow the other subs into Chapter 11. The stock fell 25 cents from the previous day's close of 57 cents, marking a 44% death-spiral on the day. It was down 2.5% in the early parts of after hours trading. The company also noted in its quarterly report that total volume of ethanol sales decreased 24% as compared to the same quarter last year. Volatile corn and oil prices, slowing demand and declining ethanol prices were all blows to the company's well-being. Though the U.S. is the world's largest consumer of energy, Pacific Ethanol's bankruptcy is only one of a series in the ethanol sector. Two weeks ago, Dallas-based White Energy filed for Chapter 11 protection. Another filing came last October courtesy of VeraSun Energy, reportedly one of the nation's largest ethanol producers at the time. "We are unwavering in our vision of being a leading producer and marketer of low carbon fuels in the Western United States," Neil Koehler, Pacific Ethanol's CEO and President, said in a statement. "While the market environment for the ethanol industry has been challenging over the last several quarters, we remain confident that a restructured company will grow and prosper as the demand for low-carbon fuels increases."
As part of the bankruptcy, the company arranged up to $20 million in debtor-in-possession financing with some lenders to continue servicing ongoing customer obligations. Kinergy amended its credit facility with Wachovia Capital Finance Corporation, giving the sub up to $10 million through October 2010 for its own capital needs.