Bill Gates’ Cascade Investment to Invest $84 Million in Pacific Ethanol

December 05, 2005 by Jeff Shepard

Pacific Ethanol Inc. announced that it has signed a definitive agreement with Cascade Investment, L.L.C. to sell 5,250,000 shares of Series A Cumulative Redeemable Convertible Preferred Stock, which will result in gross proceeds of $84 million. The shares of preferred stock will be convertible into shares of common stock at an initial conversion ratio of two shares of common stock for each share of preferred stock that, if converted immediately, would result in the issuance of 10,500,000 shares of common stock at an effective price of $8.00 per share.

The financing is subject to a number of conditions, including satisfactory completion of the debt financing of Pacific Ethanol's Madera plant, prior stockholder approval and Hart-Scott-Rodino clearance. Pacific Ethanol expects to seek stockholder approval of the financing at its annual meeting of stockholders on December 30, 2005. Assuming all approvals are obtained, Pacific Ethanol expects to close the financing in January 2006. The proceeds from the financing will be used by Pacific Ethanol to pay a portion of the costs of construction of its ethanol plants on the West Coast.

Pacific Ethanol has announced plans to build five ethanol plants in the Western United States with an expected combined installed annual ethanol capacity of at least 200 million gallons.

Bill Jones, Pacific Ethanol’s Chairman, stated, "This investment represents a fundamental building block for our company as we pursue our business plan. We are pleased to have gained the confidence of such a respected investment firm as Cascade Investment."

Neil Koehler, Pacific Ethanol's President and Chief Executive Officer, stated, "Our mission is to be the leader in renewable fuels in the Western United States. This investment gives us the equity commitment required to quickly implement our plan to build out our first five ethanol plants. We are excited about the prospect of a long term partnership with Cascade Investment as we bring new supplies of valuable domestic renewable fuels to the energy market."

Based in Kirkland, Washington, Cascade Investment, L.L.C. is owned by William H. Gates III, chairman of Microsoft Corp.