Pacific Ethanol units to emerge from bankruptcy

* Cuts about $290 mln of liabilities from balance sheet

* Idled plants to resume as market conditions permit

NEW YORK, Pacific Ethanol Inc (PEIX.O), a producer of low-carbon renewable fuels, said on Wednesday that the plan of reorganization for its Pacific Ethanol Holding Co LLC unit had been confirmed, allowing the unit to emerge from bankruptcy.

The largest West Coast-based producer and marketer of ethanol had put its unit that operates production plants in California, Oregon and Idaho into bankruptcy in May 2009, to help restructure and eliminate about $290 million of debt. The company's marketing arm, which buys and sells ethanol, did not file for Chapter 11.

In March, Sacramento, California-based Pacific Ethanol said it expected the unit to exit Chapter 11 near the end of the second quarter.

The ownership of Pacific Ethanol Holding and its four wholly owned ethanol production facility subsidiaries will be transferred to a newly formed holding company, the company said in a release.

Pacific Ethanol has an option to buy as much as 25 percent of the new company for up to $30 million in cash.

"Holding an option to purchase an equity interest in the facilities at a significant discount to replacement costs is a valuable opportunity for Pacific Ethanol," Chief Executive and President Neil Koehler said in a statement.

Koehler added that the lower debt levels will allow the company to improve the two facilities currently running, and as market conditions permit, resume operations at two idled facilities.

The company, through its other subsidiaries not in bankruptcy, will continue marketing ethanol for third parties.

Pacific Ethanol shares were up 7 cents, or 9.6 percent, at 80 cents in afternoon trading on Nasdaq.

The case is In re: Pacific Ethanol Holding Co LLC, U.S. Bankruptcy Court, District of Delaware, No. 09-11713.

source: reuters