Gates cuts investment in Pacific Ethanol

By Bryan Sims | April 08, 2008
Web exclusive posted May 8, 2008 at 4:34 p.m. CST

According to a filing May 5 with the U.S. Securities and Exchange Commission, Microsoft Corp. Chairman Bill Gates has reduced his holdings in Pacific Ethanol Inc. to 9.5 million, down from 10.5 million, out of 41.8 million shares outstanding. As a result, Gates' stake is reduced from 21 percent, or 10.5 million shares, to 18.5 percent in the Sacramento, Calif.-based corn ethanol producer and marketer.

Gates beneficially owns Pacific Ethanol through his private investment arm Cascade Investment LLC, which previously converted 3.75 million of Series A preferred stock to 7.5 million equity shares, according to the filing. Last November, Cascade Investments filed to convert its preferred shares in Pacific Ethanol to common stock and register a potential sale.

Cascade owns 21 percent of Pacific Ethanol and has lost approximately $60 million on the stock since August. Cascade invested $84 million in the company in 2005.

According to a March SEC filing by Pacific Ethanol, "based on our current number of shares of common stock outstanding, Cascade Investment LLC has approximately 19 percent and Lyles United LLC has approximately 13 percent of all outstanding voting power as compared to approximately 8 percent of all outstanding voting power held in aggregate by our current executive officers and directors."

The state of California will raise $11.5 million from the sale of tax-exempt bonds which will be used to provide a low-interest loan to Pacific Ethanol.