November 25, 2009 / 10:26 PM / 10 years ago

UPDATE 1-Pacific Ethanol aims to restart Idaho plant

* Company’s production units filed for bankruptcy in May

* Says ethanol market improved, though 2 plants still idle

SAN FRANCISCO, Nov 25 (Reuters) - Pacific Ethanol Inc (PEIX.O), which put its production plants in bankruptcy in May, said on Wednesday it would seek to restart its Idaho facility in January now that market conditions had improved.

A spokesman for the largest U.S. ethanol producer on the West Coast, which still has its Madera and Stockton plants in California shut down, confirmed that its Oregon facility was still running.

The company will restart its Magic Valley plant in Idaho, which can produce 60 million gallons a year, subject to the approval of the bankruptcy court at a Dec. 14 hearing.

“Lenders providing debtor-in-possession financing for the Magic Valley facility are expected to support the initiative,” Pacific Ethanol said in a statement.

Its production subsidiaries filed for Chapter 11 bankruptcy six months ago as their margins were squeezed by the volatile price of their key input, corn, and weak demand for motor fuel in the economic slump.

The Sacramento, California-based company’s marketing arm, which buys and sells ethanol, did not file for bankruptcy.

The five bankrupt subsidiaries of Pacific Ethanol, which reported 2008 revenue of $704 million, had obtained bankruptcy financing of up to $20 million.

The company’s 220 million gallons of annual production capacity last year compared with overall U.S. capacity of nearly 12.5 billion at the start of 2009. (Reporting by Braden Reddall; editing by Carol Bishopric) ((braden.reddall@thomsonreuters.com; +1 415 677 2543; braden.reddall.reuters.com@reuters.net))

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