Cascade Agrees to Buy Stake in Pacific Ethanol
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Cascade Investment, a firm owned by Microsoft Corp. Chairman Bill Gates, agreed Tuesday to buy an $84-million stake in Pacific Ethanol Inc. to help fund construction of fuel-additive plants on the West Coast.
Fresno-based Pacific Ethanol is expected to become the largest Western ethanol producer next year with completion of the first of five plants the company is developing. Ethanol prices surged after U.S. energy legislation enacted in August mandated increased use of the grain-based fuel additive in gasoline. Pacific Ethanol plans to sell spent grain to dairy farms as cattle feed.
“California is the world’s largest gasoline market and the world’s largest dairy shed,” Chief Executive Neil Koehler said. “We think that’s an exciting business model. Cascade obviously agrees.”
Cascade will buy preferred stock convertible to 10.5 million common shares, Pacific Ethanol said. Pacific Ethanol has 28.7 million common shares outstanding, according to a public filing. The new shares would give Gates a 27% stake.
Michael Larson, chief investment officer for Kirkland, Wash.-based Cascade, didn’t respond to a call seeking comment.
Shares of Pacific Ethanol jumped $1.11, or 12%, to $10.10. The stock has climbed 70% this year.
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