pacific_s3-111507.htm
As filed with the Securities and Exchange Commission on November 16, 2007
Registration No. 333-_________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PACIFIC ETHANOL, INC.
(Exact name of Registrant as specified in its charter)
Delaware
41-2170618
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)
 
400 Capitol Mall, Suite 2060
Sacramento, California 95814
(916) 403-2123
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
Neil Koehler
Chief Executive Officer
Pacific Ethanol, Inc.
400 Capitol Mall, Suite 2060
Sacramento, California 95814
(916) 403-2123 / (916) 446-3937 (fax)
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)
Copies of all correspondence to:
Larry A. Cerutti, Esq.
John T. Bradley, Esq.
Rutan & Tucker, LLP
611 Anton Boulevard, 14th Floor
Costa Mesa, California 92626
(714) 641-5100 / (714) 546-9035 (fax)
Approximate date of commencement of proposed sale to the public:  From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.  o
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.   x
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨
If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box.  ¨
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box.  ¨
 
CALCULATION OF REGISTRATION FEE
                         
Title of Each Class of
Securities to be Registered
  
Amount
to be
Registered(1)
    
Proposed Maximum
Offering Price
Per Unit(2)
    
Proposed Maximum
Aggregate
Offering price(2)
    
Amount of
Registration Fee
  
Common stock, $.001 par value
    
10,501,000
     $
6.27
     $
65,841,270
     $
2,021
  
(1)
In the event of a stock split, stock dividend, anti-dilution adjustment or similar transaction involving common stock of the Registrant, in order to prevent dilution, the number of shares registered shall be automatically increased to cover the additional shares in accordance with Rule 416(a) under the Securities Act.
(2)
The proposed maximum offering price per share has been estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) of the Securities Act of 1933 and is based upon the average of high and low sales prices of the Registrant’s common stock on the Nasdaq Global Market on November 14, 2007.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.


The information in this prospectus is not complete and may be changed.  The selling security holder may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective.  This prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities, in any state where the offer or sale is not permitted.
 
SUBJECT TO COMPLETION DATED NOVEMBER 16, 2007

PROSPECTUS

10,501,000 Shares
 
PACIFIC ETHANOL, INC.

Common Stock
_____________________

This a public offering of 10,501,000 shares of our common stock, including 1,000 shares of our common stock held directly and 10,500,000 shares of our common stock underlying our Series A Cumulative Redeemable Convertible Preferred Stock, or Series A Preferred Stock.  All shares are being offered by the selling security holder identified in this prospectus.  We will not receive any of the proceeds from the sale of shares by the selling security holder.  Our common stock is quoted on the Nasdaq Global Market under the symbol “PEIX.”  On November 14, 2007, the closing sale price of our common stock on the Nasdaq Global Market was $6.18 per share.

The mailing address and the telephone number of our principal executive offices are 400 Capitol Mall, Suite 2060, Sacramento, California 95814, (916) 403-2123.

_____________________

Investing in our shares of common stock involves risks.  See “Risk Factors” on page 5 for factors you should consider before buying shares of our common stock.

_____________________

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is accurate or complete.  Any representation to the contrary is a criminal offense.

The date of this prospectus is                                 , 2007.


TABLE OF CONTENTS

 
Page
   
Prospectus Summary
3
Risk Factors
5
Special Note Regarding Forward-Looking Statements
5
Use of Proceeds
6
Dividend Policy
6
Selling Security Holder
6
Plan of Distribution
8
Incorporation of Certain Information by Reference
9
Legal Matters
10
Experts
10
Transfer Agent and Registrar
11
Where You Can Find Additional Information
11
 
2

PROSPECTUS SUMMARY

To fully understand this offering and its consequences to you, you should read the following summary along with the more detailed information and our consolidated financial statements and the notes to those financial statements incorporated by reference in this prospectus.  In this prospectus, the words “we,” “us,” “our” and similar terms refer to Pacific Ethanol, Inc., a Delaware corporation, together with its subsidiaries, unless the context provides otherwise.

Pacific Ethanol, Inc.

Our primary goal is to become the leading marketer and producer of low carbon renewable fuels in the Western United States.

We produce and sell ethanol and its co-products and provide transportation, storage and delivery of ethanol through third-party service providers in the Western United States, primarily in California, Nevada, Arizona, Oregon and Colorado. We have extensive customer relationships throughout the Western United States and extensive supplier relationships throughout the Western and Midwestern United States.

Our customers are integrated oil companies and gasoline marketers who blend ethanol into gasoline. We supply ethanol to our customers either from our own ethanol production facilities located within the regions we serve, or with ethanol procured in bulk from other producers. In some cases, we have marketing agreements with other ethanol producers to market all of the output of their facilities.  Additionally, we have customers who purchase our co-products for animal feed.

In October 2006, we achieved commercial operations of an ethanol production facility with an annual production capacity of approximately 40 million gallons located in Madera, California. In October 2006, we also acquired approximately 42% of the outstanding membership interests of Front Range Energy, LLC, or Front Range, which owns and operates an ethanol production facility with  an annual production capacity of approximately 50 million gallons located in Windsor, Colorado. In September 2007, we achieved commercial operations of our second ethanol production facility with an annual production capacity of approximately 40 million gallons located in Boardman, Oregon. In addition, we have three additional facilities at various stages of construction. We also intend to construct or otherwise acquire additional ethanol production facilities as financial resources and business prospects make the construction or acquisition of these facilities advisable.

In 2006, total annual gasoline consumption in the United States was approximately 140 billion gallons. Total annual ethanol consumption currently represents less than 4% of annual gasoline consumption, or approximately 5.6 billion gallons of ethanol. We believe that the domestic ethanol industry has substantial potential for growth to reach what we estimate is an achievable level of at least 10% of the total annual gasoline consumption in the United States, or approximately 14 billion gallons of ethanol. In California alone, an increase in the consumption of ethanol from California’s current level of 5.7%, or approximately 1.0 billion gallons of ethanol per year, to at least 10% of total annual gasoline consumption would result in consumption of approximately 700 million additional gallons of ethanol, representing an increase in annual ethanol consumption in California alone of approximately 75% and an increase in annual ethanol consumption in the entire United States of approximately 13%.
 
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We intend to achieve our goal of becoming the leading marketer and producer of renewable fuels in the Western United States in part by expanding our relationships with customers and third-party ethanol producers to market higher volumes of ethanol throughout the Western United States, by expanding our relationships with animal feed distributors and end users to build local markets for wet distillers grains, or WDG, the primary co-product of our ethanol production, and by expanding the market for ethanol by continuing to work with state governments to encourage the adoption of policies and standards that promote ethanol as a fuel additive and ultimately as a primary transportation fuel.  In addition, we intend to achieve this goal in part by expanding our production capacity to 220 million gallons of annual production capacity in 2008 and 420 million gallons of annual production capacity in 2010. We also intend to expand our distribution infrastructure by expanding our ability to provide transportation, storage and related logistical services to our customers throughout the Western United States.

Corporate Information

Our principal executive offices are located at 400 Capitol Mall, Suite 2060, Sacramento, California 95814.  Our telephone number is (916) 403-2123.  Our Internet address is www.pacificethanol.net.  Information contained on, or that is accessible through, our websites should not be considered to be part of this prospectus.

The Offering
 
Common stock offered by the selling security holder
10,501,000 shares(1)
   
Common stock outstanding prior to this offering
40,604,714 shares
   
Common stock to be outstanding after this offering
51,104,714 shares
   
Use of proceeds
All proceeds of this offering will be received by the selling security holder for its own account.  See “Use of Proceeds.”
   
Nasdaq Global Market symbol
PEIX
__________
 
(1) Represents 1,000 shares of common stock held directly and 10,500,000 shares of common stock underlying our Series A Preferred Stock.

The number of shares of common stock being offered by the selling security holder assumes the immediate resale of the 1,000 shares of common stock held directly by the selling security holder and the conversion of all shares of Series A Preferred Stock whose underlying shares of common stock are covered by this prospectus in exchange for 10,500,000 shares of common stock, and the immediate resale of all of those 10,500,000 shares of common stock.  The number of shares of common stock that will be outstanding upon the completion of this offering is based on the 40,604,714 shares outstanding as of November 14, 2007, and excludes the following:

 
·
1,115,761 shares of common stock remaining reserved for issuance under our 2006 Stock Incentive Plan;
 
·
175,000 shares of common stock remaining reserved for issuance under our 2004 Stock Option Plan, of which options to purchase 175,000 shares were outstanding as of that date, at a weighted average exercise price of $7.30 per share;
 
·
options to purchase 50,000 shares of common stock outstanding as of that date under our Amended 1995 Incentive Stock Plan, at a weighted average exercise price of $5.72 per share;
 
·
723,952 shares of common stock underlying warrants outstanding as of that date, at a weighted average exercise price of $11.85 per share; and
 
·
any additional shares of common stock we may issue from time to time after that date.

4
 
Risk Factors

Except for the historical information contained in this prospectus or incorporated by reference, this prospectus (and the information incorporated by reference in this prospectus) contains forward-looking statements that involve risks and uncertainties.  Our actual results could differ materially from those discussed here or incorporated by reference.  Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled “Risk Factors” contained in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission, or Commission, as well as any amendments thereto reflected in subsequent filings with the Commission, which are incorporated herein by reference in their entirety (the “Pacific Ethanol Risk Factors”).

Investment in our securities involves risks.  Prior to making a decision about investing in our securities, you should consider carefully the Pacific Ethanol Risk Factors, together with all of the other information contained or incorporated by reference in this prospectus and any prospectus supplement, including any additional specific risks described in any prospectus supplement.  Each of these risk factors could adversely affect our business, operating results and financial condition, which may result in the loss of all or part of your investment.

Keep these risk factors in mind when you read forward-looking statements contained elsewhere or incorporated by reference in this prospectus and any prospectus supplement.  These statements relate to our expectations about future events.  Discussions containing forward-looking statements may be found, among other places, in “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” incorporated by reference from our Annual Reports on Form 10-K and our Quarterly Reports on Form 10-Q, as well as any amendments thereto reflected in subsequent filings with the Commission.  These forward-looking statements are based largely on our expectations and projections about future events and future trends affecting our business, and so are subject to risks and uncertainties, including the risks and uncertainties described below under “Special Note Regarding Forward-Looking Statements,” that could cause actual results to differ materially from those anticipated in the forward-looking statements.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements, including statements concerning future conditions in the ethanol marketing and production industries, and concerning our future business, financial condition, operating strategies, and operational and legal risks.  We use words like “believe,” “expect,” “may,” “will,” “could,” “seek,” “estimate,” “continue,” “anticipate,” “intend,” “goal,” “future,” “plan” or variations of those terms and other similar expressions, including their use in the negative, to identify forward-looking statements.  You should not place undue reliance on these forward-looking statements, which speak only as to our expectations as of the date of this prospectus.  These forward-looking statements are subject to a number of risks and uncertainties, including those identified under the caption “Risk Factors” above, contained in any applicable prospectus supplement and contained in our most recent Annual Report on Form 10-K and our most recent Quarterly Report on Form 10-Q, as well as any amendments thereto reflected in subsequent filings with the Commission.  Although we believe that the expectations reflected in these forward-looking statements are reasonable, actual conditions in the ethanol marketing and production industries, and actual conditions and results in our business, could differ materially from those expressed in these forward-looking statements.  In addition, none of the events anticipated in the forward-looking statements may actually occur.  Any of these different outcomes could cause the price of our common stock to decline substantially.  Except as required by law, we undertake no duty to update any forward-looking statement after the date of this prospectus, either to conform any statement to reflect actual results or to reflect the occurrence of unanticipated events.
 
5
 
USE OF PROCEEDS

We will not receive any of the proceeds from the sale of shares of our common stock in this offering.  Rather, all proceeds will be received by the selling security holder.

DIVIDEND POLICY

We have not declared or paid any cash dividends on our capital stock in the past, and we do not anticipate declaring or paying cash dividends on our common stock in the foreseeable future.

We will pay dividends on our common stock only if and when declared by our board of directors.  Our board of directors’ ability to declare a dividend is subject to restrictions imposed by Delaware law.  In determining whether to declare dividends, the board of directors will consider these restrictions as well as our financial condition, results of operations, working capital requirements, future prospects and other factors it considers relevant.

SELLING SECURITY HOLDER

Selling Security Holder Table

This prospectus covers the offer and sale by the selling security holder of up to 1,000 shares of common stock held directly and an aggregate of 10,500,000 shares of common stock underlying our Series A Preferred Stock.

We issued our Series A Preferred Stock on April 13, 2006 under a Purchase Agreement dated November 14, 2005 between us and the selling security holder.  The Purchase Agreement provided for the sale by us and the purchase by the selling security holder of 5,250,000 shares of our Series A Preferred Stock for an aggregate purchase price of $84 million.  As part of that investment, we also entered into a Registration Rights and Stockholders Agreement with the selling security holder that provides that holders of a majority of the Series A Preferred Stock may demand and cause us, at any time after the first anniversary of the closing of the investment, to register on their behalf the shares of common stock issued or issuable upon conversion of the Series A Preferred Stock.  We are required to file a registration statement in respect of those shares of common stock and use our best efforts to cause the registration statement to become effective as expeditiously as practicable.  The Registration Rights and Stockholders Agreement also provides for the initial appointment of two persons designated by the selling security holder to our Board of Directors and the periodic nomination of two individuals by the selling security holder for election to our Board of Directors.  The selling security holder initially designated under those provisions, and we appointed, Robert P. Thomas and Douglas L. Kieta as members of our Board of Directors.  Mr. Thomas is employed by the selling security holder and resigned as a member of our Board of Directors on October 1, 2007.  Mr. Kieta is unaffiliated with the selling security holder and continues to serve as a member of our Board of Directors.  The Registration Rights and Stockholders Agreement also contains customary representations, warranties, covenants and other terms and conditions, including customary indemnity obligations on our part and on the part of the selling security holder.

We are registering for resale the 1,000 shares of common stock held directly by the selling security holder as an accommodation to the selling security holder.

The following table sets forth, to our knowledge, certain information about the selling security holder as of November 14, 2007, the date of the table, based on information furnished to us by the selling security holder.  Except as otherwise indicated above in the description of the private offering of shares of our Series A Preferred Stock (i) the selling security holder has indicated to us that it is acting individually, not as a member of a group, and (ii) neither the selling security holder nor its affiliates has held any position or office or had any other material relationship with us in the past three years.
 
6
 
Beneficial ownership is determined in accordance with the rules of the Commission, and includes voting or investment power with respect to the securities.  To our knowledge, except as indicated by footnote, and subject to community property laws where applicable, the selling security holder named in the table below has sole voting and investment power with respect to all shares of common stock shown as beneficially owned by it.  Shares of common stock underlying derivative securities, if any, that currently are exercisable or convertible or are scheduled to become exercisable or convertible for or into shares of common stock within 60 days after the date of the table are deemed to be outstanding in calculating the percentage ownership of each listed person or group but are not deemed to be outstanding as to any other person or group.  Percentage of beneficial ownership is based on 40,604,714 shares of common stock outstanding as of the date of the table.  Shares shown as beneficially owned after the offering assume that all shares being offered are sold.

The shares of common stock being offered under this prospectus may be offered for sale from time to time during the period the registration statement of which this prospectus is a part remains effective, by or for the account of the selling security holder described below.
 
   
Shares of Common Stock
Beneficially Owned
Prior to Offering   
    
Shares of Common Stock
Being
    
Shares of Common Stock
Beneficially Owned
After Offering   
  
Name and Address of Beneficial Owner                    
  
Number
    
Percentage
    
Offered
    
Number
    
Percentage
  
Cascade Investment, L.L.C.
2365 Carillon Point
Kirkland, Washington  98033
     10,501,000 (1)     20.55 %     10,501,000 (1)    
–
      
*
  
_____________
 
*
Less than 1.0%.
(1)    
Represents 1,000 shares of common stock held directly and 10,500,000 shares of common stock underlying our Series A Preferred Stock.

7
 
Plan of Distribution

The selling security holder may, from time to time, sell any or all of its shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions.  These sales may be at fixed or negotiated prices.  The selling security holder may use any one or more of the following methods when selling shares:

 
·
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
 
·
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
 
·
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
 
·
an exchange distribution in accordance with the rules of the applicable exchange;
 
·
privately negotiated transactions;
 
·
short sales;
 
·
broker-dealers may agree with the selling security holder to sell a specified number of such shares at a stipulated price per share;
 
·
a combination of any such methods of sale; and
 
·
any other method permitted pursuant to applicable law.
 
The selling security holder may also sell shares under Rule 144 under the Securities Act of 1933, as amended, or Securities Act, if available, rather than under this prospectus.

Broker-dealers engaged by the selling security holder may arrange for other brokers-dealers to participate in sales.  Broker-dealers may receive commissions or discounts from the selling security holder (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated.  The selling security holder does not expect these commissions and discounts to exceed what is customary in the types of transactions involved.  Any profits on the resale of shares of common stock by a broker-dealer acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act.  Discounts, concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by the selling security holder.  The selling security holder may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the shares if liabilities are imposed on that person under the Securities Act.

The selling security holder may from time to time pledge or grant a security interest in some or all of the shares of common stock owned by it and, if it defaults in the performance of its secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time under this prospectus after we have filed a supplement to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act supplementing or amending the list of selling security holders to include the pledgee, transferee or other successors in interest as a selling security holder under this prospectus.

The selling security holder also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus and may sell the shares of common stock from time to time under this prospectus after we have filed a supplement to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act supplementing or amending the list of selling security holders to include the pledgee, transferee or other successors in interest as selling security holders under this prospectus.

The selling security holder and any broker-dealers or agents that are involved in selling the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales.  In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares of common stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
 
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We are required to pay all fees and expenses incident to the registration of the shares of common stock.  We have agreed to indemnify the selling security holder against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

The selling security holder has advised us that it has not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of its shares of common stock, nor is there an underwriter or coordinating broker acting in connection with a proposed sale of shares of common stock by the selling security holder.  If we are notified by the selling security holder that any material arrangement has been entered into with a broker-dealer for the sale of shares of common stock, if required, we will file a supplement to this prospectus.  If the selling security holder uses this prospectus for any sale of the shares of common stock, it will be subject to the prospectus delivery requirements of the Securities Act.

The anti-manipulation rules of Regulation M under the Securities Exchange Act of 1934, as amended, or Exchange Act, may apply to sales of our common stock and activities of the selling security holder.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The Commission allows us to incorporate by reference information we file with it, which means we can disclose important information to you by referring you to documents we have filed with the Commission.  The information incorporated by reference is considered to be a part of this prospectus.  We incorporate by reference the documents listed below and any future filings we make with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of the offering covered by this prospectus:

 
·
Our Quarterly Report on Form 10-Q for the three months ended September 30, 2007, as filed with the Commission on November 9, 2007;
 
·
Our Current Report on Form 8-K for October 8, 2007, as filed with the Commission on October 12, 2007 (File No. 0-21467);
 
·
Our Current Report on Form 8-K for October 1, 2007, as filed with the Commission on October 5, 2007;
 
·
Our Quarterly Report on Form 10-Q for the three months ended June 30, 2007, as filed with the Commission on August 9, 2007;
 
·
Our Current Report on Form 8-K for August 8, 2007, as filed with the Commission on August 9, 2007;
 
·
Our Current Report on Form 8-K for July 18, 2007, as filed with the Commission on July 23, 2007;
 
·
Our Current Report on Form 8-K for June 8, 2007, as filed with the Commission on June 8, 2007;
 
·
Our Quarterly Report on Form 10-Q for the three months ended March 31, 2007, as filed with the Commission on May 10, 2007;
 
·
Our Current Report on Form 8-K for May 4, 2007, as filed with the Commission on May 10, 2007;
 
·
Our Proxy Statement for our 2007 Annual Meeting of Stockholders, as filed with the Commission on April 27, 2007;
 
·
Our Amendment No. 1 to Annual Report on Form 10-K for the year ended December 31, 2006, as filed with the Commission on April 23, 2007;

9

 
·
Our Current Report on Form 8-K for April 13, 2007, as filed with the Commission on April 13, 2007;
 
·
Our Annual Report on Form 10-K for the year ended December 31, 2006, as filed with the Commission on March 12, 2007;
 
·
Our Current Report on Form 8-K for February 27, 2007, as filed with the Commission on March 5, 2007;
 
·
Our Current Report on Form 8-K/A for March 1, 2007, as filed with the Commission on March 2, 2007;
 
·
Our Current Report on Form 8-K for March 1, 2007, as filed with the Commission on March 1, 2007;
 
·
Our Current Report on Form 8-K for January 10, 2007, as filed with the Commission on January 17, 2007;
 
·
Our Current Report on Form 8-K/A for October 17, 2006, as filed with the Commission on January 3, 2007; and
 
·
The description of our capital stock contained in our Current Report on Form 8-K for June 8, 2007, as filed with the Commission on June 8, 2007, including any amendments or reports filed for the purpose of updating such description.

Any statement in a document incorporated or deemed to be incorporated by reference in this prospectus is deemed to be modified or superseded to the extent that a statement contained in this prospectus, or in any other document we subsequently file with the Commission, modifies or supersedes that statement.  If any statement is modified or superseded, it does not constitute a part of this prospectus, except as modified or superseded.

Information that is “furnished to” the Commission shall not be deemed “filed with” the Commission and shall not be deemed incorporated by reference into this prospectus or the registration statement of which this prospectus is a part.

We will provide to each person, including any beneficial owner, to whom a prospectus is delivered, a copy of any or all of the information that has been incorporated by reference in this prospectus but not delivered with this prospectus.  You may request a copy of these filings, at no cost, by writing or telephoning us at the following address and phone number:
 
Pacific Ethanol, Inc.
400 Capitol Mall, Suite 2060
Sacramento, California  95814
Attention:  Secretary
Telephone: (916) 403-2123

LEGAL MATTERS

The validity of the shares of common stock offered in this offering will be passed upon for us by Rutan & Tucker, LLP, Costa Mesa, California.

EXPERTS

The consolidated financial statements and management’s report on the effectiveness of internal control over financing reporting incorporated by reference in this Prospectus and Registration Statement have been audited by Hein & Associates LLP, an independent registered public accounting firm, to the extent and for the periods indicated in their report and are incorporated by reference in reliance upon such report and upon the authority of such Firm as experts in accounting and auditing.
 
10

The report of Hein & Associates, LLP dated March 7, 2007, on the effectiveness of internal control over financial reporting as of December 31, 2006, expressed an opinion that Pacific Ethanol, Inc. had not maintained effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control – Integrated  Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company.  Its telephone number is (212) 936-5100.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed a registration statement on Form S-3 with respect to the common stock offered in this prospectus with the Commission in accordance with the Securities Act, and the rules and regulations enacted under its authority.  This prospectus, which constitutes a part of the registration statement, does not contain all of the information included in the registration statement and its exhibits and schedules.  Statements contained in this prospectus regarding the contents of any document referred to in this prospectus are not necessarily complete, and in each instance, we refer you to the full text of the document which is filed as an exhibit to the registration statement.  Each statement concerning a document which is filed as an exhibit should be read along with the entire document.  For further information regarding us and the common stock offered in this prospectus, we refer you to the registration statement and its exhibits and schedules, which may be inspected without charge at the Commission’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.  Please call the Commission at (800) 732-0330 for further information on the Public Reference Room.

The Commission also maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers, such as us, that file electronically with the Commission.  The Commission’s website address is http://www.sec.gov.
 
11

PACIFIC ETHANOL, INC.

PROSPECTUS

_________________, 2007
 
We have not authorized any dealer, salesman or other person to give any information or to make any representation other than those contained in this prospectus and any accompanying supplement to this prospectus.  You must not rely upon any information or representation not contained in this prospectus or any accompanying prospectus supplement.  This prospectus and any accompanying supplement to this prospectus do not constitute an offer to sell or the solicitation of an offer to buy any securities other than the registered securities to which they relate, nor do this prospectus and any accompanying supplement to this prospectus constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction.  The information contained in this prospectus and any accompanying supplement to this prospectus is accurate as of the dates on their covers.  When the selling security holder delivers this prospectus or a supplement or makes a sale pursuant to this prospectus or a supplement, there is no implication that the information is current as of the date of the delivery or sale.
 
 
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14.  Other Expenses of Issuance and Distribution

The following table sets forth all expenses to be paid by the Registrant in connection with this offering.  All amounts shown are estimates except for the SEC registration fee.
 
SEC registration fee
   $
2,021
  
Legal fees and expenses
    
25,000
  
Accounting fees and expenses 
    
10,000
  
Printing expenses 
    
—
  
Blue sky fees and expenses
    
—
  
Transfer agent and registrar fees and expenses 
    
—
  
Miscellaneous 
    
—
  
Total  
   $
37,021
  

Item 15.  Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law authorizes a court to award, or a corporation’s board of directors to grant, indemnity to officers, directors and other corporate agents in terms sufficiently broad to permit indemnification under certain circumstances and subject to certain limitations, such as if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Registrant, and with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful.

As permitted to Section 145 of the Delaware General Corporation Law, the Registrant’s certificate of incorporation includes a provision that eliminates the personal liability of its directors of monetary damages for breach of their fiduciary duty as directors.

In addition, as permitted by Section 145 of the Delaware General Corporation Law, the bylaws of the Registrant provide that:

 
·
the Registrant shall indemnify its directors and officers for serving the Registrant in those capacities or for serving other business enterprises at the Registrant’s request, to the fullest extent permitted by Delaware law;
 
·
the Registrant may, in its discretion, indemnify employees and agents in those circumstances where indemnification is not required by law;
 
·
the Registrant is required to advance expenses, as incurred, to its directors and officers in connection with defending a proceeding, except that such director or officer shall undertake to repay such advance if it is ultimately determined that such person is not entitled to indemnification;
 
·
the rights conferred in the bylaws are not exclusive, and the Registrant is authorized to enter into indemnification agreements with its directors, officers, employees and agents and to obtain insurance to indemnify such persons; and
 
·
the Registrant may not retroactively amend the bylaw provisions to reduce its indemnification obligations to directors, officers, employees and agents.

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The Registrant’s policy is to enter into separate indemnification agreements with each of its directors and officers that provide the maximum indemnity allowed to directors and officers by Section 145 of the Delaware General Corporation Law and which allow for additional procedural protections.  The Registrant also maintains directors’ and officers’ insurance to insure those persons against various liabilities.

Registration rights agreements between the Registrant and various investors provide for cross-indemnification in connection with registration of the registration’s common stock on behalf of those investors.

These indemnification provisions and the indemnification agreements entered into between the Registrant and its officers and directors may be sufficiently broad to permit indemnification of the Registrant’s officers and directors for liabilities (including reimbursement of expenses incurred) arising under the Securities Act of 1933, as amended.

Item 16.  Exhibits
 
The following exhibits are included or incorporated herein by reference.

Exhibit
Number
Description
4.1
Purchase Agreement dated November 14, 2005 between Pacific Ethanol, Inc. and Cascade Investment, L.L.C. (1)
   
4.2
Certificate of Designations, Powers, Preferences and Rights of the Series A Cumulative Redeemable Convertible Preferred Stock (2)
   
4.3
Registration Rights and Stockholders Agreement dated April 13, 2006 between Pacific Ethanol, Inc. and Cascade Investment, L.L.C. (2)
   
5.1
Opinion of Rutan & Tucker, LLP (*)
   
23.1
Consent of Independent Registered Public Accounting Firm (*)
   
23.2
Consent of Rutan & Tucker, LLP (contained in Exhibit 5.1) (*)
   
24.1
Power of Attorney (contained in the signature page hereto) (*)
_______________
(*)
Filed herewith.
(1)
Filed as an exhibit to the Registrant’s current report on Form 8-K for November 10, 2005 filed with the Securities and Exchange Commission on November 15, 2005 and incorporated herein by reference (File No. 0-21467).
(2)
Filed as an exhibit to the Registrant’s Current Report on Form 8-K for April 13, 2006 filed with the Securities and Exchange Commission on April 19, 2006 and incorporated herein by reference.

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Item 17.  Undertakings

The undersigned Registrant hereby undertakes:

(1)           To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i)           To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii)           To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement.  Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii)           To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

provided, however, that paragraphs (1)(i) and (1)(ii) shall not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.

(2)           That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and

(3)           To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

The undersigned Registrant hereby undertakes that, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

(1)           If the Registrant is relying on Rule 430B:

(i)           Each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
 
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(ii)           Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x), for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus.  As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.  Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

(2)           If the Registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness.  Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

The undersigned Registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described in Item 15 hereof, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
 
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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Sacramento, State of California on November 15, 2007.

 
PACIFIC ETHANOL, INC.

 
By: /s/ NEIL M. KOEHLER                        
Neil M. Koehler
President and Chief Executive Officer
  
 
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and directors of Pacific Ethanol, Inc., a Delaware corporation, which is filing a registration statement on Form S-3 with the Securities and Exchange Commission under the provisions of the Securities Act of 1933, as amended, hereby constitute and appoint Neil M. Koehler, their true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign such registration statement and any or all amendments to the registration statement, including a prospectus or an amended prospectus therein, and all other documents in connection therewith to be filed with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all interests and purposes as they might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
 
Name
Title
Date
/s/ WILLIAM L. JONES          
William L. Jones
Chairman of the Board and Director
November 15, 2007
     
/s/ NEIL M. KOEHLER            
Neil M. Koehler
President, Chief Executive Officer and Director (principal executive officer)
November 15, 2007
     
/s/ JOHN T. MILLER               
John T. Miller
Acting Chief Financial Officer (principal financial and accounting officer)
and Chief Operating Officer
November 15, 2007
     
/s/ TERRY L. STONE               
Terry L. Stone
Director
November 15, 2007
     
/s/ JOHN L. PRINCE                
John L. Prince
Director
November 15, 2007
     
/s/ DOUGLAS L. KIETA        
Douglas L. Kieta
Director
November 15, 2007

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INDEX TO EXHIBITS
 
 Exhibit
Number
Description
     
5.1
Opinion of Rutan & Tucker, LLP
  
     
23.1
Consent of Independent Registered Public Accounting Firm
  
     
23.2
Consent of Rutan & Tucker, LLP (contained in Exhibit 5.1)
  
     
24.1
Power of Attorney (contained in the signature page to the registration statement)