[LETTERHEAD OF RUTAN & TUCKER, LLP]
LARRY A. CERUTTI
Direct Dial: (714) 641-3450
E-mail: lcerutti@rutan.com November 22, 2005
VIA FEDEX AND
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EDGAR CORRESPONDENCE
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Jennifer Hardy, Esq.
Branch Chief
Division of Corporation Finance
Securities and Exchange Commission
Mail Stop 7010
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Pacific Ethanol, Inc.
Amendment No. 1 to Registration Statement on Form S-1
Filed on November 1, 2005
File No. 333-127714
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Dear Ms. Hardy:
This letter responds to the comments of your letter dated November 10, 2005
relating to Pacific Ethanol, Inc. (the "Company"), a copy of which letter is
enclosed for your convenience.
The enclosed clean and marked-to-show-changes copies of Amendment No. 2 to
the Company's Registration Statement on Form S-1, Reg. No. 333-127714 (the
"Registration Statement") contain revisions that are directly in response to
your comments. We have reproduced below in bold font each of your comments set
forth in your letter of November 10, 2005, together with the Company's responses
in regular font immediately following each reproduced comment. The Company's
responses in this letter correspond to the numbers you placed adjacent to your
comments in your letter of November 10, 2005. We have indicated below whether
the comment has been responded to in the Registration Statement or the reasons
why the Company believes a response is either inapplicable or inappropriate. The
page numbers referenced below correspond to the MARKED versions of the documents
enclosed herewith.
General
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1. PLEASE NOTE THAT THE FINANCIAL STATEMENTS MUST BE UPDATED IF THE
REGISTRATION STATEMENT IS NOT DECLARED EFFECTIVE BY NOVEMBER 14, 2005.
Financial statements and financial information with regard to the nine
months ended September 30, 2005 have been included in the Registration Statement
pursuant to Rule 3-12 of Regulation S-X.
Jennifer Hardy, Esq.
November 22, 2005
Page 2
Use of Proceeds, page 22
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2. PLEASE DISCLOSE THE AMOUNT OF PROCEEDS YOU WILL RECEIVE UPON EXERCISE OF
ALL OF THE WARRANTS AND YOUR INTENDED USE OF THESE PROCEEDS.
The Company has included additional disclosure in the Use of Proceeds
section on page 18 of the Registration Statement to disclose the amount of
proceeds it will receive upon exercise of all of the warrants and its intended
use of such proceeds.
Selling Security Holders, page 66
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3. WE NOTE YOUR RESPONSE TO PRIOR COMMENT 24. PLEASE CLARIFY WHETHER THERE ARE
ANY MATERIAL RELATIONSHIPS BETWEEN YOU OR YOUR AFFILIATES AND ANY OF THE
PLACEMENT AGENTS.
The Company has revised its disclosure in the Selling Security Holder
section on pages 78, 84 and 85 of the Registration Statement to clarify and/or
disclose the material relationships between the Company or its affiliates and
any of the placement agents.
Plan of Distribution, page 75
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4. WE NOTE YOUR RESPONSE TO PRIOR COMMENT 28. IF A SELLING STOCKHOLDER IS AN
AFFILIATE OF A BROKER-DEALER, PROVIDE THE FOLLOWING REPRESENTATIONS IN THE
PROSPECTUS: (1) THE SELLER PURCHASED IN THE ORDINARY COURSE OF BUSINESS,
AND (2) AT THE TIME OF THE PURCHASE OF THE SECURITIES TO BE RESOLD, THE
SELLER HAD NO AGREEMENTS OR UNDERSTANDINGS, DIRECTLY OR INDIRECTLY, WITH
ANY PERSON TO DISTRIBUTE THE SECURITIES. WE NOTE THAT THIS LANGUAGE WAS
INCLUDED IN YOUR FIRST FILING.
The Company has revised its disclosure in the Selling Security Holder
section on page 79 of the Registration Statement to include the following:
"Each of the selling security holders, including the selling
security holders identified above, has represented to us that it
is not acting as an underwriter in this offering, any warrants it
received whose underlying shares are offered under this
prospectus, and other shares of common stock offered under this
prospectus, were received only in the ordinary course of
business, and at the time of such receipt and through the
effective date of the information contained in the selling
security holder table, it had no agreements or understandings,
directly or indirectly, with any person to distribute the
warrants, the underlying shares or other shares of common stock
offered under this prospectus."
Jennifer Hardy, Esq.
November 22, 2005
Page 3
Financial Statements
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5. WE NOTE YOUR RESPONSE TO PRIOR COMMENT 33. PLEASE PROVIDE A REVENUE
RECOGNITION ACCOUNTING POLICY DISCLOSURE IN THE FOOTNOTES TO THE 6/30/05
FINANCIAL STATEMENTS. SPECIFICALLY ADDRESS THE REGISTRANT'S VARIOUS,
MATERIAL REVENUE GENERATING TRANSACTIONS. ALSO, DISCLOSE THE PRIMARY
FACTORS CONSIDERED BY MANAGEMENT IN DETERMINING THAT THE KINERGY REVENUES
SHOULD BE RECORDED GROSS IN THE FINANCIAL STATEMENTS. STATE HEREIN HOW
MANAGEMENT HAS DETERMINED THAT THE REGISTRANT IS THE PRIMARY OBLIGOR IN THE
KINERGY TRANSACTIONS. IN THIS REGARD, PLEASE DISCLOSE WHETHER THE
REGISTRANT, AND NOT ITS SUPPLIERS, IS RESPONSIBLE FOR CUSTOMER CLAIMS
RESULTING FROM ERRORS IN SPECIFICATIONS, PRODUCT QUALITY, DELIVERY,
RETURNS/REFUND ISSUES.
The Company has provided additional disclosure in Note 1 of the financial
statements commencing on page F-11 to provide a revenue recognition accounting
policy disclosure. In addition, the Company has provided additional consistent
disclosure in Management's Discussion and Analysis of Financial Condition and
Results of Operations commencing on page 33 of the Registration Statement to
include a revenue recognition critical accounting policy.
Please be advised that we have included our final, executed legal opinion
as Exhibit 5.1 to the Registration Statement.
We trust that the foregoing is responsive to your comments in your letter
of comments dated November 10, 2005. If you have any questions, please call me
at (714) 641-3450 or my associate John T. Bradley, Esq. at (714) 662-4659.
Sincerely yours,
RUTAN & TUCKER, LLP
/s/ John T. Bradley for
Larry A. Cerutti
LAC:jtb
cc: Brigitte Lippmann, Esq. (w/encl.)
Neil M. Koehler (w/encl.)
Ryan W. Turner (w/encl.)
William G. Langley (w/encl.)