From Bloomberg News this morning. Bloomberg also pronounces ethanol "2007's worst energy investment."

By Mario Parker Bloomberg News

CHICAGO: Cascade Investment, a company owned by Bill Gates, chairman of Microsoft, is preparing to sell its shares in Pacific Ethanol, which has lost almost two-thirds of its market value this year.

Cascade, which owns a 21 percent stake in the company, will convert its preferred stock to 10.5 million common shares and offer them to the public, according to a Pacific Ethanol filing with the U.S. Securities and Exchange Commission. At the closing price Friday, Gates has lost $24 million on the investment. He paid $84 million for his stake in 2005.

Pacific Ethanol, based in Sacramento, California, has fallen 63 percent this year in Nasdaq composite trading, as the burgeoning supply of the fuel additive drove prices down 25 percent. The company reported a third-quarter loss last week of $4.8 million.

The filing is "nothing other than optionality," Neil Koehler, chief executive of Pacific Ethanol, said Friday in an interview by telephone.
Cascade asked Pacific Ethanol to make the SEC filing, Koehler said.

Cascade may sell the shares from "time to time," Pacific Ethanol said in the filing. Gates bought the preferred shares two years ago to help the company finance construction projects on the West Coast.

A voice-mail message left for Michael Larson, who manages Cascade's investment holdings, was not returned.

Pacific Ethanol shares fell 13 cents, or 2.2 percent, to finish Friday at $5.70, their lowest level since January 2005.

Pacific Ethanol produces about 80 million gallons, or 190 million liters, of the additive annually at its plants in Madera, California, and Boardman, Oregon. The company owns a 42 percent stake in a 48 million-gallon plant in Windsor, Colorado.