On December 26, 2012, Pacific Ethanol, Inc. (the "Company") entered into a letter agreement (the "Letter Agreement") with the holders of the Company's Series B Cumulative Convertible Preferred Stock ("Series B Preferred Stock"), pursuant to which the Company agreed to pay to the holders of the Company's Series B Preferred Stock an aggregate of $737,361 of the accrued and unpaid dividends owed to the holders through the issuance of an aggregate of 2,168,708 shares (the "Shares") of the Company's common stock. In connection with the issuance of the Shares, each of the holders agreed to forbear from exercising such holder's rights, if any, held by such holder with respect to the remaining accrued and unpaid dividends through June 30, 2014. Under the terms of the Letter Agreement, the Company agreed to issue to each of the holders the number of shares of the Company's common stock equal to the quotient obtained by dividing (a) the payment amount of the accrued and unpaid dividends owed to such holder as of December 31, 2011 as set forth in the letter agreement, by (b) $0.34. As of December 31, 2012, an aggregate of approximately $6.9 million of accrued and unpaid dividends were owed to the holders of the Company's Series B Preferred Stock.

The Shares were issued and sold pursuant to an effective registration statement on Form S-3 (Registration No. 333-180731, as supplemented to date, the "Registration Statement")

The forgoing description is intended to provide a summary of the material terms of the Letter Agreement. This summary is qualified in its entirety by reference to the Letter Agreement which is filed as Exhibit 10.1 to this Current Report on Form 8-K.

In connection with the offering discussed in Item 1.01, the legal opinion letter of Troutman Sanders LLP, counsel to the Company, regarding the validity of the Shares is filed as Exhibit 5.1 to this Current Report on Form 8-K. The legal opinion letter is also filed with reference to, and is hereby incorporated by reference into, the Registration Statement.

(a) Financial statements of businesses acquired.

Not applicable.

(b) Pro forma financial information.

Not applicable.

(c) Shell company transactions.

Not applicable.

(d) Exhibits.

     Number   Description
     5.1      Opinion of Troutman Sanders LLP (*)
     10.1     Letter Agreement, dated December 26, 2012, by and among the
              Company and the holders of the Company's Series B Cumulative
              Convertible Preferred Stock (*)(**)


    __________________

(*) Filed herewith.
(**) The agreement filed as an exhibit to this report contains representations and warranties made by the parties thereto. The assertions embodied in such representations and warranties are not necessarily assertions of fact, but a mechanism for the parties to allocate risk. Accordingly, investors should not rely on the representations and warranties as characterizations of the actual state of facts or for any other purpose at the time they were made or otherwise.