Business Context and Reporting Period
Company: Green Plains Renewable Energy, Inc.
Filing Type: Form 8-K (Current Report)
Date: May 20, 2009
Event: Entry into Material Definitive Agreements to acquire two ethanol plants in Nebraska.
Key Financial Metrics and Transaction Details
This filing details a specific acquisition transaction rather than periodic financial performance. Key financial terms include:
- Total Purchase Price: $123.5 million ($38.0 million for RBF VI/Ord plant; $85.5 million for RBF II/Central City plant).
- Debt Financing: $123.5 million provided by AgStar Financial Services, PCA.
- Working Capital Financing: $16.0 million provided by AgStar.
- Loan Structure:
- Amortizing Term Loans: $25.0 million (Ord) and $55.0 million (Central City).
- Revolving Term Loans: $13.0 million (Ord) and $30.5 million (Central City).
- Revolving Lines of Credit: $5.0 million (Ord) and $11.0 million (Central City).
- Interest Rates:
- Amortizing Term Loans: 3.0% + max(30-day LIBOR, 2.0%).
- Revolving Term Loans: 1.5% + max(30-day LIBOR, 2.0%) until Dec 31, 2010; thereafter same as amortizing loans.
- Revolving Lines of Credit: 4.0% + max(30-day LIBOR, 2.0%).
- Maturity: Term loans mature in seven years.
- Escrow Deposits: $250,000 (Ord) and $500,000 (Central City) as good faith deposits.
Material Changes and Transaction Conditions
The filing reports the entry into agreements to acquire membership interests in RBF Acquisition VI, LLC and RBF Acquisition II, LLC. The transaction is subject to customary closing conditions, including:
- Execution of ancillary agreements.
- Accuracy of representations and warranties.
- Receipt of required consents and regulatory approvals.
- Hart-Scott-Rodino filings and clearance (specifically for the RBF II acquisition).
- Consummation of financing arrangements with AgStar.
The sellers have agreed to incur startup costs and maintenance up to $2.0 million cumulatively. Upon closing, the entities will be renamed Green Plains Ord LLC and Green Plains Central City LLC.
Outlook, Risks, and Management Commentary
Expected Closing: June 2009.
Repayment Terms: Monthly interest payments begin 180 days after closing. Amortizing principal and interest payments begin on a 10-year schedule starting the 25th month after closing, but no later than June 1, 2011.
Collateral: Loans are secured by all real and personal property of the plants, with cross-collateralization and cross-default provisions between the two facilities.
Risks: The transaction is contingent on financing consummation and regulatory clearances. The filing notes that the description of agreements is qualified by the full text of the agreements to be filed as exhibits to the subsequent Form 10-Q.
Investor Verification Checklist
- Verify the successful consummation of the closing in June 2009.
- Confirm receipt of Hart-Scott-Rodino clearance for the RBF II acquisition.
- Review the final Credit Agreements filed in the subsequent Form 10-Q for specific covenants and default provisions.
- Monitor the status of the $2.0 million seller maintenance and startup cost cap.
- Assess the impact of the new debt load ($123.5 million term debt plus working capital) on the company's liquidity and leverage ratios.