Business Context and Reporting Period
This Form 8-K was filed by Green Plains Inc. on December 3, 2014, reporting a material definitive agreement entered into on the same date. The agreement involves Green Plains Cattle Company, LLC, a wholly-owned subsidiary of Green Plains Inc., and pertains to the financing of cattle feedlot operations.
Key Financial Metrics and Debt Structure
The filing details the establishment of a new Revolving Credit Facility with the following terms:
- Total Commitment: $100 million.
- Accordion Feature: Capacity to increase commitments by up to $50 million upon agent approval.
- Maturity Date: October 2017.
- Interest Rate: Variable rate based on LIBOR plus a margin of 2.0%, 2.5%, or 3.0% depending on availability.
- Collateral: Secured by substantially all assets of the Borrower.
- Administrative Agents: Bank of the West and ING Capital LLC.
The filing does not provide specific values for revenue, profit, cash flow, or existing liquidity positions outside of the new facility terms.
Material Changes and Covenants
The primary material change is the entry into the new credit facility to finance working capital. The agreement imposes specific financial covenants on the Borrower:
- Minimum Working Capital: $15.0 million.
- Minimum Tangible Net Worth: $20.0 million.
- Maximum Debt Ratio: Total debt to tangible net worth ratio of 3.50 to 1.00.
- Distribution Limitations: Restrictions on distributions, dividends, or loans to Green Plains Inc.
Outlook, Risks, and Contingencies
The proceeds are designated primarily for working capital related to cattle feedlot operations. The agreement includes customary events of default, including nonpayment, breach of covenants, material incorrect representations, defaults on other indebtedness, and insolvency. Upon an event of default, the remaining principal and accrued interest become immediately due and payable.
Investor Verification Checklist
- Verify the current utilization status of the $100 million revolving facility.
- Confirm the subsidiary's compliance with the $15.0 million minimum working capital and $20.0 million tangible net worth covenants.
- Review the specific availability metrics determining the LIBOR margin (2.0% vs. 3.0%).
- Assess the impact of the new debt on the parent company's overall leverage and liquidity.