Business Context and Reporting Period
This Form 8-K filing by Green Plains Renewable Energy, Inc. (Green Plains) reports a material definitive agreement entered into on July 30, 2009. The report was filed on August 3, 2009. The transaction involves Green Plains Trade Group LLC, a wholly-owned subsidiary of the Company.
Key Financial Metrics and Debt
- Debt Facility: A Revolving Credit Agreement with PNC Bank, National Association.
- Facility Size: Up to $30.0 million in revolving discretionary credit.
- Purpose: Funding working capital requirements and ongoing operations.
- Security: Secured by eligible receivables and real and personal property of Green Plains Trade.
- Guaranty: A limited corporate guaranty provided by Green Plains Renewable Energy, Inc. for amounts up to $10 million.
- Interest Rates: Base Rate (PNC commercial lending rate + 2.5%) or EuroDollar Rate (30, 60, or 90-day rate + 3.0%).
- Maturity Date: July 30, 2012.
Material Changes
The filing discloses the creation of a new direct financial obligation. The Company has established a new credit facility to support liquidity and operations. No prior comparable period data is provided in this specific filing as it reports a discrete event rather than periodic financial performance.
Guidance, Risks, and Covenants
The Credit Agreement includes standard affirmative and negative covenants that restrict the Company's operational flexibility:
- Affirmative Covenants: Include payment of fees, maintenance of existence, compliance with laws, financial reporting, fixed charge coverage ratio requirements, and restrictions on changes in management.
- Negative Covenants: Prohibit mergers, consolidations, asset sales, creation of liens, specified distributions, capital expenditures above specified amounts, and additional indebtedness.
- Events of Default: Include failure to make payments, material breach of representations, failure to furnish financial information, judgments exceeding $250,000, bankruptcy, and change of ownership or control.
- Acceleration: Upon an event of default, PNC may accelerate payment of outstanding amounts. Bankruptcy of the guarantor or Green Plains Trade triggers immediate due and payable status.
The filing does not provide specific revenue, profit, or cash flow guidance for future periods.
Investor Verification Checklist
- Verify the full text of the Credit Agreement in the upcoming Form 10-Q for the quarter ended June 30, 2009.
- Confirm the specific "fixed charge coverage ratio" thresholds required by the agreement.
- Monitor the Company's capital expenditure plans to ensure they remain within the limits set by the negative covenants.
- Assess the impact of the $10 million corporate guaranty on the parent company's balance sheet.