Green Plains Renewable Energy, Inc. - 8-K Summary
Business Context and Reporting Period
This Current Report (Form 8-K) was filed on January 26, 2006, by Green Plains Renewable Energy, Inc. (GPRE). The filing discloses the entry into a material definitive agreement regarding infrastructure for a proposed dry-mill ethanol production facility near Shenandoah, Iowa.
Key Financial Metrics and Obligations
- Capital Expenditure: GPRE paid an estimated $3.5 million to BNSF Railway Company (BNSF) on January 26, 2006.
- Project Scope: Funds are designated for the renovation and maintenance of approximately 20 miles of a closed rail spur to meet HAZMAT standards.
- Agreement Term: The Allowance Agreement expires on September 14, 2015.
- Financial Impact: The filing does not provide specific revenue, profit, cash flow, or debt figures for the reporting period.
Material Changes and Agreement Terms
GPRE entered into an Allowance Agreement with BNSF to upgrade the rail spur adjacent to its proposed plant site. Under the terms:
- BNSF will own, operate, and maintain the spur.
- GPRE is entitled to refund payments from BNSF only if it meets specific annual volume thresholds (cars placed on the rail).
- There is no assurance that usage thresholds will be met or that the $3.5 million will be fully reimbursed.
- GPRE retains responsibility for any future additional major renovations to the spur.
Outlook, Risks, and Contingencies
Management highlights a significant contingency risk: the potential loss of the $3.5 million investment if the facility fails to meet the required rail volume thresholds. The filing explicitly states there can be no assurance of reimbursement. Additionally, GPRE assumes the risk for any future major renovation costs beyond the initial scope.
Key Facts for Investor Verification
- Verify the specific annual volume thresholds required to trigger reimbursement of the $3.5 million.
- Assess the operational timeline for the Shenandoah ethanol plant to determine if volume targets are achievable within the agreement term.
- Review the company's liquidity position to confirm the impact of the $3.5 million cash outflow.
- Monitor future filings for updates on the plant's construction status and rail usage metrics.