SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 24, 2021
HERON LAKE BIOENERGY, LLC | |||
(Exact name of small business issuer as specified in its charter) | |||
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(507) 793-0077 | |||
(Issuer's telephone number) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ◻
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
ITEM 1.01 - ENTRY INTO A MATERIAL DEFINITIVE AGREEMENTS
Merger Agreement
On or about March 24, 2021, Granite Falls Energy, LLC, a Minnesota limited liability company (“GFE”), and Heron Lake BioEnergy, LLC, a Minnesota limited liability company (“HLBE”), executed a Merger Agreement, pursuant to which GFE will acquire the minority interest of HLBE (the “Merger”). The structure of the transaction will be a merger in which a wholly owned subsidiary of GFE (the “Merger Sub”) will merge with and into HLBE, with HLBE surviving the transaction as a wholly owned subsidiary of GFE.
A copy of the Merger Agreement is furnished as Exhibit 10.1 to this report. The proposed transaction is further detailed in a Plan of Merger, which is furnished as Exhibit 2.1 to this report.
Prior to the Merger, GFE owns approximately 50.7 percent of the issued and outstanding units of HLBE. Excluding the units owned by GFE, there are 38,456,283 units of HLBE issued and outstanding (the “Minority Interest”). The purchase price for the entire Minority Interest is $14,000,000 in cash payable at the closing of the Merger. Each issued and outstanding unit of the Minority Interest will be canceled and converted into the right to receive $0.36405 per Unit. (the “Merger Consideration”).
The units of HLBE held by GFE immediately prior closing of Merger shall be cancelled with no consideration issued to GFE. GFE will emerge from the transaction as the sole owner of HLBE.
At the time the Merger becomes effective, 100 percent of the membership interest in the Merger Sub shall be converted into and become 100 percent of the membership interests in HLBE, as the surviving company in the Merger.
The Merger is subject to approval by a majority of the Minority Interest of HLBE. A special meeting of the members of HLBE will be called to vote on the Plan of Merger. The Merger is also subject to (i) the consent of GFE’s lender, (ii) GFE’s ability to obtain financing for the transaction, (iii) confirmation that the Merger will not have materially adverse tax consequences for GFE, (iv) the receipt of regulatory approval, including approval by the Securities and Exchange Commission and (v) the receipt of third-party consents.
Pursuant to the Merger Agreement, GFE and HLBE release, acquit, and discharge each other and all related parties from all claims, including, all liabilities, obligations, claims, litigation, actions, causes of action, suits, proceedings, executions, judgments, demands, damages, losses, duties, debts, dues, accounts, fees, costs, expenses and penalties, and agree not to initiate, maintain, prosecute or continue to maintain or prosecute any action, suit or proceeding, or seek to enforce any right or claim against the other or its related parties.
Pursuant to the Merger Agreement, HLBE and GFE shall appoint an exchange agent who shall be responsible for, among other things, dispersing Merger Consideration to holders of Minority Interest units who properly surrender their units. Both HLBE and GFE agree to pay their own transaction expenses related to the Merger.
Voting agreements related to Merger
On or about March 24, 2021, GFE and HLBE entered into a Voting Agreement, pursuant to which GFE agrees to vote its units of HLBE in favor of the proposed Merger (the “GFE Voting Agreement”). The GFE Voting Agreement also provides that GFE will designate HLBE as its proxy for the purposes of voting for the Merger, GFE will refrain from transferring any of its units of HLBE prior to the Merger, and GFE authorizes HLBE to suspend trading of all units until the Merger is complete or is terminated. A copy of the GFE Voting Agreement is furnished as Exhibit 10.2 to this report.
Additionally, on or about March 24, 2021, GFE and the governors of HLBE appointed by HLBE’s Minority Interest (the “Governors”) entered into a Voting Agreement (the “HLBE Voting Agreement”). Pursuant to the HLBE Voting Agreement, the Governors agree to vote for the Merger, recommend the members of HLBE vote for the Merger, and designate HLBE as their proxy for the purpose of voting for the Merger. The Governors additionally agree not to
transfer their units and authorize HLBE to suspend trading of all units until the Merger is complete or is terminated. A copy of the HLBE Voting Agreement is furnished as Exhibit 10.3 to this report.
ITEM 5.07 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On March 24, 2021, Heron Lake BioEnergy, LLC (the “Company”) held its 2021 Annual Meeting of Members (the “Annual Meeting”) for the purpose of electing two governors to its board of governors. Votes were solicited in person and by proxy.
Of the Company’s 77,896,119 Class A and Class B units issued, outstanding and entitled to vote at the Annual Meeting, 51,792,109 Class A and Class B units, or 66.5% of the total units, were present either in person or by proxy. As a result, a quorum was present to conduct business at the Annual Meeting.
With respect to the election of governors, Class A and Class B units held by members entitled to appoint one or more governors under the Company’s Member Control Agreement are not entitled to vote. Therefore, of the total units present in person or by proxy at the meeting, 12,305,285 units were entitled to vote in the election of governors.
There were two nominees for the governor positions, incumbent Douglas Schmitz and incumbent David Woestehoff. The votes were as follows:
Name | | Votes For | | Votes Withheld/Abstaining |
Douglas Schmitz | | 11,811,035 | | 494,250 |
David Woestehoff | | 11,749,535 | | 555,750 |
As a result, Mr. Schmitz and Mr. Woestehoff were re-elected governor of the Company to serve a three-year term expiring at the 2024 Annual Meeting or until a successor has been elected and qualified or such governor’s earlier death, resignation, or removal.
No other matters were voted upon at the Annual Meeting.
ITEM 9.01 - FINANCIAL STATEMENTS AND EXHIBITS
(a)None.
(b)None.
(c)None.
(d)Exhibits.
Exhibit No.Description
2.1 |
10.1 |
10.2 |
10.3 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PLAN OF MERGER
THIS PLAN OF MERGER (the “Plan”) is dated as of March 24, 2021, and is by and between GRANITE HERON MERGER SUB, LLC (“Merger Sub”) and HERON LAKE BIOENERGY, LLC (“HLBE”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Merger Agreement (as defined below).
WHEREAS, Merger Sub is a Minnesota limited liability company that is organized and existing under Chapter 322C of the laws of the State of Minnesota (as amended, the “Act”), and whose parent company and sole member and 100% owner is Granite Falls Energy, LLC, a Minnesota limited liability company that is organized and existing under Chapter 322C of the Act (“GFE”); and
WHEREAS, HLBE is a Minnesota limited liability company that is organized and existing under Chapter 322C of the Act; and
WHEREAS, on the date hereof, the HLBE and GFE have entered into a Merger Agreement (the “Merger Agreement”) specifying certain of the terms of and establishment and issuance of the consideration given for the Transaction (as defined in the Merger Agreement); and
WHEREAS, the parties have prepared this Plan of Merger and the respective members or equity holders, as the case may be, of the parties each has approved and adopted this Plan and the transactions contemplated hereby in the manner required by the Act and their respective organizational documents.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements of the parties contained herein, the parties hereto agree as follows:
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filing of the Articles of Merger or at such other time as is agreed by the parties and specified in the Articles of Merger (the time the Merger becomes effective being the “Effective Time”) (b) cause the Articles of Merger to be filed with the Secretary of State of the State of Minnesota, and as otherwise required by the Act, and (c) make such other filings or recordings, if any, required by the Act, and shall take all such further actions as may be required by law to make the Merger effective.
current, former, and future partners, principals, members, and unitholders, and predecessors and successors in interest, assigns, insurers, heirs, administrators, legatees, executors and estates, and any other individual or entity that acts or has acted on behalf of any of the foregoing.
[Signature Page Follows]
IN WITNESS WHEREOF, this Plan has been agreed to and executed by the duly authorized representatives of the parties, as of the date first set forth above.
GRANITE HERON SUB, LLCHERON LAKE BIOENERGY, LLC
By: /s/ Paul Enstad By: /s/ Mike Kunerth
Its: Chairman Its: Secretary
EXHIBIT A
Articles of Organization
MERGER AGREEMENT
THIS MERGER AGREEMENT (this "Agreement"), dated effective as of March 24, 2021 (“Effective Date”), sets forth the binding agreement between Granite Falls Energy, LLC, a Minnesota limited liability company ("Buyer"), and Heron Lake BioEnergy, LLC, a Minnesota limited liability company ("Company"), for Buyer’s acquisition of the Company by merger, on the terms and conditions set forth herein. The structure of the acquisition will be by merger of a to-be-formed wholly owned subsidiary of Buyer ("Merger Sub") with and into the Company, with the Company surviving the merger. The merger is referred to as the "Transaction" and Buyer, Merger Sub and the Company are referred to collectively as the "Parties."
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For the purposes of Section 4, “Released Claims” means any and all liabilities, obligations, claims, litigation, actions, causes of action, suits, proceedings, executions, judgments, demands, damages, losses, duties, debts, dues, accounts, fees, costs, expenses and penalties (including interest penalties), of any nature whatsoever, whether known or unknown, asserted or unasserted, ascertained or unascertained, suspected or unsuspected, existing or claimed to exist, which the applicable releasing party or person or its Related Parties, as applicable, has had, has as of the closing of the Transaction or may have after the closing of the Transaction against the released Party or person, as applicable, or the Related Parties of such released Party or person, as applicable, by reason of any matter, cause or thing whatsoever arising from or related to the Company from the beginning of time to the closing of the Transaction. However, Released Claims shall not include any claims, rights or obligations arising by virtue of the terms or breach of the Definitive Agreement or fraud.
For the purposes of Section 4, “Related Parties” means, with respect to a Party, any and all of such Party’s current, former, and future parent companies, subsidiaries, affiliates, partners, principals, members, unitholders, Directors, Governors, managers, officers, employees, agents, representatives, attorneys, consultants, independent contractors, predecessors and successors in interest, assigns, insurers, heirs, administrators, legatees, executors and estates, and any other individual or entity that acts or has acted on behalf or any of the foregoing.
[signature page follows]
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date set forth above.
HERON LAKE BIOENERGY, LLC | GRANITE FALLS ENERGY, LLC |
/s/ Mike Kunerth_________ By: Mike Kunerth, Secretary | /s/ Paul Enstad__________ By: Paul Enstad, Chairman |
By signing below, the undersigned Governors of Heron Lake BioEnergy, LLC each agree that (a) they will not disparage Buyer, the Company or any part of the Transaction either privately or publicly, and (b) they will (i) recommend approval of the Transaction at all Board of Governor meetings, member meetings, and in all communications with members of the Company and the public, and (ii) vote those membership interests or units which they and their affiliates control in favor of the Transaction at any member meeting called for that purpose, pursuant to the terms of the Elected Governor/Alternate Voting Agreement in the form attached hereto as Exhibit 4.
/s/ Mike Kunerth_________
Mike Kunerth, Governor
/s/ Doug Schmitz_________
Doug Schmitz, Governor
/s/ Dave Woestehoff______
Dave Woestehoff, Governor
/s/ Robert Ferguson______
Robert Ferguson, Governor
/s/ Jeremy Janssen_______
Jeremy Janssen, Alternate
This Voting Agreement (this "Agreement"), dated as of March 24, 2021, is entered into by and between Granite Falls Energy, LLC, a Minnesota limited liability company ("Member"), and Heron Lake BioEnergy, LLC, a Minnesota limited liability company (the "Company"). Member and the Company are each sometimes referred to herein individually as a "Party" and collectively as the "Parties."
WHEREAS, concurrently with the execution of this Agreement, the Company and Member have entered into a merger agreement providing for Member’s acquisition of the Company by merger (the "Merger Agreement"), providing for, among other things, the merger of Member’s wholly-owned subsidiary (“Merger Sub”) with and into the Company (the "Merger") pursuant to the terms and conditions of the Merger Agreement;
WHEREAS, in order to induce the Company to enter into the Merger Agreement, Member is willing to make certain representations, warranties, covenants, and agreements as set forth in this Agreement with respect to the units of membership interest of the Company ("Company Interest") Beneficially Owned by Member and set forth below Member's signature on the signature page hereto (the "Original Units" and, together with any additional units of Company Interest pursuant to Section 6 hereof, the "Units"); and
WHEREAS, as a condition to its willingness to enter into the Merger Agreement, the Company has required that Member, and Member has agreed to, execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, and agreements set forth below and for other good and valuable consideration, the receipt, sufficiency, and adequacy of which are hereby acknowledged, the Parties hereto, intending to be legally bound, do hereby agree as follows:
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[signature page follows]
This Voting Agreement (this "Agreement"), dated as of March 24, 2021, is entered into by and among the undersigned governors (each, a "Governor") of Heron Lake BioEnergy, LLC, a Minnesota limited liability company (the "Company"), and Granite Falls Energy, LLC, a Minnesota limited liability company ("Parent"). Parent and Governor are each sometimes referred to herein individually as a "Party" and collectively as the "Parties."
WHEREAS, concurrently with the execution of this Agreement, the Company and Parent have entered into a merger agreement providing for Parent’s acquisition of the Company by merger (the "Merger Agreement"), providing for, among other things, the merger of Parent’s wholly-owned subsidiary (“Merger Sub”) with and into the Company (the "Merger") pursuant to the terms and conditions of the Merger Agreement;
WHEREAS, in order to induce the Company to enter into the Merger Agreement, Governor is willing to make certain representations, warranties, covenants, and agreements as set forth in this Agreement with respect to the units of membership interest of the Company ("Company Interest") owned and Beneficially Owned by Governor and set forth below Governor's signature on the signature page hereto (the "Units"); and
WHEREAS, as a condition to its willingness to enter into the Merger Agreement, the Company has required that Governor, and Governor has agreed to, execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, and agreements set forth below and for other good and valuable consideration, the receipt, sufficiency, and adequacy of which are hereby acknowledged, the Parties hereto, intending to be legally bound, do hereby agree as follows:
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[signature page follows]
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IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement as of the date first written above.
PARENT: GRANITE FALLS ENERGY, LLC | GOVERNORS: |
/s/ Paul Enstad__________ By: Paul Enstad, Chairman Address: | /s/ Mike Kunerth_________ Mike Kunerth Address: Units: /s/ Doug Schmitz_______ Doug Schmitz Address: Units: /s/ Dave Woestehoff___ Dave Woestehoff Address: Units: /s/ Robert Ferguson__ Robert Ferguson Address: Units: |
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