UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 2013
Commission File Number 001-32924
Green Plains Renewable Energy, Inc.
(Exact name of registrant as specified in its charter)
|
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Iowa |
84-1652107 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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450 Regency Parkway, Suite 400, Omaha, NE 68114 |
(402) 884-8700 |
(Address of principal executive offices, including zip code) |
(Registrant’s telephone number, including area code) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
x Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o Accelerated filer x Non-accelerated filer o Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o Yes x No
The number of shares of common stock, par value $0.001 per share, outstanding as of October 28, 2013 was 30,477,300 shares.
TABLE OF CONTENTS
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Page |
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PART I – FINANCIAL INFORMATION |
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Item 1. |
Financial Statements |
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2 |
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3 |
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4 |
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5 |
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7 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
24 |
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Item 3. |
40 |
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Item 4. |
42 |
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PART II – OTHER INFORMATION |
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Item 1. |
43 |
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Item 1A. |
43 |
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Item 2. |
45 |
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Item 3. |
45 |
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Item 4. |
45 |
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Item 5. |
45 |
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Item 6. |
46 |
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47 |
1
GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES
(in thousands, except share amounts)
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September 30, |
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December 31, |
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2013 |
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2012 |
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(unaudited) |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
$ |
334,509 |
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$ |
254,289 |
Restricted cash |
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27,626 |
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25,815 |
Accounts receivable, net of allowances of $252 and $219, respectively |
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76,982 |
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80,537 |
Inventories |
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116,098 |
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172,009 |
Prepaid expenses and other |
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7,766 |
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12,314 |
Deferred income taxes |
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6,373 |
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2,133 |
Derivative financial instruments |
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26,372 |
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20,938 |
Total current assets |
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595,726 |
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568,035 |
Property and equipment, net of accumulated depreciation of |
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$202,338 and $164,445, respectively |
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697,751 |
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708,110 |
Goodwill |
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40,877 |
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40,877 |
Other assets |
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48,778 |
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32,712 |
Total assets |
$ |
1,383,132 |
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$ |
1,349,734 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities |
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Accounts payable |
$ |
84,989 |
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$ |
95,564 |
Accrued and other liabilities |
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28,531 |
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32,475 |
Unearned revenue |
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10,899 |
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3,617 |
Short-term notes payable and other borrowings |
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96,432 |
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171,302 |
Current maturities of long-term debt |
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62,846 |
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129,426 |
Total current liabilities |
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283,697 |
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432,384 |
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Long-term debt |
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487,926 |
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362,549 |
Deferred income taxes |
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84,414 |
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60,082 |
Other liabilities |
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5,039 |
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4,217 |
Total liabilities |
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861,076 |
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859,232 |
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Stockholders' equity |
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Common stock, $0.001 par value; 75,000,000 shares authorized; |
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37,407,240 and 36,903,777 shares issued, and 30,207,240 |
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and 29,703,777 shares outstanding, respectively |
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37 |
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37 |
Additional paid-in capital |
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462,831 |
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445,198 |
Retained earnings |
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124,263 |
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107,540 |
Accumulated other comprehensive income |
|
733 |
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3,535 |
Treasury stock, 7,200,000 shares |
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(65,808) |
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(65,808) |
Total stockholders' equity |
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522,056 |
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490,502 |
Total liabilities and stockholders' equity |
$ |
1,383,132 |
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$ |
1,349,734 |
See accompanying notes to the consolidated financial statements.
2
GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except per share amounts)
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Three Months Ended |
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Nine Months Ended |
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2013 |
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2012 |
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2013 |
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2012 |
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Revenues |
$ |
757,971 |
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$ |
947,413 |
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$ |
2,328,142 |
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$ |
2,593,163 |
Cost of goods sold |
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716,947 |
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919,516 |
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2,227,294 |
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2,538,363 |
Gross profit |
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41,024 |
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27,897 |
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100,848 |
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54,800 |
Selling, general and administrative expenses |
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15,490 |
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19,273 |
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44,048 |
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58,350 |
Operating income (loss) |
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25,534 |
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8,624 |
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56,800 |
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(3,550) |
Other income (expense) |
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Interest income |
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64 |
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46 |
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166 |
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144 |
Interest expense |
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(7,608) |
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(9,832) |
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(23,440) |
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(28,741) |
Other, net |
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(947) |
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(448) |
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(2,077) |
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(1,859) |
Total other expense |
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(8,491) |
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(10,234) |
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(25,351) |
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(30,456) |
Income (loss) before income taxes |
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17,043 |
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(1,610) |
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31,449 |
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(34,006) |
Income tax expense (benefit) |
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7,633 |
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(604) |
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13,519 |
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(12,749) |
Net income (loss) |
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9,410 |
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(1,006) |
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17,930 |
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(21,257) |
Net loss attributable to noncontrolling interests |
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- |
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4 |
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- |
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13 |
Net income (loss) attributable to Green Plains |
$ |
9,410 |
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$ |
(1,002) |
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$ |
17,930 |
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$ |
(21,244) |
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Earnings per share: |
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Net income (loss) attributable to Green Plains - basic |
$ |
0.31 |
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$ |
(0.03) |
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$ |
0.60 |
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$ |
(0.70) |
Net income (loss) attributable to Green Plains - diluted |
$ |
0.28 |
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$ |
(0.03) |
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$ |
0.56 |
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$ |
(0.70) |
Weighted average shares outstanding: |
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Basic |
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30,204 |
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29,655 |
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30,100 |
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30,499 |
Diluted |
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37,483 |
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29,655 |
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36,818 |
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30,499 |
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Cash dividend declared per share |
$ |
0.04 |
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$ |
- |
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$ |
0.04 |
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$ |
- |
See accompanying notes to the consolidated financial statements.
3
GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited and in thousands)
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Three Months Ended |
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Nine Months Ended |
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2013 |
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2012 |
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2013 |
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2012 |
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Net income (loss) |
$ |
9,410 |
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$ |
(1,006) |
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$ |
17,930 |
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$ |
(21,257) |
Other comprehensive income (loss), net of tax: |
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Unrealized gains (losses) on derivatives arising during period, |
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net of tax (expense) benefit of $6,307, $(9,957), $24,746 and |
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$(17,045), respectively |
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(9,092) |
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16,540 |
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(37,683) |
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28,493 |
Reclassification of realized (gains) losses on derivatives, net |
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of tax expense (benefit) of $(6,797), $4,245, $(22,906) and |
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$3,557, respectively |
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9,903 |
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(7,052) |
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34,881 |
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(5,945) |
Total other comprehensive income (loss), net of tax |
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811 |
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9,488 |
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(2,802) |
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22,548 |
Comprehensive income |
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10,221 |
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8,482 |
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15,128 |
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1,291 |
Comprehensive loss attributable to noncontrolling interests |
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- |
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4 |
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- |
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13 |
Comprehensive income attributable to Green Plains |
$ |
10,221 |
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$ |
8,486 |
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$ |
15,128 |
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$ |
1,304 |
See accompanying notes to the consolidated financial statements.
4
GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
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Nine Months Ended |
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2013 |
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2012 |
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Cash flows from operating activities: |
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Net income (loss) |
$ |
17,930 |
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$ |
(21,257) |
Adjustments to reconcile net income (loss) to net cash |
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provided (used) by operating activities: |
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Depreciation and amortization |
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37,807 |
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39,922 |
Amortization of debt issuance costs |
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2,697 |
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2,314 |
Deferred income taxes |
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12,897 |
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|
741 |
Stock-based compensation expense |
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2,863 |
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3,149 |
Undistributed equity in loss of affiliates |
|
2,078 |
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|
1,858 |
Allowance for doubtful accounts |
|
33 |
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|
225 |
Changes in operating assets and liabilities before |
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effects of business combinations: |
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|
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Accounts receivable |
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3,522 |
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|
3,492 |
Inventories |
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56,309 |
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(11,297) |
Derivative financial instruments |
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(10,121) |
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(2,858) |
Prepaid expenses and other assets |
|
2,239 |
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(971) |
Accounts payable and accrued liabilities |
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(15,343) |
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(21,319) |
Unearned revenues |
|
7,282 |
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(11,151) |
Other |
|
903 |
|
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(270) |
Net cash provided (used) by operating activities |
|
121,096 |
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(17,422) |
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Cash flows from investing activities: |
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|
|
|
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Purchases of property and equipment |
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(12,593) |
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(23,892) |
Acquisition of businesses, net of cash acquired |
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(15,305) |
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|
(1,490) |
Investments in unconsolidated subsidiaries |
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(3,147) |
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|
(6,513) |
Net cash used by investing activities |
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(31,045) |
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(31,895) |
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Cash flows from financing activities: |
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|
|
|
Proceeds from the issuance of long-term debt, including convertible notes |
|
185,600 |
|
|
53,200 |
Payments of principal on long-term debt |
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(110,476) |
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|
(87,690) |
Proceeds from short-term borrowings |
|
2,489,569 |
|
|
2,457,848 |
Payments on short-term borrowings |
|
(2,564,337) |
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|
(2,398,289) |
Payments for repurchase of common stock |
|
- |
|
|
(10,445) |
Payment of dividend |
|
(1,207) |
|
|
- |
Change in restricted cash |
|
(1,811) |
|
|
46 |
Payments of loan fees |
|
(7,766) |
|
|
(306) |
Proceeds from exercises of stock options |
|
597 |
|
|
142 |
Net cash provided (used) by financing activities |
|
(9,831) |
|
|
14,506 |
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|
|
|
|
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Net change in cash and cash equivalents |
|
80,220 |
|
|
(34,811) |
Cash and cash equivalents, beginning of period |
|
254,289 |
|
|
174,988 |
Cash and cash equivalents, end of period |
$ |
334,509 |
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$ |
140,177 |
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Continued on the following page |
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5
GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
Continued from the previous page |
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Nine Months Ended |
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2013 |
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2012 |
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Supplemental disclosures of cash flow: |
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Cash paid for income taxes |
$ |
2,069 |
|
$ |
495 |
Cash paid for interest |
$ |
22,209 |
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$ |
24,479 |
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|
|
|
Supplemental noncash investing and financing activities: |
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|
|
|
Assets acquired in acquisitions and mergers |
$ |
15,870 |
|
$ |
1,590 |
Less: liabilities assumed |
|
(565) |
|
|
(100) |
Net assets acquired |
$ |
15,305 |
|
$ |
1,490 |
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|
|
|
|
Short-term note payable issued to repurchase common stock |
$ |
- |
|
$ |
27,162 |
See accompanying notes to the consolidated financial statements.
6
GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
References to the Company
References to “Green Plains” or the “Company” in the consolidated financial statements and in these notes to the consolidated financial statements refer to Green Plains Renewable Energy, Inc., an Iowa corporation, and its subsidiaries.
Consolidated Financial Statements
The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and entities which it controls. All significant intercompany balances and transactions have been eliminated on a consolidated basis for reporting purposes. Unconsolidated entities are included in the financial statements on an equity basis. Results for the interim periods presented are not necessarily indicative of results to be expected for the entire year.
The accompanying unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles, or GAAP, for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The consolidated financial statements should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2012.
The unaudited financial information reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. The adjustments are of a normal recurring nature, except as otherwise noted.
Use of Estimates in the Preparation of Consolidated Financial Statements
The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Description of Business
Green Plains is North America’s fourth largest ethanol producer. The Company operates its business within four segments: (1) production of ethanol and distillers grains, collectively referred to as ethanol production, (2) corn oil production, (3) grain handling and storage, collectively referred to as agribusiness, and (4) marketing and logistics services for Company-produced and third-party ethanol, distillers grains, corn oil and other commodities, and the operation of blending and terminaling facilities, collectively referred to as marketing and distribution. Additionally, the Company is a partner in a joint venture that was formed to commercialize advanced photo-bioreactor technologies for the growing and harvesting of algal biomass.
Revenue Recognition
The Company recognizes revenue when all of the following criteria are satisfied: persuasive evidence of an arrangement exists; risk of loss and title transfer to the customer; the price is fixed and determinable; and collectability is reasonably assured.
For sales of ethanol, distillers grains and other commodities by the Company’s marketing business, revenue is recognized when title to the product and risk of loss transfer to an external customer. Revenues related to marketing operations for third parties are recorded on a gross basis as the Company takes title to the product and assumes risk of loss. Unearned revenue is reflected on the consolidated balance sheets for goods in transit for which the Company has received payment and title has not been transferred to the customer. Revenues from the Company’s biofuel terminal operations, which include ethanol transload and splash blending services, are recognized as these services are rendered.
7
The Company routinely enters into fixed-price, physical-delivery ethanol sales agreements. In certain instances, the Company intends to settle the transaction by open market purchases of ethanol rather than by delivery from its own production. These transactions are reported net as a component of revenues. Revenues also include realized gains and losses on related derivative financial instruments, ineffectiveness on cash flow hedges, and reclassifications of realized gains and losses on effective cash flow hedges from accumulated other comprehensive income (loss).
Sales of agricultural commodities are recognized when title to the product and risk of loss transfer to the customer, which is dependent on the agreed upon sales terms with the customer. These sales terms provide for passage of title either at the time shipment is made or at the time the commodity has been delivered to its destination and final weights, grades and settlement prices have been agreed upon with the customer. Revenues related to grain merchandising are presented gross in the statements of operations with amounts billed for shipping and handling included in revenues and also as a component of cost of goods sold. Revenues from grain storage are recognized as services are rendered.
Cost of Goods Sold
Cost of goods sold includes costs for direct labor, materials and certain plant overhead costs. Direct labor includes all compensation and related benefits of non-management personnel involved in the operation of the Company’s ethanol plants. Grain purchasing and receiving costs, other than labor costs for grain buyers and scale operators, are also included in cost of goods sold. Direct materials consist of the costs of corn feedstock, denaturant, and process chemicals. Corn feedstock costs include unrealized gains and losses on related derivative financial instruments not designated as cash flow hedges, inbound freight charges, inspection costs and transfer costs. Corn feedstock costs also include realized gains and losses on related derivative financial instruments, ineffectiveness on cash flow hedges, and reclassifications of realized gains and losses on effective cash flow hedges from accumulated other comprehensive income (loss). Plant overhead costs primarily consist of plant utilities, plant depreciation and outbound freight charges. Shipping costs incurred directly by the Company, including railcar lease costs, are also reflected in cost of goods sold.
The Company uses exchange-traded futures and options contracts to minimize the effects of changes in the prices of agricultural commodities on its agribusiness segment’s grain inventories and forward purchase and sales contracts. Exchange-traded futures and options contracts are valued at quoted market prices. Grain inventories held for sale, forward purchase contracts and forward sale contracts in the agribusiness segment are valued at market prices, where available, or other market quotes adjusted for differences, primarily transportation, between the exchange-traded market and the local markets on which the terms of the contracts are based. Changes in the fair value of grain inventories held for sale, forward purchase and sale contracts, and exchange-traded futures and options contracts in the agribusiness segment, are recognized in earnings as a component of cost of goods sold. These contracts are predominantly settled in cash. The Company is exposed to loss in the event of non-performance by the counter-party to forward purchase and forward sales contracts.
Derivative Financial Instruments
To minimize the risk and the effects of the volatility of commodity price changes primarily related to corn, ethanol and natural gas, the Company uses various derivative financial instruments, including exchange-traded futures, and exchange-traded and over-the-counter options contracts. The Company monitors and manages this exposure as part of its overall risk management policy. As such, the Company seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results. The Company may take hedging positions in these commodities as one way to mitigate risk. While the Company attempts to link its hedging activities to purchase and sales activities, there are situations in which these hedging activities can themselves result in losses.
By using derivatives to hedge exposures to changes in commodity prices, the Company has exposures on these derivatives to credit and market risk. The Company is exposed to credit risk that the counterparty might fail to fulfill its performance obligations under the terms of the derivative contract. The Company minimizes its credit risk by entering into transactions with high quality counterparties, limiting the amount of financial exposure it has with each counterparty and monitoring the financial condition of its counterparties. Market risk is the risk that the value of the financial instrument might be adversely affected by a change in commodity prices or interest rates. The Company manages market risk by incorporating monitoring parameters within its risk management strategy that limit the types of derivative instruments and derivative strategies the Company uses, and the degree of market risk that may be undertaken by the use of derivative instruments.
The Company evaluates its contracts that involve physical delivery to determine whether they may qualify for the normal purchases or normal sales exemption and are expected to be used or sold over a reasonable period in the normal course of business. Any contracts that do not meet the normal purchase or sales criteria are recorded at fair value with the change in fair value recorded in operating income unless the contracts qualify for, and the Company elects, hedge accounting treatment.
8
Certain qualifying derivatives within the ethanol production segment are designated as cash flow hedges. Prior to entering into cash flow hedges, the Company evaluates the derivative instrument to ascertain its effectiveness. For cash flow hedges, any ineffectiveness is recognized in current period results, while other unrealized gains and losses are reflected in accumulated other comprehensive income until gains and losses from the underlying hedged transaction are realized. In the event that it becomes probable that a forecasted transaction will not occur, the Company would discontinue cash flow hedge treatment, which would affect earnings. These derivative financial instruments are recognized in current assets or other current liabilities at fair value.
At times, the Company hedges its exposures to changes in the value of inventories and designates certain qualifying derivatives as fair value hedges. The carrying amount of the hedged inventory is adjusted through current period results for changes in the fair value arising from changes in underlying prices. Any ineffectiveness is recognized in current period results to the extent that the change in the fair value of the inventory is not offset by the change in the fair value of the derivative.
Recent Accounting Pronouncements
Effective January 1, 2013, the Company adopted the amended guidance in ASC Topic 210, Balance Sheet. The amended guidance addresses disclosure of offsetting financial assets and liabilities. It requires entities to add disclosures showing both gross and net information about instruments and transactions eligible for offset in the balance sheet and instruments and transactions subject to an agreement similar to a master netting arrangement. The updated disclosures have been implemented retrospectively and do not impact the Company’s financial position or results of operations.
Effective January 1, 2013, the Company adopted the amended guidance in ASC Topic 220, Comprehensive Income. The amended guidance requires entities to disclose additional information about reclassification adjustments, including (1) changes in accumulated other comprehensive income by component and (2) significant items reclassified out of accumulated other comprehensive income by presenting the amount reclassified and the individual income statement line items affected. The updated disclosures have been implemented prospectively and do not impact our financial position or results of operations. Refer to Note 10, Stockholders’ Equity, for expanded disclosures.
2. FAIR VALUE DISCLOSURES
The following methods, assumptions and valuation techniques were used in estimating the fair value of the Company’s financial instruments:
Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 1 unrealized gains and losses on commodity derivatives relate to exchange-traded open trade equity and option values in the Company’s brokerage accounts.
Level 2 – directly or indirectly observable inputs such as quoted prices for similar assets or liabilities in active markets other than quoted prices included within Level 1; quoted prices for identical or similar assets in markets that are not active; and other inputs that are observable or can be substantially corroborated by observable market data by correlation or other means. Grain inventories held for sale in the agribusiness segment are valued at nearby futures values, plus or minus nearby basis levels.
Level 3 – unobservable inputs that are supported by little or no market activity and that are a significant component of the fair value of the assets or liabilities. The Company currently does not have any recurring Level 3 financial instruments.
There have been no changes in valuation techniques and inputs used in measuring fair value.
9
The following tables set forth the Company’s assets and liabilities by level for the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at September 30, 2013 |
||||||||||
|
Quoted Prices in Active Markets for Identical Assets |
|
Significant Other Observable Inputs |
|
Reclassification for Balance Sheet |
|
|
|
|||
|
(Level 1) |
|
(Level 2) |
|
Presentation |
|
Total |
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
334,509 |
|
$ |
- |
|
$ |
- |
|
$ |
334,509 |
Restricted cash |
|
27,626 |
|
|
- |
|
|
- |
|
|
27,626 |
Margin deposits |
|
28,290 |
|
|
- |
|
|
(28,290) |
|
|
- |
Inventories carried at market |
|
- |
|
|
90 |
|
|
- |
|
|
90 |
Derivative financial instruments |
|
2,690 |
|
|
8,603 |
|
|
15,079 |
|
|
26,372 |
Other assets (1) |
|
2,200 |
|
|
- |
|
|
- |
|
|
2,200 |
Total assets measured at fair value |
$ |
395,315 |
|
$ |
8,693 |
|
$ |
(13,211) |
|
$ |
390,797 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments |
$ |
13,211 |
|
$ |
4,972 |
|
$ |
(13,211) |
|
$ |
4,972 |
Other |
|
93 |
|
|
- |
|
|
- |
|
|
93 |
Total liabilities measured at fair value |
$ |
13,304 |
|
$ |
4,972 |
|
$ |
(13,211) |
|
$ |
5,065 |
(1) Represents long-term restricted cash related to the $22.0 million revenue bond of Green Plains Bluffton.
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2012 |
||||||||||
|
Quoted Prices in Active Markets for Identical Assets |
|
Significant Other Observable Inputs |
|
Reclassification for Balance Sheet |
|
|
|
|||
|
(Level 1) |
|
(Level 2) |
|
Presentation |
|
Total |
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
254,289 |
|
$ |
- |
|
$ |
- |
|
$ |
254,289 |
Restricted cash |
|
25,815 |
|
|
- |
|
|
- |
|
|
25,815 |
Margin deposits |
|
12,847 |
|
|
- |
|
|
(12,847) |
|
|
- |
Inventories carried at market |
|
- |
|
|
61,763 |
|
|
- |
|
|
61,763 |
Derivative financial instruments |
|
7,337 |
|
|
3,254 |
|
|
10,347 |
|
|
20,938 |
Other assets (1) |
|
2,200 |
|
|
- |
|
|
- |
|
|
2,200 |
Total assets measured at fair value |
$ |
302,488 |
|
$ |
65,017 |
|
$ |
(2,500) |
|
$ |
365,005 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments |
$ |
2,544 |
|
$ |
2,103 |
|
$ |
(2,500) |
|
$ |
2,147 |
Other |
|
107 |
|
|
- |
|
|
- |
|
|
107 |
Total liabilities measured at fair value |
$ |
2,651 |
|
$ |
2,103 |
|
$ |
(2,500) |
|
$ |
2,254 |
(1) Represents long-term restricted cash related to the $22.0 million revenue bond of Green Plains Bluffton.
The Company believes the fair value of its debt approximated $676.0 million compared to a book value of $647.2 million at September 30, 2013. The Company estimates the fair value of its outstanding debt using Level 2 inputs. The Company believes the fair values of its accounts receivable and accounts payable, which were $77.0 million and $85.0 million, respectively, at September 30, 2013 approximated book value. The Company believes the fair values of its debt, accounts receivable and accounts payable, which were $663.3 million, $80.5 million and $95.6 million, respectively, at December 31, 2012 approximated book value.
Although the Company currently does not have any recurring Level 3 financial measurements, the fair values of the tangible assets and goodwill acquired represent Level 3 measurements and were derived using a combination of the income approach, the market approach and the cost approach as considered appropriate for the specific assets being valued.
10
3. SEGMENT INFORMATION
Company management reviews financial and operating performance in the following four separate operating segments: (1) production of ethanol and distillers grains, collectively referred to as ethanol production, (2) corn oil production, (3) grain handling and storage, collectively referred to as agribusiness, and (4) marketing and logistics services for Company-produced and third-party ethanol, distillers grains, corn oil and other commodities, and the operation of blending and terminaling facilities, collectively referred to as marketing and distribution. Selling, general and administrative expenses, primarily consisting of compensation of corporate employees, professional fees and overhead costs not directly related to a specific operating segment, are reflected in the table below as corporate activities.
During the normal course of business, the Company enters into transactions between segments. Examples of these intersegment transactions include, but are not limited to, the ethanol production segment selling ethanol to the marketing and distribution segment and the agribusiness segment selling grain to the ethanol production segment. These intersegment activities are recorded by each segment at prices approximating market and treated as if they are third-party transactions. Consequently, these transactions impact segment performance. However, revenues and corresponding costs are eliminated in consolidation and do not impact the Company’s consolidated results.
In June 2013, the Company acquired an ethanol plant located in Atkinson, Nebraska for approximately $15.2 million, with the capacity to produce approximately 50 million gallons of ethanol per year. The plant began ethanol production on July 25, 2013. Also in June 2013, the Company acquired a grain elevator in Archer, Nebraska. During the third quarter of 2013, the Company completed construction of additional storage capacity of 2.4 million bushels at its grain elevators and 7.0 million bushels at its ethanol plants.
In December 2012, the Company sold twelve grain elevators located in northwestern Iowa and western Tennessee. The transaction involved approximately 32.6 million bushels, or 83%, of the Company’s reported agribusiness grain storage capacity and all of its agronomy and retail petroleum operations. The divested assets were reported within the Company’s agribusiness segment.
The following tables set forth certain financial data for the Company’s operating segments for the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
2013 |
|
2012 |
|
2013 |
|
2012 |
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Ethanol production: |
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers |
$ |
39,766 |
|
$ |
52,982 |
|
$ |
118,511 |
|
$ |
149,115 |
Intersegment revenues |
|
477,103 |
|
|
439,917 |
|
|
1,437,821 |
|
|
1,268,851 |
Total segment revenues |
|
516,869 |
|
|
492,899 |
|
|
1,556,332 |
|
|
1,417,966 |
Corn oil production: |
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers |
|
- |
|
|
1 |
|
|
- |
|
|
518 |
Intersegment revenues |
|
17,290 |
|
|
14,530 |
|
|
49,304 |
|
|
43,003 |
Total segment revenues |
|
17,290 |
|
|
14,531 |
|
|
49,304 |
|
|
43,521 |
Agribusiness: |
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers |
|
5,055 |
|
|
125,446 |
|
|
43,178 |
|
|
300,051 |
Intersegment revenues |
|
274,100 |
|
|
50,254 |
|
|
498,189 |
|
|
134,725 |
Total segment revenues |
|
279,155 |
|
|
175,700 |
|
|
541,367 |
|
|
434,776 |
Marketing and distribution: |
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers |
|
713,150 |
|
|
768,984 |
|
|
2,166,453 |
|
|
2,143,479 |
Intersegment revenues |
|
9,629 |
|
|
111 |
|
|
13,042 |
|
|
302 |
Total segment revenues |
|
722,779 |
|
|
769,095 |
|
|
2,179,495 |
|
|
2,143,781 |
Revenues including intersegment activity |
|
1,536,093 |
|
|
1,452,225 |
|
|
4,326,498 |
|
|
4,040,044 |
Intersegment eliminations |
|
(778,122) |
|
|
(504,812) |
|
|
(1,998,356) |
|
|
(1,446,881) |
Revenues as reported |
$ |
757,971 |
|
$ |
947,413 |
|
$ |
2,328,142 |
|
$ |
2,593,163 |
11
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
2013 |
|
2012 |
|
2013 |
|
2012 |
||||
Gross profit (loss): |
|
|
|
|
|
|
|
|
|
|
|
Ethanol production |
$ |
22,269 |
|
$ |
(3,701) |
|
$ |
34,228 |
|
$ |
(20,610) |
Corn oil production |
|
9,649 |
|
|
7,865 |
|
|
25,431 |
|
|
25,205 |
Agribusiness |
|
815 |
|
|
12,513 |
|
|
2,986 |
|
|
27,357 |
Marketing and distribution |
|
8,615 |
|
|
10,980 |
|
|
39,074 |
|
|
21,769 |
Intersegment eliminations |
|
(324) |
|
|
240 |
|
|
(871) |
|
|
1,079 |
|
$ |
41,024 |
|
$ |
27,897 |
|
$ |
100,848 |
|
$ |
54,800 |
Operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
Ethanol production |
$ |
17,851 |
|
$ |
(7,520) |
|
$ |
22,508 |
|
$ |
(32,435) |
Corn oil production |
|
9,596 |
|
|
7,811 |
|
|
25,226 |
|
|
25,011 |
Agribusiness |
|
163 |
|
|
5,849 |
|
|
781 |
|
|
8,916 |
Marketing and distribution |
|
4,456 |
|
|
7,162 |
|
|
26,654 |
|
|
10,546 |
Intersegment eliminations |
|
(324) |
|
|
240 |
|
|
(826) |
|
|
1,113 |
Corporate activities |
|
(6,208) |
|
|
(4,918) |
|
|
(17,543) |
|
|
(16,701) |
|
$ |
25,534 |
|
$ |
8,624 |
|
$ |
56,800 |
|
$ |
(3,550) |
The following table sets forth revenues by product line for the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
2013 |
|
2012 |
|
2013 |
|
2012 |
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Ethanol |
$ |
595,152 |
|
$ |
672,177 |
|
$ |
1,798,297 |
|
$ |
1,887,376 |
Distillers grains |
|
110,426 |
|
|
111,432 |
|
|
364,866 |
|
|
310,962 |
Corn oil |
|
19,375 |
|
|
15,255 |
|
|
53,749 |
|
|
44,041 |
Grain |
|
23,081 |
|
|
113,567 |
|
|
78,703 |
|
|
252,490 |
Agronomy products |
|
83 |
|
|
10,294 |
|
|
183 |
|
|
42,612 |
Other |
|
9,854 |
|
|
24,688 |
|
|
32,344 |
|
|
55,682 |
|
$ |
757,971 |
|
$ |
947,413 |
|
$ |
2,328,142 |
|
$ |
2,593,163 |
The following table sets forth total assets by operating segment for the periods indicated (in thousands):
|
|
|
|
|
|
|
September 30, |
|
December 31, |
||
|
2013 |
|
2012 |
||
Total assets: |
|
|
|
|
|
Ethanol production |
$ |
814,178 |
|
$ |
831,939 |
Corn oil production |
|
27,737 |
|
|
27,751 |
Agribusiness |
|
66,769 |
|
|
179,930 |
Marketing and distribution |
|
252,514 |
|
|
184,541 |
Corporate assets |
|
223,147 |
|
|
150,797 |
Intersegment eliminations |
|
(1,213) |
|
|
(25,224) |
|
$ |
1,383,132 |
|
$ |
1,349,734 |
12
4. INVENTORIES
Inventories are carried at the lower of cost or market, except grain held for sale, which is valued at market value. The components of inventories are as follows (in thousands):
|
September 30, |
|
December 31, |
||
|
2013 |
|
2012 |
||
Finished goods |
$ |
63,143 |
|
$ |
58,080 |
Grain held for sale |
|
90 |
|
|
61,763 |
Raw materials |
|
28,327 |
|
|
28,494 |
Work-in-process |
|
12,508 |
|
|
13,326 |
Supplies and parts |
|
12,030 |
|
|
10,346 |
|
$ |
116,098 |
|
$ |
172,009 |
5. GOODWILL
The Company did not have any changes in the total carrying amount of goodwill, which was $40.9 million, during the nine months ended September 30, 2013. Goodwill of $30.3 million is attributable to the ethanol production segment and $10.6 million is attributable to the marketing and distribution segment.
6. DERIVATIVE FINANCIAL INSTRUMENTS
At September 30, 2013, the Company’s consolidated balance sheet reflects unrealized gains, net of tax, of $0.7 million in accumulated other comprehensive income. The Company expects that all of the unrealized gains at September 30, 2013 will be reclassified into operating income over the next 12 months as a result of hedged transactions that are forecasted to occur. The amount ultimately realized in operating income, however, will differ as commodity prices change.
Fair Values of Derivative Instruments
The following table provides information about the fair values of the Company’s derivative financial instruments and the line items on the consolidated balance sheets in which the fair values are reflected (in thousands):
|
|
Asset Derivatives' |
|
Liability Derivatives' |
||||||||
|
|
Fair Value |
|
Fair Value |
||||||||
|
|
September 30, |
|
December 31, |
|
September 30, |
|
December 31, |
||||
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
||||
Derivative financial instruments (1) |
|
$ |
(1,918) |
(2) |
$ |
8,091 |
(3) |
$ |
- |
|
$ |
- |
Accrued and other liabilities |
|
|
- |
|
|
- |
|
|
4,972 |
|
|
2,103 |
Other liabilities |
|
|
- |
|
|
- |
|
|
- |
|
|
44 |
Total |
|
$ |
(1,918) |
|
$ |
8,091 |
|
$ |
4,972 |
|
$ |
2,147 |
(1) Derivative financial instruments as reflected on the consolidated balance sheets are net of related margin deposit assets of $28.3 million and $12.8 million at September 30, 2013 and December 31, 2012, respectively.
(2) Balance at September 30, 2013 includes $8.6 million of net unrealized losses on derivative financial instruments designated as cash flow hedging instruments.
(3)Balance at December 31, 2012 includes $2.1 million of net unrealized gains on derivative financial instruments designated as cash flow hedging instruments.
Refer to Note 2 - Fair Value Disclosures, which also contains fair value information related to derivative financial instruments.
13
Effect of Derivative Instruments on Consolidated Statements of Operations and Consolidated Statements of Stockholders’ Equity and Comprehensive Income
The following tables provide information about the gain or loss recognized in income and other comprehensive income on the Company’s derivative financial instruments and the line items in the financial statements in which such gains and losses are reflected (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains (Losses) on Derivative Instruments Not |
|
Three Months Ended |
|
Nine Months Ended |
||||||||
Designated in a Hedging Relationship |
|
2013 |
|
2012 |
|
2013 |
|
2012 |
||||
Revenues |
|
$ |
(2,241) |
|
$ |
(10,190) |
|
$ |
(16,724) |
|
$ |
(11,469) |
Cost of goods sold |
|
|
2,982 |
|
|
(6,255) |
|
|
14,189 |
|
|
(10,580) |
Net increase (decrease) recognized in earnings before tax |
|
$ |
741 |
|
$ |
(16,445) |
|
$ |
(2,535) |
|
$ |
(22,049) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) Due to Ineffectiveness |
|
Three Months Ended |
|
Nine Months Ended |
||||||||
of Cash Flow Hedges |
|
2013 |
|
2012 |
|
2013 |
|
2012 |
||||
Revenues |
|
$ |
53 |
|
$ |
(22) |
|
$ |
26 |
|
$ |
(10) |
Cost of goods sold |
|
|
(410) |
|
|
(405) |
|
|
(434) |
|
|
(29) |
Net decrease recognized in earnings before tax |
|
$ |
(357) |
|
$ |
(427) |
|
$ |
(408) |
|
$ |
(39) |
|
|
|
|
|
|
|
|
|
||||
Gains (Losses) Reclassified from Accumulated |
|
Three Months Ended |
|
Nine Months Ended |
||||||||
into Net Income (Loss) |
|
2013 |
|
2012 |
|
2013 |
|
2012 |
||||
Revenues |
|
$ |
(11,642) |
|
$ |
(1,994) |
|
$ |
(45,862) |
|
$ |
1,563 |
Cost of goods sold |
|
|
(5,058) |
|
|
13,291 |
|
|
(11,925) |
|
|
7,939 |
Net increase (decrease) recognized in earnings before tax |
|
$ |
(16,700) |
|
$ |
11,297 |
|
$ |
(57,787) |
|
$ |
9,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Portion of Cash Flow |
|
Three Months Ended |
|
Nine Months Ended |
||||||||
Other Comprehensive Income (Loss) |
|
2013 |
|
2012 |
|
2013 |
|
2012 |
||||
Commodity Contracts |
|
$ |
(15,399) |
|
$ |
26,497 |
|
$ |
(62,429) |
|
$ |
45,538 |
There were no gains or losses due to the discontinuance of cash flow hedge treatment or fair value hedge exposure during the nine months ended September 30, 2013 and 2012.
14
The following table summarizes the volumes of open commodity derivative positions as of September 30, 2013 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
September 30, 2013 |
||||||||||
|
|
Exchange Traded |
|
Non-Exchange Traded |
|
|
|
|
||
Derivative Instruments |
|
Net Long & (Short) (1) |
|
Long (2) |
|
(Short) (2) |
|
Unit of Measure |
|
Commodity |
Futures |
|
280 |
|
|
|
|
|
Bushels |
|
Corn, Soybeans and Wheat |
Futures |
|
28,915 |
(3) |
|
|
|
|
Bushels |
|
Corn |
Futures |
|
(1,218) |
|
|
|
|
|
Gallons |
|
Ethanol |
Futures |
|
(135,366) |
(3) |
|
|
|
|
Gallons |
|
Ethanol |
Options |
|
(11,362) |
|
|
|
|
|
Bushels |
|
Corn, Soybeans and Wheat |
Options |
|
(8,630) |
|
|
|
|
|
Gallons |
|
Ethanol |
Forwards |
|
|
|
4,724 |
|
(3,921) |
|
Bushels |
|
Corn and Soybeans |
Forwards |
|
|
|
8,331 |
|
(160,889) |
|
Gallons |
|
Ethanol |
Forwards |
|
|
|
107 |
|
(188) |
|
Tons |
|
Distillers Grains |
Forwards |
|
|
|
528 |
|
(57,648) |
|
Pounds |
|
Corn Oil |
|
|
|
|
|
|
|
|
|
|
|
(1) |
Exchange traded futures and options are presented on a net long and (short) position basis. Options are presented on a delta-adjusted basis. |
(2) |
Non-exchange traded forwards are presented on a gross long and (short) position basis including both fixed-price and basis contracts. |
(3) |
Futures used for cash flow hedges. |
Revenues and cost of goods sold for energy trading contracts that do not involve physical delivery are presented in revenues on the consolidated statements of operations on a net basis and are summarized in the table below for the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
2013 |
|
2012 |
|
2013 |
|
2012 |
||||
Revenues |
$ |
13,915 |
|
$ |
18,285 |
|
$ |
23,676 |
|
$ |
30,848 |
Cost of goods sold |
|
14,028 |
|
|
17,521 |
|
|
23,626 |
|
|
30,013 |
15
7. DEBT
The principal balances of the components of long-term debt are as follows (in thousands):
|
September 30, |
|
December 31, |
||
|
2013 |
|
2012 |
||
Green Plains Bluffton: |
|
|
|
|
|
$70.0 million term loan |
$ |
27,395 |
|
$ |
41,018 |
$20.0 million revolving term loan |
|
20,000 |
|
|
20,000 |
$22.0 million revenue bond |
|
15,780 |
|
|
17,510 |
Green Plains Central City: |
|
|
|
|
|
$55.0 million term loan |
|
34,512 |
|
|
38,635 |
$30.5 million revolving term loan |
|
28,639 |
|
|
28,639 |
$11.0 million revolving line of credit |
|
10,600 |
|
|
10,600 |
Equipment financing loan |
|
54 |
|
|
105 |
Green Plains Holdings II: |
|
|
|
|
|
$26.4 million term loan |
|
17,414 |
|
|
21,914 |
$51.1 million revolving term loan |
|
42,640 |
|
|
45,320 |
Green Plains Obion: |
|
|
|
|
|
$60.0 million term loan |
|
6,279 |
|
|
13,479 |
$37.4 million revolving term loan |
|
37,400 |
|
|
37,400 |
Equipment financing loan |
|
179 |
|
|
334 |
Economic development grant |
|
1,268 |
|
|
1,335 |
Green Plains Ord: |
|
|
|
|
|
$25.0 million term loan |
|
15,789 |
|
|
17,675 |
$13.0 million revolving term loan |
|
12,151 |
|
|
12,151 |
$5.0 million revolving line of credit |
|
4,749 |
|
|
4,749 |
Green Plains Otter Tail: |
|
|
|
|
|
$30.3 million term loan |
|
19,190 |
|
|
22,791 |
$4.7 million revolver |
|
4,675 |
|
|
4,675 |
$19.2 million note payable |
|
19,116 |
|
|
19,014 |
Capital lease payable |
|
- |
|
|
53 |
Green Plains Shenandoah: |
|
|
|
|
|
$17.0 million revolving term loan |
|
16,000 |
|
|
17,000 |
Green Plains Superior: |
|
|
|
|
|
$40.0 million term loan |
|
11,125 |
|
|
15,250 |
$10.0 million revolving term loan |
|
10,000 |
|
|
10,000 |
Equipment financing loan |
|
36 |
|
|
89 |
Corporate: |
|
|
|
|
|
$90.0 million convertible notes |
|
90,000 |
|
|
90,000 |
$120.0 million convertible notes |
|
95,538 |
|
|
- |
Notes payable |
|
- |
|
|
1,625 |
Capital lease |
|
243 |
|
|
403 |
Other |
|
10,000 |
|
|
211 |
Total long-term debt |
|
550,772 |
|
|
491,975 |
Less: current portion of long-term debt |
|
(62,846) |
|
|
(129,426) |
Long-term debt |
$ |
487,926 |
|
$ |
362,549 |
Short-term notes payable and other borrowings at September 30, 2013 included working capital revolvers at Green Plains Grain and Green Plains Trade with outstanding balances of $38.0 million and $58.4 million, respectively. Short-term notes payable and other borrowings at December 31, 2012 included working capital revolvers at Green Plains Grain and Green Plains Trade with outstanding balances of $105.0 million and $39.1 million, respectively, and a $27.2 million short-term note payable issued in conjunction with the March 2012 repurchase of common stock.
16
Ethanol Production Segment
· |
Term Loans |
o |
Scheduled principal payments are as follows: |
• |
Green Plains Bluffton |
$0.3 million per month |
• |
Green Plains Central City |
$0.5 million per month |
• |
Green Plains Holdings II |
$1.5 million per quarter |
• |
Green Plains Obion |
$2.4 million per quarter |
• |
Green Plains Ord |
$0.2 million per month |
• |
Green Plains Otter Tail |
$0.4 million per month |
• |
Green Plains Superior |
$1.4 million per quarter |
o |
Final maturity dates (at the latest) are as follows: |
• |
Green Plains Bluffton |
January 31, 2015 |
• |
Green Plains Central City |
July 1, 2016 |
• |
Green Plains Holdings II |
July 1, 2016 |
• |
Green Plains Obion |
May 20, 2014 |
• |
Green Plains Ord |
July 1, 2016 |
• |
Green Plains Otter Tail |
September 1, 2018 |
• |
Green Plains Superior |
July 20, 2015 |
· |
Revolving Term Loans – The revolving term loans are generally available for advances throughout the life of the commitment, subject, in certain cases, to borrowing base restrictions. Allowable advances under the Green Plains Shenandoah loan agreement are reduced by $1.0 million each six-month period commencing on June 1, 2013. Allowable advances under the Green Plains Superior loan agreement are reduced by $2.5 million each six-month period commencing on the first day of the month beginning six months after repayment of the term loan, but in no event later than January 1, 2016. Allowable advances under the Green Plains Obion loan agreement are reduced by $4.7 million on a semi-annual basis commencing on March 1, 2015. Allowable advances under the Green Plains Holdings II loan agreement are reduced by $2.7 million on a semi-annual basis commencing on April 1, 2012 and are reduced by $5.7 million on a semi-annual basis commencing on October 1, 2016. Interest-only payments are due each month on all revolving term loans until the final maturity date for the Green Plains Bluffton, Green Plains Central City, Green Plains Ord, Green Plains Shenandoah, and Green Plains Superior loan agreements. |
o |
Final maturity dates (at the latest) are as follows: |
• |
Green Plains Bluffton |
January 31, 2015 |
• |
Green Plains Central City |
July 1, 2016 |
• |
Green Plains Holdings II |
October 1, 2018 |
• |
Green Plains Obion |
June 1, 2018 |
• |
Green Plains Ord |
July 1, 2016 |
• |
Green Plains Shenandoah |
March 1, 2018 |
• |
Green Plains Superior |
July 1, 2017 |
Green Plains Bluffton issued a $22.0 million Subordinate Solid Waste Disposal Facility Revenue Bond with the City of Bluffton, Indiana. The revenue bond requires: (1) semi-annual principal and interest payments of approximately $1.5 million through March 1, 2019, and (2) a final principal and interest payment of $3.745 million on September 1, 2019. At September 30, 2013, Green Plains Bluffton had $2.5 million of cash, presented as restricted cash with the long-term portion in other assets on the consolidated balance sheets, the use of which was restricted for principal and interest payments towards the revenue bond.
Green Plains Otter Tail issued $19.2 million in senior notes under New Market Tax Credits financing. The notes bear interest at a rate equal to the prime rate (as defined) plus 1.5%, but not less than 4.0%, payable monthly, and require monthly
17
principal payments of approximately $0.3 million beginning in September 2014. The notes mature on September 1, 2018 with an expected outstanding balance of $4.7 million upon maturity.
Allowable dividends or other annual distributions from each respective subsidiary, subject to certain additional restrictions including compliance with all loan covenants, terms and conditions, are as follows:
• |
Green Plains Bluffton |
Up to 35% of net profit before tax, and up to an additional 15% of net profit before tax, |
|
|
after free cash flow payment is made |
• |
Green Plains Central City |
|
|
and Green Plains Ord |
Up to 35% of net profit before tax, and an unlimited amount may be distributed after |
|
|
free cash flow payment is made, provided maintenance of 70% tangible owners’ equity |
• |
Green Plains Holdings II |
Up to 40% of net profit before tax, and unlimited after free cash flow payment is made |
• |
Green Plains Obion |
Up to 40% of net profit before tax, and unlimited after free cash flow payment is made |
• |
Green Plains Otter Tail |
Up to 40% of net profit before tax, and an amount reasonably acceptable to the lender |
|
|
may be distributed provided maintenance of 40% tangible owner equity |
• |
Green Plains Superior |
Up to 40% of net profit before tax, and unlimited after free cash flow payment is made |
In October 2013, the Green Plains Shenandoah revolving term loan was amended to remove the restriction on allowable dividends and to revise the working capital and net worth covenants. The working capital covenant, previously to be not less than $8.0 million, was amended to be not less than $6.0 million. The net worth covenant, previously to be not less than $60.0 million, was amended to be not less than $65.0 million.
Agribusiness Segment
Green Plains Grain has a $125.0 million senior secured revolving credit facility with various lenders, as amended on August 27, 2013, to provide the agribusiness segment with working capital funding subject to a borrowing base as defined in the facility. The revolving credit facility matures on August 26, 2016. The revolving credit facility includes total revolving credit commitments of $125.0 million and an accordion feature whereby amounts available under the facility may be increased by up to $75.0 million of new lender commitments upon agent approval. The facility also allows for additional seasonal borrowings up to $50.0 million. The total commitments outstanding under the facility cannot exceed $250.0 million. As security for the revolving credit facility, the lender received a first priority lien on certain cash, inventory, accounts receivable and other assets owned by subsidiaries of the agribusiness segment. Advances are subject to interest charges at a rate per annum equal to the LIBOR rate for the outstanding period plus the applicable margin or a rate per annum equal to the base rate plus the applicable margin. In addition to other customary covenants, this revolving credit facility contains restrictions on distributions with respect to capital stock, with exceptions for distributions of up to 40% of net profit before tax, subject to certain conditions.
Marketing and Distribution Segment
Green Plains Trade has a senior secured asset-based revolving credit facility pursuant to which the lender will loan up to $130.0 million on eligible collateral. This credit facility was increased from $70.0 million in April 2013. The amount of eligible collateral is determined by a calculated borrowing base value equal to the sum of percentages of eligible receivables and eligible inventories, less certain miscellaneous adjustments. The outstanding balance, if any, is subject to interest charges at the lender’s floating base rate plus the applicable margin or LIBOR plus the applicable margin. The revolving credit facility expires on April 25, 2016. In addition to other customary covenants, this revolving credit facility contains restrictions on distributions with respect to capital stock, with exceptions (i) for distributions with respect to tax obligations, subject to certain conditions, and (ii) whereby distributions may be made in an amount up to 50% of net income if (a) undrawn availability under this facility, on a pro forma basis, is greater than $10.0 million for the preceding 30 days and (b) as of the date of the distribution, the borrower would be in compliance with the fixed charge coverage ratio on a pro forma basis. At September 30, 2013, Green Plains Trade had $27.4 million, presented as restricted cash on the consolidated balance sheets, the use of which was restricted for repayment towards the outstanding loan balance.
In June 2013, subsidiaries of the Company executed a New Markets Tax Credits financing transaction. In order to facilitate this financing transaction, the Company was required to issue promissory notes payable in the amount of $10.0 million and a note receivable in the amount of $8.1 million. The promissory notes payable and note receivable bear interest at 1% per annum, payable quarterly. Beginning in March 2020, the promissory notes and note receivable each require quarterly principal and interest payments of approximately $0.2 million; the Company retains the right to call $8.1 million of the promissory notes in 2020. The promissory notes payable and note receivable mature on September 15, 2031 and will be fully
18
amortized upon maturity. In connection with the New Markets Tax Credits financing transaction, income tax credits were generated for the benefit of the lender. The Company has guaranteed the lender the value of these income tax credits over their statutory lives, a period of seven years, in the event that the income tax credits are recaptured or reduced. The value of the income tax credits was anticipated to be $5.0 million at the time of the transaction. The Company believes the likelihood of recapture or reduction of the income tax credits is remote, and therefore has not established a liability in connection with this guarantee.
Corporate Activities
On September 20, 2013, the Company issued $120.0 million of 3.25% Convertible Senior Notes due 2018, or the 3.25% Notes. The 3.25% Notes represent senior, unsecured obligations of the Company, with interest payable on April 1 and October 1 of each year. Conversion of the 3.25% Notes may only be settled in shares of the Company’s common stock unless shareholder approval is received to allow for flexible settlement consisting of, at the Company's election, cash, shares of the Company's common stock, or a combination of cash and shares of the Company's common stock (and cash in lieu of fractional shares) until the close of business on the scheduled trading day immediately preceding the maturity date. As a result, the 3.25% Notes contain liability and equity components which were bifurcated and accounted for separately. The liability component of the 3.25% Notes, as of the issuance date, was calculated by estimating the fair value of a similar liability issued at an 8.21% effective interest rate, which was determined by considering the rate of return investors would require in the Company’s debt structure. The amount of the equity component was calculated by deducting the fair value of the liability component from the principal amount of the 3.25% Notes, resulting in the initial recognition of $24.5 million as debt discount costs recorded in additional paid-in capital. The carrying amount of the 3.25% Notes will be accreted to the principal amount over the remaining term to maturity and the Company will record a corresponding amount of non-cash interest expense. Additionally, the Company incurred debt issuance costs of $5.1 million related to the 3.25% Notes and allocated $4.0 million of debt issuance costs to the liability component of the 3.25% Notes. These costs will be amortized to non-cash interest expense over the five-year term of the 3.25% Notes. Prior to April 1, 2018, the 3.25% Notes will not be convertible unless certain conditions are satisfied. The initial conversion rate is 47.9627 shares of common stock per $1,000 principal amount of 3.25% Notes, which is equal to an initial conversion price of approximately $20.85 per share. The conversion rate is subject to adjustment upon the occurrence of certain events, including the payment of a quarterly cash dividend that exceeds $0.04 per share. In addition, the Company may be obligated to increase the conversion rate for any conversion that occurs in connection with certain corporate events, including the Company calling the 3.25% Notes for redemption.
The Company may redeem for cash all, but not less than all, of the 3.25% Notes at any time on or after October 1, 2016 if the sale price of the Company's common stock equals or exceeds 140% of the applicable conversion price for a specified time period ending on the trading day immediately prior to the date the Company delivers notice of the redemption. The redemption price will equal 100% of the principal amount of the 3.25% Notes, plus any accrued and unpaid interest to, but excluding, the redemption date. In addition, upon the occurrence of a fundamental change, such as a change in control, holders of the 3.25% Notes will have the right, at their option, to require the Company to repurchase their 3.25% Notes in cash at a price equal to 100% of the principal amount of the 3.25% Notes to be repurchased, plus accrued and unpaid interest. Default with respect to any loan in excess of $10.0 million constitutes an event of default under the 3.25% Notes, which could result in the 3.25% Notes being declared due and payable.
In November 2010, the Company issued $90.0 million of 5.75% Convertible Senior Notes due 2015, or the 5.75% Notes. The 5.75% Notes represent senior, unsecured obligations of the Company, with interest payable on May 1 and November 1 of each year. The 5.75% Notes may be converted into shares of the Company’s common stock and cash in lieu of fractional shares of the common stock based on a conversion rate equal to 69.9527 shares of the common stock per $1,000 principal amount of 5.75% Notes, which is equal to a conversion price of approximately $14.30 per share. The conversion rate is subject to adjustment upon the occurrence of specified events, including the payment of a cash dividend. The conversion rate was adjusted to reflect the payment of a cash dividend of $0.04 per common share paid on September 26, 2013 to all shareholders of record as of September 5, 2013. The Company may redeem for cash all, but not less than all, of the 5.75% Notes at any time on or after November 1, 2013, if the last reported sale price of the Company’s common stock equals or exceeds 140% of the applicable conversion price for a specified time period, at a redemption price equal to 100% of the principal amount of the 5.75% Notes, plus accrued and unpaid interest. Default with respect to any loan in excess of $10.0 million constitutes an event of default under the 5.75% Notes, which could result in the 5.75% Notes being declared due and payable.
19
A $27.2 million note payable to a subsidiary of NTR plc, which previously was the Company’s largest shareholder, was paid in full during the first quarter of 2013.
Covenant Compliance
The Company, including all of its subsidiaries, was in compliance with its debt covenants as of September 30, 2013.
Capitalized Interest
The Company had no capitalized interest during the nine months ended September 30, 2013.
Restricted Net Assets
At September 30, 2013, there were approximately $548.4 million of net assets at the Company’s subsidiaries that were not available to be transferred to the parent company in the form of dividends, loans or advances due to restrictions contained in the credit facilities of these subsidiaries.
8. STOCK-BASED COMPENSATION
The Company has equity incentive plans which reserve a combined total of 3.5 million shares of common stock for issuance pursuant to their terms. The plans provide for the granting of shares of stock, including options to purchase shares of common stock, stock appreciation rights tied to the value of common stock, restricted stock, and restricted and deferred stock unit awards to eligible employees, non-employee directors and consultants. The Company measures share-based compensation grants at fair value on the grant date, adjusted for estimated forfeitures. The Company records noncash compensation expense related to equity awards in its financial statements over the requisite service period on a straight-line basis. Substantially all of the Company’s existing share-based compensation awards have been determined to be equity awards.
The following table summarizes stock option activity for the nine months ended September 30, 2013:
|
Shares |
|
Weighted-Average Exercise Price |
|
Weighted-Average Remaining Contractual Term (in years) |
|
Aggregate Intrinsic Value (in thousands) |
||
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2012 |
726,750 |
|
$ |
10.10 |
|
4.3 |
|
$ |
625 |
Granted |
- |
|
|
- |
|
|
|
|
|
Exercised |
(95,000) |
|
|
6.28 |
|
|
|
|
576 |
Forfeited |
- |
|
|
- |
|
|
|
|
|
Expired |
- |
|
|
- |
|
|
|
|
|
Outstanding at September 30, 2013 |
631,750 |
|
$ |
10.67 |
|
3.7 |
|
$ |
3,623 |
Exercisable at September 30, 2013 (1) |
631,750 |
|
$ |
10.67 |
|
3.7 |
|
$ |
3,623 |
(1) Includes in-the-money options totaling 520,750 shares at a weighted-average exercise price of $8.95.
The Company’s option awards allow employees to exercise options through cash payment to the Company for the shares of common stock or through a simultaneous broker-assisted cashless exercise of a share option through which the employee authorizes the exercise of an option and the immediate sale of the option shares in the open market. The Company uses newly-issued shares of common stock to satisfy its share-based payment obligations.
20
The following table summarizes non-vested stock award and deferred stock unit activity for the nine months ended September 30, 2013:
|
|
|
|
|
|
|
|
Non-Vested Shares and Deferred Stock Units |
|
Weighted-Average Grant-Date Fair Value |
|
Weighted-Average Remaining Vesting Term |
|
|
|
|
|
|
|
|
Nonvested at December 31, 2012 |
628,090 |
|
$ |
11.41 |
|
|
Granted |
565,651 |
|
|
9.60 |
|
|
Forfeited |
(5,358) |
|
|
9.80 |
|
|
Vested |
(455,683) |
|
|
10.88 |
|
|
Nonvested at September 30, 2013 |
732,700 |
|
$ |
10.35 |
|
1.8 |
Compensation costs expensed for share-based payment plans described above during the three and nine months ended September 30, 2013 were approximately $1.0 million and $4.4 million, respectively, and during the three and nine months ended September 30, 2012 were approximately $1.0 million and $4.3 million, respectively. At September 30, 2013, there were $5.4 million of unrecognized compensation costs from share-based compensation arrangements, which are related to non-vested awards. This compensation is expected to be recognized over a weighted-average period of approximately 1.8 years. The potential tax benefit realizable for the anticipated tax deductions of the exercise of share-based payment arrangements generally would approximate 38% of these expense amounts.
9. EARNINGS PER SHARE
Basic earnings per common shares, or EPS, is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income on an if-converted basis, with respect to the 3.25% Notes and the 5.75% Notes, available to common stockholders by the weighted average number of common shares outstanding during the period, adjusted for the dilutive effect of any outstanding dilutive securities. The reconciliations of net income to net income on an if-converted basis and basic and diluted earnings per share are as follows (in thousands):
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
September 30, |
|
September 30, |
||||||||
|
2013 |
|
2012 |
|
2013 |
|
2012 |
||||
Basic EPS: |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Green Plains |
$ |
9,410 |
|
$ |
(1,002) |
|
$ |
17,930 |
|
$ |
(21,244) |
Weighted average shares outstanding - basic |
|
30,204 |
|
|
29,655 |
|
|
30,100 |
|
|
30,499 |
Net income (loss) attributable to Green Plains - basic |
$ |
0.31 |
|
$ |
(0.03) |
|
$ |
0.60 |
|
$ |
(0.70) |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS: |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Green Plains |
$ |
9,410 |
|
$ |
(1,002) |
|
$ |
17,930 |
|
$ |
(21,244) |
Interest and amortization on convertible debt, net of tax effect: |
|
|
|
|
|
|
|
|
|
|
|
5.75% Notes due 2015 |
|
883 |
|
|
- |
|
|
2,643 |
|
|
- |
3.25% Notes due 2018 |
|
79 |
|
|
- |
|
|
79 |
|
|
- |
Net income (loss) attributable to Green Plains on an if-converted basis |
$ |
10,372 |
|
$ |
(1,002) |
|
$ |
20,652 |
|
$ |
(21,244) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic |
|
30,204 |
|
|
29,655 |
|
|
30,100 |
|
|
30,499 |
Effect of dilutive convertible debt: |
|
|
|
|
|
|
|
|
|
|
|
5.75% Notes due 2015 |
|
6,284 |
|
|
- |
|
|
6,281 |
|
|
- |
3.25% Notes due 2018 |
|
688 |
|
|
- |
|
|
232 |
|
|
- |
Effect of dilutive warrants |
|
93 |
|
|
- |
|
|
- |
|
|
- |
Effect of dilutive stock-based compensation awards |
|
214 |
|
|
- |
|
|
205 |
|
|
- |
Total potential shares outstanding |
|
37,483 |
|
|
29,655 |
|
|
36,818 |
|
|
30,499 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Green Plains - diluted |
$ |
0.28 |
|
$ |
(0.03) |
|
$ |
0.56 |
|
$ |
(0.70) |
21
Excluded from the computations of diluted EPS for the three and nine months ended September 30, 2013 were stock-based compensation awards totaling 0.2 million and 0.2 million shares, respectively, and for the three and nine months ended September 30, 2012 were stock-based compensation awards totaling 1.3 million and 1.1 million shares, respectively, because the exercise prices or the grant-date fair value, as applicable, of the corresponding awards were greater than the average market price of the Company’s common stock during the respective periods. For the three and nine months ended September 30, 2012, 6.3 million and 6.4 million shares, respectively, related to the effect of the convertible debt and stock-based compensation awards were also excluded from the computation of diluted EPS as the inclusion of these shares would have been antidilutive. As consideration for the acquisition of the Lakota and Riga ethanol plants in October 2010, the Company issued warrants for 700,000 shares of its common stock at a price of $14.00 per share exercisable until October 22, 2013. The warrants are excluded from the computations of diluted EPS for the nine months ended September 30, 2013 and the three and nine months ended September 30, 2012 as the exercise price was greater than the average market price of the Company’s common stock for those periods. On October 22, 2013, 270,060 warrants were exercised at a price of $14.00 per share and 429,940 warrants expired unexercised.
10. STOCKHOLDERS’ EQUITY
Components of stockholders’ equity are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accum. |
|
|
|
|||||
|
|
Additional |
|
|
Other |
|
Total |
|||||||
|
Common Stock |
Paid-in |
Retained |
Comp. |
Treasury Stock |
Stockholders' |
||||||||
|
Shares |
Amount |
Capital |
Earnings |
Income |
Shares |
Amount |
Equity |
||||||
Balance, December 31, 2012 |
36,904 |
$ |
37 |
$ |
445,198 |
$ |
107,540 |
$ |
3,535 | 7,200 |
$ |
(65,808) |
$ |
490,502 |
Net income |
- |
|
- |
|
- |
|
17,930 |
|
- |
- |
|
- |
|
17,930 |
Cash dividends declared |
- |
|
- |
|
- |
|
(1,207) |
|
- |
- |
|
- |
|
(1,207) |
Other comprehensive loss, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of tax |
- |
|
- |
|
- |
|
- |
|
(2,802) |
- |
|
- |
|
(2,802) |
Stock-based compensation |
408 |
|
- |
|
2,863 |
|
- |
|
- |
- |
|
- |
|
2,863 |
Stock options exercised |
95 |
|
- |
|
597 |
|
- |
|
- |
- |
|
- |
|
597 |
Issuance of 3.25 % notes due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018, net of tax |
- |
|
- |
|
14,173 |
|
- |
|
- |
- |
|
- |
|
14,173 |
Balance, September 30, 2013 |
37,407 |
$ |
37 |
$ |
462,831 |
$ |
124,263 |
$ |
733 | 7,200 |
$ |
(65,808) |
$ |
522,056 |
On August 22, 2013, the Company announced that its Board of Directors approved the initiation of a quarterly cash dividend. An initial dividend of $0.04 per common share was paid on September 26, 2013 to all shareholders of record as of September 5, 2013.
Changes in accumulated other comprehensive income during the nine months ended September 30, 2013, net of tax, which related primarily to gains and losses on derivative financial instruments, are as follows (in thousands):
|
Accumulated |
|
|
|
Other Comp. |
|
|
|
Income |
|
|
Balance, December 31, 2012 |
$ |
3,535 |
|
|
|
|
|
Other comprehensive loss before reclassifications |
|
(37,683) |
|
Amounts reclassified from accumulated other |
|
|
|
comprehensive loss |
|
34,881 |
|
Net current period other comprehensive loss |
|
(2,802) |
|
|
|
|
|
Balance, September 30, 2013 |
$ |
733 |
|
22
Amounts reclassified from accumulated other comprehensive income for the periods indicated are as follows (in thousands):
|
Three Months Ended |
|
Nine Months Ended |
|
|
||||||||
|
September 30, |
|
September 30, |
|
Statements of Operations |
||||||||
|
2013 |
|
2012 |
|
2013 |
|
2012 |
|
Classification |
||||
Gains (losses) on cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ethanol commodity derivatives |
$ |
(11,642) |
|
$ |
(1,994) |
|
$ |
(45,862) |
|
$ |
1,563 |
|
Revenues |
Corn commodity derivatives |
|
(5,058) |
|
|
13,291 |
|
|
(11,925) |
|
|
7,939 |
|
Cost of goods sold |
Total |
|
(16,700) |
|
|
11,297 |
|
|
(57,787) |
|
|
9,502 |
|
Income (loss) before income taxes |
Income tax benefit |
|
(6,797) |
|
|
4,245 |
|
|
(22,906) |
|
|
3,557 |
|
Income tax expense (benefit) |
Amounts reclassified from accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
other comprehensive income (loss) |
$ |
(9,903) |
|
$ |
7,052 |
|
$ |
(34,881) |
|
$ |
5,945 |
|
|
11. INCOME TAXES
The Company records income tax expense or benefit during interim periods based on its best estimate of the annual effective tax rate. Certain items are given discrete period treatment and, as a result, the tax effects of such items are reported in full in the relevant interim period.
Income tax expense for the three and nine months ended September 30, 2013 was $7.6 million and $13.5 million, respectively, compared to an income tax benefit of $0.6 million and $12.7 million, respectively, for the same periods in 2012. The effective tax rate (calculated as the ratio of income tax expense to income before income taxes) was approximately 44.8% and 43.0% for the three and nine months ended September 30, 2013, respectively, and 37.5% and 37.5% for the three and nine months ended September 30 2012, respectively. The effective tax rate for the three and nine months ended September 30, 2013 reflects a change in estimate related to nondeductible compensation expense and an increase in the accrual for uncertain tax positions partially offset by an increase in tax benefits arising from stock-based compensation awards.
The amount of unrecognized tax benefits for uncertain tax positions was $1.1 million as of September 30, 2013 and $0.1 million as of December 31, 2012. Recognition of these benefits would have a favorable impact on the Company’s effective tax rate. The Company estimates that it is reasonably possible that the amount of unrecognized tax benefits will decrease by up to $0.1 million over the next twelve months due to the expiration of statutes of limitation.
The 2013 annual effective tax rate can be affected as a result of variances among the estimates and amounts of full-year sources of taxable income (among the various states), the realization of tax credits, adjustments that may arise from the resolution of tax matters under review, variances in the release of valuation allowances and the Company’s assessment of its liability for uncertain tax positions.
12. COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases certain facilities and parcels of land under agreements that expire at various dates. For accounting purposes, rent expense is based on a straight-line amortization of the total payments required over the lease term. The Company incurred lease expenses of $4.7 million and $14.6 million during the three and nine months ended September 30, 2013, respectively, and $4.8 million and $13.9 million during the three and nine months ended September 30, 2012, respectively. Aggregate minimum lease payments under these agreements for the remainder of 2013 and in future fiscal years are as follows (in thousands):
23
|
|
|
|
Year Ending December 31, |
|
Amount |
|
2013 |
|
$ |
4,845 |
2014 |
|
|
14,715 |
2015 |
|
|
13,580 |
2016 |
|
|
11,308 |
2017 |
|
|
6,438 |
Thereafter |
|
|
6,150 |
Total |
|
$ |
57,036 |
Commodities
As of September 30, 2013 the Company had contracted for future purchases of grain, natural gas, ethanol and distillers grains valued at approximately $188.9 million, $10.8 million, $8.6 million and $19.7 million, respectively.
Legal
The Company is currently involved in litigation that has arisen in the ordinary course of business, but it does not believe that any other pending litigation will have a material adverse effect on its financial position, results of operations or cash flows.
13. RELATED PARTY TRANSACTIONS
Commercial Contracts
Two subsidiaries of the Company have executed separate financing agreements for equipment with AXIS Capital Inc. Gordon F. Glade, President and Chief Executive Officer of AXIS Capital, is a member of the Company’s Board of Directors. Totals of $0.1 million and $0.2 million were included in debt at September 30, 2013 and December 31, 2012, respectively, under these financing arrangements. Payments, including principal and interest, totaled $37 thousand and $0.1 million during the three and nine months ended September 30, 2013, respectively, and $37 thousand and $0.2 million during the three and nine months ended September 30, 2012, respectively, and the weighted average interest rate for all financing agreements with AXIS Capital was 6.1%.
The Company has entered into ethanol purchase and sale agreements with Center Oil Company. Gary R. Parker, President and Chief Executive Officer of Center Oil, is a member of the Company’s Board of Directors. During the three and nine months ended September 30, 2013 cash receipts from Center Oil totaled $1.3 million and $1.9 million, respectively, and cash payments to Center Oil totaled $3.0 million and $5.6 million for the same periods, respectively, on these contracts. During the three and nine months ended September 30, 2012, cash receipts from Center Oil totaled $12.0 million and $15.7 million, respectively, and cash payments to Center Oil totaled $3.4 million and $4.5 million for the same periods, respectively, on these contracts. In October 2011, the Company also entered into an operating lease agreement with Center Oil in which the Company will pay $42 thousand per month for the lease of 35 railcars. The agreement was effective through October 14, 2013 and was not renewed. The Company had $0.5 million included in accounts payable, net of outstanding receivables, and $14 thousand included in accounts receivable, net of outstanding payables, from Center Oil at September 30, 2013 and December 31, 2012, respectively.
Aircraft Lease
The Company has entered into an agreement with Hoovestol Inc. for the lease of an aircraft. Wayne B. Hoovestol, President of Hoovestol Inc., is Chairman of the Company’s Board of Directors. The Company has agreed to pay $6,667 per month for use of up to 100 hours per year of the aircraft. Any flight time in excess of 100 hours per year will incur additional hourly-based charges. During the three and nine months ended September 30, 2013, payments related to this lease totaled $30 thousand and $104 thousand, respectively, and during the three and nine months ended September 30, 2012, payments related to this lease totaled $25 thousand and $90 thousand, respectively. The Company had $2 thousand in accounts payable to Hoovestol Inc. at September 30, 2013 and did not have any accounts payables to Hoovestol Inc. at December 31, 2012.
24
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
General
The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated financial condition and results of operations. This discussion should be read in conjunction with the consolidated financial statements included herewith and notes to the consolidated financial statements thereto and our annual report on Form 10-K for the year ended December 31, 2012 including the consolidated financial statements, accompanying notes and the risk factors contained therein.
Cautionary Information Regarding Forward-Looking Statements
This report contains forward-looking statements based on current expectations that involve a number of risks and uncertainties. Forward-looking statements generally do not relate strictly to historical or current facts, but rather to plans and objectives for future operations based upon management’s reasonable estimates of future results or trends, and include statements preceded by, followed by, or that include words such as “anticipates,” “believes,” “continue,” “estimates,” “expects,” “intends,” “outlook,” “plans,” “predicts,” “may,” “could,” “should,” “will,” and words and phrases of similar impact, and include, but are not limited to, statements regarding future operating or financial performance, business strategy, business environment, key trends, and benefits of actual or planned acquisitions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although we believe that our expectations regarding future events are based on reasonable assumptions, any or all forward-looking statements in this report may turn out to be incorrect. They may be based on inaccurate assumptions or may not account for known or unknown risks and uncertainties. Consequently, no forward-looking statement is guaranteed, and actual future results may vary materially from the results expressed or implied in our forward-looking statements. The cautionary statements in this report expressly qualify all of our forward-looking statements. In addition, we are not obligated, and do not intend, to update any of our forward-looking statements at any time unless an update is required by applicable securities laws. Factors that could cause actual results to differ from those expressed or implied in the forward-looking statements include, but are not limited to, those discussed in Part I, Item 1A – Risk Factors of our annual report on Form 10-K for the year ended December 31, 2012 and in Item 1A of Part II of this quarterly report on Form 10-Q for the quarter ended September 30, 2013. Specifically, we may experience significant fluctuations in future operating results due to a number of economic conditions, including, but not limited to, competition in the ethanol and other industries in which we operate, commodity market risks, financial market risks, counter-party risks, risks associated with changes to federal policy or regulation, risks related to closing and achieving anticipated results from acquisitions, and other risk factors detailed in our reports filed with the SEC. Actual results may differ from projected results due, but not limited, to unforeseen developments.
In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this report or in any document incorporated by reference might not occur. Investors are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report or the date of the document incorporated by reference in this report. We are not under any obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.
Overview
We are a leading, vertically-integrated producer, marketer and distributor of ethanol. We focus on generating stable operating margins through our diversified business segments and our risk management strategy. We believe that owning and operating strategically-located assets throughout the ethanol value chain enables us to mitigate changes in commodity prices and differentiates us from companies focused only on ethanol production. Today, we have operations throughout the ethanol value chain, beginning upstream with our grain handling and storage operations, continuing through our ethanol, distillers grains and corn oil production operations and ending downstream with our ethanol marketing, distribution and blending facilities.
We review our operations within the following four separate operating segments:
· |
Ethanol Production. We are North America’s fourth largest ethanol producer. We operate a total of ten ethanol plants in Indiana, Iowa, Michigan, Minnesota, Nebraska and Tennessee. We have the capacity at our ten plants to collectively consume approximately 280 million bushels of corn per year and produce approximately 790 million gallons of ethanol per year, or mmgy, of ethanol and approximately 2.2 million tons of distillers grains annually. |
25
· |
Corn Oil Production. We operate corn oil extraction systems at nine of our ethanol plants, with the capacity to produce approximately 155 million pounds annually. We plan to install corn oil extraction technology at the recently-acquired Atkinson plant in the fourth quarter of 2013. The corn oil systems are designed to extract non-edible corn oil, a value-added product, from the whole stillage process immediately prior to production of distillers grains. Industrial uses for corn oil include feedstock for biodiesel, livestock feed additives, rubber substitutes, rust preventatives, inks, textiles, soaps and insecticides. |
· |
Agribusiness. Within our bulk grain business, we have four grain elevators with approximately 8.3 million bushels of total storage capacity. Our ethanol plants have approximately 19.4 million bushels of storage capacity. We believe our bulk grain business provides synergies with our ethanol production segment as it supplies a portion of the feedstock for our ethanol plants. |
· |
Marketing and Distribution. Our in-house marketing business is responsible for the sale, marketing and distribution of all ethanol, distillers grains and corn oil produced at our ethanol plants. We also market and provide logistical services for ethanol and other commodities for a third-party producer. Additionally, our wholly-owned subsidiary, BlendStar LLC, operates eight blending or terminaling facilities with approximately 831 mmgy of total throughput capacity in seven south central U.S. states. To optimize the value of our assets, we utilize a portion of our railcar fleet to transport crude oil for third parties. At September 30, 2013, we had 382 railcars deployed for crude oil transportation. |
In June 2013, we acquired an ethanol plant located in Atkinson, Nebraska with the capacity to produce approximately 50 mmgy. We began operations at the ethanol plant early in the third quarter of 2013. Also, in June 2013, we acquired a grain elevator in Archer, Nebraska. During the third quarter of 2013, we completed construction of additional storage capacity of 2.4 million bushels at our grain elevators and 7.0 million bushels at our ethanol plants.
We intend to continue to take a disciplined approach in evaluating new opportunities related to potential acquisition of additional ethanol plants by considering whether the plants meet our design, engineering, valuation and geographic criteria. In our marketing and distribution segment, our strategy is to expand our marketing efforts by entering into new or renewal contracts with other ethanol producers and realize additional profit margins by optimizing our commodity logistics. During 2014, we plan to add between ten and fifteen million bushels of additional grain storage capacity around our ethanol plants, with a goal of 50 million bushels of grain storage capacity by the end of 2015, to take advantage of our current grain handling infrastructure and processing demand. We also intend to pursue opportunities to develop or acquire additional grain elevators, specifically those located near our ethanol plants. We believe that owning additional grain handling and storage operations in close proximity to our ethanol plants enables us to strengthen relationships with local corn producers, allowing us to source corn more effectively and at a lower average cost. We also own approximately 53% of BioProcess Algae LLC, which was formed to commercialize advanced photo-bioreactor technologies for growing and harvesting algal biomass. We continue to support the BioProcess Algae joint venture.
Industry Factors Affecting our Results of Operations
Variability of Commodity Prices. Our operations and our industry are highly dependent on commodity prices, especially prices for corn, ethanol, distillers grains and natural gas. Because the market prices of these commodities are not always correlated, at times ethanol production may be unprofitable. As commodity price volatility poses a significant threat to our margin structure, we have developed a risk management strategy focused on locking in favorable operating margins when available. We continually monitor market prices of corn, natural gas and other input costs relative to the prices for ethanol and distillers grains at each of our production facilities. We create offsetting positions by using derivative instruments, fixed-price purchases and sales contracts, or a combination of strategies within strict limits. Our primary focus is not to manage general price movements of individual commodities, for example to minimize the cost of corn consumed, but rather to lock in favorable profit margins whenever possible. By using a variety of risk management tools and hedging strategies, including our internally-developed real-time margin management system, we believe we are able to maintain a disciplined approach to price risks.
A combination of factors resulted in compressed ethanol margins in 2012. The ethanol industry increased production in the fourth quarter of 2011 to meet demand from ethanol blenders seeking to take advantage of the volumetric ethanol excise tax credit prior to its expiration on December 31, 2011. As a result, ethanol stocks at the end of 2011 exceeded normal market levels which caused ethanol margins to compress to near break-even levels in the first half of 2012. Additionally, corn prices traded to all-time highs during 2012 due to drought conditions in the midwestern region of the United States. According to the Energy Information Administration, or EIA, as an industry, ethanol producers have responded to these factors by
26
reducing production by approximately 4.9% in 2012 compared to 2011. EIA data also show ethanol imports increased from 174 million gallons in 2011 to 533 million gallons in 2012. Under the Renewable Fuels Standard II, or RFS II, certain parties are obligated to blend, in the aggregate, 2.0 billion gallons of advanced biofuels in 2012. During 2012, sugarcane ethanol imported from Brazil, which totaled approximately 530 million gallons, has been one of the most economical means for obligated parties to meet this standard. Effective May 1, 2013, the Brazilian government increased the required percentage of ethanol in vehicle fuel sold in Brazil to 25 percent (from 20 percent) due to a rise in sugarcane production, which could possibly limit ethanol exports from Brazil into the U.S. As of July 2013, year-to-date ethanol imports were 251 million gallons and year-to-date ethanol exports were 306 million gallons.
U.S. ethanol production reached its lowest level since 2010 in 2013, averaging an annualized rate of 12.8 billion gallons in the first nine months of 2013 compared with 13.4 billion gallons in the first nine months of 2012 and the 13.8 billion gallon RFS II mandate for 2013. As a result of the U.S. ethanol industry rationalizing production, inventory stocks reached a low of 649 million gallons at the end of June 2013, the lowest level since October 2010. Inventory stocks were 651 million gallons at the end of September 2013. Lower production and lower stocks have had a positive effect on ethanol margins in the first nine months of 2013, which are significantly better than during the first nine months of 2012. We believe that U.S. ethanol production levels will continue to adjust to supply and demand factors for ethanol and corn.
There may be periods of time that, due to the variability of commodity prices and compressed margins, we reduce or cease ethanol production operations at certain of our ethanol plants. In 2012, we reduced production volumes at several of our ethanol plants in direct response to unfavorable operating margins, and have continued our production during the first nine months of 2013 at approximately 92% of our total daily average capacity. The reduced production rates increase yield and optimize cash flow in lower margin environments.
Reduced Availability of Capital. Some ethanol producers have faced financial distress over the past few years, culminating with bankruptcy filings by several companies. This, in combination with continued volatility in the capital markets, has resulted in reduced availability of capital for the ethanol industry in general. In this market environment, we may experience limited access to incremental financing.
Legislation. Federal and state governments have enacted numerous policies and incentives to encourage the usage of domestically-produced alternative fuels. Passed in 2007 as part of the Energy Independence and Security Act, RFS II has been, and we expect will continue to be, a driving factor in the growth of ethanol usage. On April 10, 2013 the Renewable Fuel Standard Elimination Act was introduced as H.R. 1461. The bill is targeted to repeal the renewable fuel program of the Environmental Protection Agency, or EPA. Also introduced on April 10, 2013 was the RFS Reform Bill, H.R. 1462, which would prohibit more than ten percent ethanol in gasoline and reduce the RFS II mandated volume of renewable fuel. On May 14, 2013, the Domestic Alternatives Fuels Act of 2013 was introduced in the U.S. House of Representatives as H.R. 1959 to allow ethanol produced from natural gas to be used to meet the RFS II mandate. These bills were assigned to congressional committees, which will consider them before possibly sending any on to the House or Senate as a whole.
To further drive the increased adoption of ethanol, Growth Energy, an ethanol industry trade association, and a number of ethanol producers requested a waiver from the EPA to increase the allowable amount of ethanol blended into gasoline from the current 10% level, or E10, to a 15% level, or E15. Through a series of decisions beginning in October 2010, the EPA has granted a waiver for the use of E15 in model year 2001 and newer passenger vehicles, including cars, sport utility vehicles, and light pickup trucks. In June 2012, the EPA gave final approval for the sale and use of E15 ethanol blends. On June 24, 2013 the U.S. Supreme Court declined to hear an appeal from the American Petroleum Institute and other organizations challenging the EPA’s decision to permit the sale of E15. According to the EPA, as of August 1, 2013, 78 fuel manufacturers were registered to sell E15. Approximately 72% of the passenger vehicles in service are eligible to use E15.
The Domestic Alternative Fuels Act of 2012 was introduced on January 18, 2012 in the U.S. House of Representatives and was re-introduced March 15, 2013 as H.R. 1214 to provide liability protection for claims based on the sale or use of certain fuels and fuel additives. Passage of this bill would provide liability protection to consumers in the event they unintentionally put any transportation fuel into their motor vehicle for which such fuel has not been approved. The American Fuel Protection Act of 2013 was introduced on June 5, 2013 in the U.S. House of Representatives to make the United States exclusively liable for certain claims of liability for damages resulting from, or aggravated by, the inclusion of ethanol in transportation fuel.
The Master Limited Partnership Parity Act was introduced on April 24, 2013 in the U.S. House of Representatives as H.R. 1696 to extend the publicly traded partnership ownership structure to renewable energy projects. The legislation would provide a level financing system and tax treatment for renewable energy and fossil energy projects.
27
Industry Fundamentals. The ethanol industry is supported by a number of market fundamentals that drive its long-term outlook and extend beyond the short-term margin environment. Following the EPA’s approval, the industry is working to broadly introduce E15 into the retail fuel market. The RFS II mandate increased to 13.8 billion gallons for 2013, 600 million gallons over the mandated volume in 2012, and continues to increase each year through 2015. In August 2013, the EPA announced that in its forthcoming proposed rule, it will propose adjustments to the 2014 volume requirements, including to both the advanced biofuel and total renewable fuel categories. The EPA stated it expects that in preparing the 2014 proposed rule, it will estimate the available supply of cellulosic and advanced biofuels, assess the E10 blend wall and current infrastructure and market-based limitations for blends above E10, and establish volume requirements that are reasonably attainable. Moreover, the EPA expects to utilize the notice and comment process to fully engage the public in consideration of a reasonable path forward that appropriately addresses the blend wall and other constraints. The EPA further stated it believes the statute provides it with the authority and tools needed to make appropriate adjustments in volume requirements. The proposed rule is by regulation, and is required to be issued no later than November 30, 2013.
The domestic gasoline market continues to evolve as refiners are producing more CBOB, a sub-grade (84 octane) gasoline, which requires ethanol or other octane sources to meet the minimum octane rating requirements for the U.S. gasoline market. The demand for ethanol is also affected by the overall demand for transportation fuel, which peaked in 2007 and has been declining steadily since then. Currently, according to the EIA, total gasoline demand in the U.S. is approximately 135 billion gallons annually. Demand for transportation fuel is affected by the number of miles traveled by consumers and the fuel economy of vehicles. Market acceptance of E15 may partially offset the effects of this decrease. Consumer acceptance of E15 and E85 (85% ethanol blended) fuels and flex-fuel vehicles is needed before ethanol can achieve any significant growth in market share. In addition, ethanol export markets, although affected by competition from other ethanol exporters, mainly from Brazil, are expected to remain active in 2013. Overall, the industry is producing below the mandated levels but ethanol prices have remained at a discount to gasoline, providing blenders and refiners with an economic incentive to blend.
BioProcess Algae Joint Venture
Our BioProcess Algae joint venture is focused on developing technology to grow and harvest algae, which consume carbon dioxide, in commercially viable quantities. Through multiple stages of expansion, BioProcess Algae has constructed a five-acre algae farm next to our Shenandoah, Iowa ethanol plant and has been operating its Grower Harvesters™ bioreactors since January 2011. The joint venture is currently focused on verification of growth rates, energy balances, capital requirements and operating expenses of the technology which are considered to be some of the key steps to commercialization.
BioProcess Algae is expanding the algae farm with the construction of additional Grower Harvester™ bioreactors and a new processing facility. When construction is completed, expected annual capacity is expected be 350 to 400 tons of dry wholesale algae. We increased our ownership of BioProcess Algae to approximately 53% during the third quarter of 2013. However, we do not possess the requisite control of this investment to consolidate it.
BioProcess Algae announced on April 22, 2013, that it had been selected to receive a grant of up to $6.4 million from the U.S. Department of Energy as part of a pilot-scale biorefinery project related to production of hydrocarbon fuels meeting military specification. The project will use renewable carbon dioxide, lignocellulosic sugars and waste heat through BioProcess Algae’s Grower Harvester™ technology platform. The objective of the project is to demonstrate technologies to cost-effectively convert biomass into advanced drop-in biofuels. BioProcess Algae is required to contribute a minimum of 50% matching funds for the project.
If we and the other BioProcess Algae members determine that the venture can achieve the desired economic performance, we and the other BioProcess Algae members will consider a larger build-out, possibly as large as 200 to 400 acres, of Grower Harvester™ reactors at the Shenandoah, Iowa ethanol plant. Such a build-out may be completed in stages and could take up to two years to complete. Funding for such a project would come from a variety of sources including current partners, new equity investors, debt financing or a combination thereof.
Critical Accounting Policies and Estimates
This disclosure is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires that we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and other assumptions that we believe are proper and reasonable under the circumstances. We continually evaluate the appropriateness of estimates and
28
assumptions used in the preparation of our consolidated financial statements. Actual results could differ materially from those estimates. Key accounting policies, including but not limited to those relating to revenue recognition, depreciation of property and equipment, impairment of long-lived assets and goodwill, derivative financial instruments, and accounting for income taxes, are impacted significantly by judgments, assumptions and estimates used in the preparation of the consolidated financial statements. See further discussion of our critical accounting policies and estimates, as well as significant accounting policies, in our annual report on Form 10-K for the year ended December 31, 2012.
Recent Accounting Pronouncements
Effective January 1, 2013, we adopted the amended guidance in ASC Topic 210, Balance Sheet. The amended guidance addresses disclosure of offsetting financial assets and liabilities. It requires entities to add disclosures showing both gross and net information about instruments and transactions eligible for offset in the balance sheet and instruments and transactions subject to an agreement similar to a master netting arrangement. The updated disclosures have been implemented retrospectively and do not impact our financial position or results of operations.
Effective January 1, 2013, we adopted the amended guidance in ASC Topic 220, Comprehensive Income. The amended guidance requires entities to disclose additional information about reclassification adjustments, including (1) changes in accumulated other comprehensive income by component and (2) significant items reclassified out of accumulated other comprehensive income by presenting the amount reclassified and the individual income statement line items affected. The updated disclosures have been implemented prospectively and do not impact our financial position or results of operations.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our consolidated financial condition, results of operations or liquidity.
Components of Revenues and Expenses
Revenues. In our ethanol production segment, our revenues are derived primarily from the sale of ethanol and distillers grains, which is a co-product of the ethanol production process. In our corn oil production segment, our revenues are derived from the sale of corn oil, which is extracted from the whole stillage process immediately prior to the production of distillers grains. In our agribusiness segment, the sale of grain is our primary source of revenue. In our marketing and distribution segment, the sale of ethanol, distillers grains and corn oil that we market for our ethanol plants, the sale of ethanol we market for a third-party ethanol plant and the sale of other commodities purchased in the open market represent our primary sources of revenue. Revenues also include net gains or losses from derivatives.
Cost of Goods Sold. Cost of goods sold in our ethanol production and corn oil production segments includes costs for direct labor, materials and certain plant overhead costs. Direct labor includes all compensation and related benefits of non-management personnel involved in the operation of our ethanol plants. Plant overhead costs primarily consist of plant utilities, plant depreciation and outbound freight charges. Our cost of goods sold in these segments is mainly affected by the cost of corn, natural gas, purchased distillers grains and transportation. Within our corn oil segment, we compensate the ethanol plants for the value of distillers grains displaced during the production process. In the ethanol production segment, corn is our most significant raw material cost. We purchase natural gas to power steam generation in our ethanol production process and to dry our distillers grains. Natural gas represents our second largest cost in this business segment. Cost of goods sold also includes net gains or losses from derivatives.
Grain acquisition costs represent the primary components of cost of goods sold in our agribusiness segment. Grain inventories held for sale, forward purchase contracts and forward sale contracts are valued at market prices, where available, or other market quotes adjusted for differences, primarily transportation, between the exchange-traded market and the local markets on which the terms of the contracts are based. Changes in the market value of grain inventories, forward purchase and sale contracts, and exchange-traded futures and options contracts are recognized in earnings as a component of cost of goods sold.
In our marketing and distribution segment, purchases of ethanol, distillers grains and corn oil represent the largest components of cost of goods sold. Transportation expense represents an additional major component of our cost of goods sold in this segment. Transportation expense includes rail car leases, freight and shipping of our ethanol and co-products, as well as costs incurred in storing ethanol at destination terminals.
Selling, General and Administrative Expenses. Selling, general and administrative expenses are recognized at the
29
operating segment level, as well as at the corporate level. These expenses consist of employee salaries, incentives and benefits; office expenses; director fees; and professional fees for accounting, legal, consulting, and investor relations activities. Personnel costs, which include employee salaries, incentives and benefits, are the largest single category of expenditures in selling, general and administrative expenses. We refer to selling, general and administrative expenses that are not allocable to a segment as corporate activities.
Other Income (Expense). Other income (expense) includes interest earned, interest expense, equity earnings in nonconsolidated subsidiaries and other non-operating items.
Results of Operations
Segment Results
Our operations fall within the following four segments: (1) production of ethanol and related distillers grains, collectively referred to as ethanol production, (2) corn oil production, (3) grain handling and storage, collectively referred to as agribusiness, and (4) marketing and logistics services for Company-produced and third-party ethanol, distillers grains, corn oil and other commodities, and the operation of blending and terminaling facilities, collectively referred to as marketing and distribution. Selling, general and administrative expenses, primarily consisting of compensation of corporate employees, professional fees and overhead costs not directly related to a specific operating segment, are reflected in the table below as corporate activities. When the Company’s management evaluates segment performance, they review the information provided below, as well as segment earnings before interest, income taxes, noncontrolling interest, depreciation and amortization.
During the normal course of business, our operating segments enter into transactions with one another. For example, our ethanol production and corn oil production segments sell ethanol, distillers grains and corn oil to our marketing and distribution segment and our agribusiness segment sells grain to our ethanol production segment. These intersegment activities are recorded by each segment at prices approximating market and treated as if they are third-party transactions. Consequently, these transactions impact segment performance. However, intersegment revenues and corresponding costs are eliminated in consolidation, and do not impact our consolidated results.
In June 2013, we acquired an ethanol plant located in Atkinson, Nebraska with the capacity to produce approximately 50 mmgy. The plant began ethanol production on July 25, 2013. Also, in June 2013, we acquired a grain elevator in Archer, Nebraska. During the third quarter of 2013, we completed construction of additional storage capacity of 2.4 million bushels at our grain elevators and 7.0 million bushels at our ethanol plants.
In December 2012, we sold 12 grain elevators located in northwestern Iowa and western Tennessee consisting of approximately 32.6 million bushels, or approximately 85%, of our grain storage capacity and all of our agronomy and retail petroleum operations, which affects the comparability of our operating results. The tables below reflect selected operating segment financial information for the periods indicated (in thousands):
30
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
2013 |
|
2012 |
|
2013 |
|
2012 |
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Ethanol production: |
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers |
$ |
39,766 |
|
$ |
52,982 |
|
$ |
118,511 |
|
$ |
149,115 |
Intersegment revenues |
|
477,103 |
|
|
439,917 |
|
|
1,437,821 |
|
|
1,268,851 |
Total segment revenues |
|
516,869 |
|
|
492,899 |
|
|
1,556,332 |
|
|
1,417,966 |
Corn oil production: |
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers |
|
- |
|
|
1 |
|
|
- |
|
|
518 |
Intersegment revenues |
|
17,290 |
|
|
14,530 |
|
|
49,304 |
|
|
43,003 |
Total segment revenues |
|
17,290 |
|
|
14,531 |
|
|
49,304 |
|
|
43,521 |
Agribusiness: |
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers |
|
5,055 |
|
|
125,446 |
|
|
43,178 |
|
|
300,051 |
Intersegment revenues |
|
274,100 |
|
|
50,254 |
|
|
498,189 |
|
|
134,725 |
Total segment revenues |
|
279,155 |
|
|
175,700 |
|
|
541,367 |
|
|
434,776 |
Marketing and distribution: |
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers |
|
713,150 |
|
|
768,984 |
|
|
2,166,453 |
|
|
2,143,479 |
Intersegment revenues |
|
9,629 |
|
|
111 |
|
|
13,042 |
|
|
302 |
Total segment revenues |
|
722,779 |
|
|
769,095 |
|
|
2,179,495 |
|
|
2,143,781 |
Revenues including intersegment activity |
|
1,536,093 |
|
|
1,452,225 |
|
|
4,326,498 |
|
|
4,040,044 |
Intersegment eliminations |
|
(778,122) |
|
|
(504,812) |
|
|
(1,998,356) |
|
|
(1,446,881) |
Revenues as reported |
$ |
757,971 |
|
$ |
947,413 |
|
$ |
2,328,142 |
|
$ |
2,593,163 |
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
2013 |
|
2012 |
|
2013 |
|
2012 |
||||
Gross profit (loss): |
|
|
|
|
|
|
|
|
|
|
|
Ethanol production |
$ |
22,269 |
|
$ |
(3,701) |
|
$ |
34,228 |
|
$ |
(20,610) |
Corn oil production |
|
9,649 |
|
|
7,865 |
|
|
25,431 |
|
|
25,205 |
Agribusiness |
|
815 |
|
|
12,513 |
|
|
2,986 |
|
|
27,357 |
Marketing and distribution |
|
8,615 |
|
|
10,980 |
|
|
39,074 |
|
|
21,769 |
Intersegment eliminations |
|
(324) |
|
|
240 |
|
|
(871) |
|
|
1,079 |
|
$ |
41,024 |
|
$ |
27,897 |
|
$ |
100,848 |
|
$ |
54,800 |
Operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
Ethanol production |
$ |
17,851 |
|
$ |
(7,520) |
|
$ |
22,508 |
|
$ |
(32,435) |
Corn oil production |
|
9,596 |
|
|
7,811 |
|
|
25,226 |
|
|
25,011 |
Agribusiness |
|
163 |
|
|
5,849 |
|
|
781 |
|
|
8,916 |
Marketing and distribution |
|
4,456 |
|
|
7,162 |
|
|
26,654 |
|
|
10,546 |
Intersegment eliminations |
|
(324) |
|
|
240 |
|
|
(826) |
|
|
1,113 |
Corporate activities |
|
(6,208) |
|
|
(4,918) |
|
|
(17,543) |
|
|
(16,701) |
|
$ |
25,534 |
|
$ |
8,624 |
|
$ |
56,800 |
|
$ |
(3,550) |
Three Months Ended September 30, 2013 Compared to the Three Months Ended September 30, 2012
Consolidated Results
Consolidated revenues decreased by $189.4 million for the three months ended September 30, 2013 compared to the same period in 2012 primarily as a result of lower grain and agronomy sales and lower ethanol volumes. The decline in grain and agronomy sales resulted from the sale of certain grain elevators and agronomy assets during the fourth quarter of 2012. Gross profit increased by $13.1 million for the three months ended September 30, 2013 compared to the same period in 2012 primarily as a result of improved margins for ethanol production and a contractor recovery, offset partially by a decrease in margins for grain and agronomy sales. Operating income (loss) increased by $16.9 million to $25.5 million for the three months ended September 30, 2013 compared to the same period in 2012 as a result of the factors discussed above and a $3.8 million decrease in selling, general and administrative expenses. Selling, general and administrative expenses were lower for
31
the three months ended September 30, 2013 compared to the same period in 2012 due most significantly to the grain elevator sale during the fourth quarter of 2012. Interest expense decreased by $2.2 million for the three months ended September 30, 2013 compared to the same period in 2012 due to lower average debt balances. Income tax expense was $7.6 million for the three months ended September 30, 2013 compared to an income tax benefit of $0.6 million for the same period in 2012.
The following discussion of segment results provides greater detail on period-to-period results.
Ethanol Production Segment
The table below presents key operating data within our ethanol production segment for the periods indicated:
|
|
Three Months Ended September 30, |
||
|
|
2013 |
|
2012 |
Ethanol sold |
|
|
|
|
(thousands of gallons) |
|
177,799 |
|
161,574 |
Ethanol produced |
|
|
|
|
(thousands of gallons) |
|
176,815 |
|
160,832 |
Distillers grains sold |
|
|
|
|
(thousands of equivalent dried tons) |
|
491 |
|
438 |
Corn consumed |
|
|
|
|
(thousands of bushels) |
|
62,435 |
|
56,706 |
Revenues in the ethanol production segment increased by $24.0 million for the three months ended September 30, 2013 compared to the same period in 2012 primarily due to higher volumes produced and sold, partially offset by lower average ethanol and distillers grains prices. Revenues in the third quarter of 2013 included production from our Atkinson plant, which was acquired in June and began operations on July 25, 2013 and contributed an additional 8.2 million gallons of ethanol production and $22.7 million in revenue. The ethanol production segment produced 176.8 million gallons of ethanol, which represents approximately 91% of production capacity, during the third quarter of 2013.
Cost of goods sold in the ethanol production segment decreased by $2.0 million for the three months ended September 30, 2013 compared to the same period in 2012. Consumption of corn increased by 5.7 million bushels but the average cost per bushel decreased by 18% during the three months ended September 30, 2013 compared to the same period in 2012. Also, cost of goods sold was reduced by approximately $4.0 million from a contractor recovery relating to grain silo issues at certain ethanol plants. As a result of the factors identified above, gross profit and operating income for the ethanol production segment increased by $26.0 million and $25.4 million, respectively, for the three months ended September 30, 2013 compared to the same period in 2012. Depreciation and amortization expense for the ethanol production segment was $11.4 million for the three months ended September 30, 2013 compared to $11.2 million during the same period in 2012.
Corn Oil Production Segment
Revenues in the corn oil production segment increased by $2.8 million for the three months ended September 30, 2013 compared to the same period in 2012. During the three months ended September 30, 2013, we sold 42.0 million pounds of corn oil compared to 37.2 million pounds in the same period of 2012. The average price for corn oil was 5% higher for the third quarter of 2013 compared to the same period in 2012.
Gross profit and operating income in the corn oil production segment increased by $1.8 million for the three months ended September 30, 2013 compared to the same period in 2012. The increase in revenues was partially offset by $1.0 million of additional expense related to increased volumes produced along with higher input costs during the three months ended September 30, 2013 compared to the same period in 2012.
Agribusiness Segment
Revenues in the agribusiness segment increased by $103.5 million and gross profit and operating income decreased by $11.7 million and $5.7 million, respectively, for the three months ended September 30, 2013 compared to the same period in 2012. We sold 44.0 million bushels of grain, including 43.5 million bushels to our ethanol production segment, and had no fertilizer sales during the three months ended September 30, 2013 compared to sales of 18.9 million bushels of grain, including 6.2 million bushels to our ethanol production segment, and three thousand tons of fertilizer during the same period in 2012. Subsequent to the sale of certain grain elevators and the agronomy business during the fourth quarter of 2012, we
32
increased our focus on supplying corn to our ethanol plants from our agribusiness segment. As a result, 99% of the grain sold by our agribusiness segment was sold to our ethanol plants rather than to external customers. The decrease in gross profit and operating income is due to the factors discussed above.
Marketing and Distribution Segment
Revenues in our marketing and distribution segment decreased by $46.3 million for the three months ended September 30, 2013 compared to the same period in 2012. The decrease in revenues was primarily due to a decrease of $71.0 million in ethanol revenue from lower ethanol volumes, lower prices of distillers grains sold and lower volumes of crude oil transportation. These decreases were partially offset by a $26.3 million increase in grain trading activity within our marketing and distribution segment. We sold 240.2 million and 269.8 million gallons of ethanol during the three months ended September 30, 2013 and 2012, respectively, within the marketing and distribution segment.
Gross profit and operating income for the marketing and distribution segment decreased by $2.4 million and $2.7 million, respectively, for the three months ended September 30, 2013 compared to the same period in 2012, primarily due to the factors discussed above.
Intersegment Eliminations
Intersegment eliminations of revenues increased by $273.3 million for the three months ended September 30, 2013 compared to the same period in 2012 due to increased corn sales from our agribusiness segment to our ethanol production segment of $231.9 million. In addition, sales of ethanol and distillers grains from our ethanol production segment to our marketing and distribution segment increased by $30.7 million and $8.0 million, respectively, between the periods.
Corporate Activities
Operating income was impacted by an increase in operating expenses for corporate activities of $1.3 million for the three months ended September 30, 2013 compared to the same period in 2012 primarily due to an increase in personnel costs.
Income Taxes
We record income tax expense or benefit during interim periods based on our best estimate of the annual effective tax rate. Certain items are given discrete period treatment and, as a result, the tax effects of such items are reported in full in the relevant interim period. We recorded income tax expense of $7.6 million for the three months ended September 30, 2013 compared to an income tax benefit of $0.6 million for the same period in 2012. The effective tax rate (calculated as the ratio of income tax expense to income before income taxes) was approximately 44.8% for the three months ended September 30, 2013 compared to 37.5% for the three months ended September 30, 2012. The effective tax rate for the three months ended September 30, 2013 reflects a change in estimate related to nondeductible compensation expense and an increase in the accrual for uncertain tax positions partially offset by an increase in tax benefits. The annual effective tax rate can be affected as a result of variances among the estimates and amounts of full-year sources of taxable income (among the various states), the realization of tax credits, adjustments that may arise from the resolution of tax matters under review, variances in the release of valuation allowances and an assessment of our liability for uncertain tax positions.
Nine Months Ended September 30, 2013 Compared to the Nine Months Ended September 30, 2012
Consolidated Results
Consolidated revenues decreased by $265.0 million for the nine months ended September 30, 2013 compared to the same period in 2012 primarily as a result of lower grain and agronomy sales and lower ethanol volumes partially offset by higher average prices realized for ethanol and distillers grains. The decline in grain and agronomy sales resulted from the sale of certain grain elevators and agronomy assets during the fourth quarter of 2012. Gross profit increased by $46.0 million for the nine months ended September 30, 2013 compared to the same period in 2012 primarily as a result of improved margins for ethanol production and marketing and distribution and a contractor recovery, offset partially by a decrease in grain and agronomy margins. Operating income (loss) increased by $60.4 million to $56.8 million for the nine months ended September 30, 2013 compared to the same period in 2012 as a result of the factors discussed above. Selling, general and administrative expenses were $14.3 million lower for the nine months ended September 30, 2013 compared to the same period in 2012 due most significantly to the grain elevator sale during the fourth quarter of 2012. Interest expense decreased by $5.3 million for the nine months ended September 30, 2013 compared to the same period in 2012 due to lower average debt balances. Income tax expense was $13.5 million for the nine months ended September 30, 2013 compared to an income tax benefit of $12.7 million for the same period in 2012.
33
The following discussion of segment results provides greater detail on period-to-period results.
Ethanol Production Segment
The table below presents key operating data within our ethanol production segment for the periods indicated:
|
|
Nine Months Ended September 30, |
||
|
|
2013 |
|
2012 |
Ethanol sold |
|
|
|
|
(thousands of gallons) |
|
521,169 |
|
507,923 |
Ethanol produced |
|
|
|
|
(thousands of gallons) |
|
519,597 |
|
508,358 |
Distillers grains sold |
|
|
|
|
(thousands of equivalent dried tons) |
|
1,456 |
|
1,397 |
Corn consumed |
|
|
|
|
(thousands of bushels) |
|
183,149 |
|
178,924 |
Revenues in the ethanol production segment increased by $138.4 million for the nine months ended September 30, 2013 compared to the same period in 2012. Revenues in the first nine months of 2013 included production from our Atkinson plant, which began operations on July 25, 2013 and contributed an additional 8.2 million gallons of ethanol production and $22.7 million in revenues. In addition to higher volumes sold, the increase in revenues was also due to higher average ethanol and distillers grains prices realized. The ethanol production segment produced 519.6 million gallons of ethanol, which represents approximately 92% of production capacity, during the first nine months of 2013.
Cost of goods sold in the ethanol production segment increased by $83.5 million for the nine months ended September 30, 2013 compared to the same period in 2012. Consumption of corn increased by 4.2 million bushels, while the average cost per bushel was not significantly different during the nine months ended September 30, 2013 compared to the same period in 2012. Also, cost of goods sold was reduced by approximately $4.0 million from a contractor recovery relating to grain silo issues at certain ethanol plants. As a result of the factors identified above, gross profit and operating income for the ethanol production segment increased by $54.8 million and $54.9 million, respectively, for the nine months ended September 30, 2013 compared to the same period in 2012.
Corn Oil Production Segment
Revenues in the corn oil production segment increased by $5.8 million for the nine months ended September 30, 2013 compared to the same period in 2012. During the nine months ended September 30, 2013, we sold 119.5 million pounds of corn oil compared to 109.2 million pounds in the same period of 2012. The average price for corn oil was 5% higher for the first nine months of 2013 compared to the same period in 2012.
Gross profit and operating income in the corn oil production segment increased by $0.2 million for the nine months ended September 30, 2013 compared to the same period in 2012. The increase in revenues was partially offset by $5.6 million of additional expense related to higher input costs due to the increased prices for distillers grains during the nine months ended September 30, 2013 compared to the same period in 2012.
Agribusiness Segment
Revenues in the agribusiness segment increased by $106.6 million and gross profit and operating income decreased by $24.4 million and $8.1 million, respectively, for the nine months ended September 30, 2013 compared to the same period in 2012. We sold 82.2 million bushels of grain, including 77.7 million to our ethanol production segment, and had no fertilizer sales during the nine months ended September 30, 2013 compared to sales of 48.4 million bushels of grain, including 19.2 million bushels to our ethanol production segment, and 35 thousand tons of fertilizer during the same period in 2012. Subsequent to the sale of certain grain elevators and the agronomy business during the fourth quarter of 2012, we increased our focus on supplying corn to our ethanol plants from our agribusiness segment. As a result, 95% of the grain sold by our agribusiness segment was sold to our ethanol plants rather than to external customers. The decrease in gross profit and operating income is due to the factors discussed above.
34
Marketing and Distribution Segment
Revenues in our marketing and distribution segment increased by $35.7 million for the nine months ended September 30, 2013 compared to the same period in 2012. The increase in revenues was primarily due to a $45.1 million increase in grain trading activity within our marketing and distribution segment, higher average prices for ethanol and distillers grains, expanded trading and logistic operations and operation of the BlendStar LLC unit-train terminal in Birmingham, Alabama that commenced in the fourth quarter of 2012. In addition, revenues were impacted by a decrease of 88.0 million gallons of ethanol sold in the nine months ended September 30, 2013 compared to the same period in 2012 and lower revenues from crude oil transportation. Ethanol revenues decreased by $32.7 million and distillers grains revenues increased by $33.2 million. We sold 719.5 million and 807.5 million gallons of ethanol during the nine months ended September 30, 2013 and 2012, respectively, within the marketing and distribution segment.
Gross profit and operating income for the marketing and distribution segment increased by $17.3 million and $16.1 million, respectively, for the nine months ended September 30, 2013 compared to the same period in 2012, primarily due to profits realized from commodity trading and logistics, higher margins related to the deployment of railcars for crude oil transportation and the operation of the Birmingham unit-train terminal.
Intersegment Eliminations
Intersegment eliminations of revenues increased by $551.5 million for the nine months ended September 30, 2013 compared to the same period in 2012 due to increased corn sales from our agribusiness segment to our ethanol production segment of $372.4 million. In addition, sales of ethanol and distillers grains from our ethanol production segment to our marketing and distribution segment increased by $135.5 million and $36.9 million, respectively, between the periods.
Corporate Activities
Operating income was impacted by an increase in operating expenses for corporate activities of $0.8 million for the nine months ended September 30, 2013 compared to the same period in 2012 primarily due to an increase in personnel costs and increased fees for professional services during the first nine months of 2013.
Income Taxes
We record income tax expense or benefit during interim periods based on our best estimate of the annual effective tax rate. Certain items are given discrete period treatment and, as a result, the tax effects of such items are reported in full in the relevant interim period. We recorded income tax expense of $13.5 million for the nine months ended September 30, 2013 compared to an income tax benefit of $12.7 million for the same period in 2012. The effective tax rate (calculated as the ratio of income tax expense to income before income taxes) was approximately 43.0% for the nine months ended September 30, 2013 compared to 37.5% for the nine months ended September 30, 2012. The effective tax rate for the nine months ended September 30, 2013 reflects a change in estimate related to nondeductible compensation expense and an increase in the accrual for uncertain tax positions partially offset by an increase in tax benefits. The annual effective tax rate can be affected as a result of variances among the estimates and amounts of full-year sources of taxable income (among the various states), the realization of tax credits, adjustments that may arise from the resolution of tax matters under review, variances in the release of valuation allowances and an assessment of our liability for uncertain tax positions.
EBITDA
Management uses earnings before interest, income taxes, depreciation and amortization, or EBITDA, to measure our financial performance and to internally manage our businesses. Management believes that EBITDA provides useful information to investors as a measure of comparison with peer and other companies. EBITDA should not be considered an alternative to, or more meaningful than, net income or cash flow as determined in accordance with generally accepted accounting principles. EBITDA calculations may vary from company to company. Accordingly, our computation of EBITDA may not be comparable with a similarly-titled measure of another company. The following sets forth the reconciliation of net income (loss) to EBITDA for the periods indicated (in thousands):
35
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
2013 |
|
2012 |
|
2013 |
|
2012 |
||||
Net income (loss) |
$ |
9,410 |
|
$ |
(1,006) |
|
$ |
17,930 |
|
$ |
(21,257) |
Interest expense |
|
7,608 |
|
|
9,832 |
|
|
23,440 |
|
|
28,741 |
Income tax expense (benefit) |
|
7,633 |
|
|
(604) |
|
|
13,519 |
|
|
(12,749) |
Depreciation and amortization |
|
12,763 |
|
|
13,487 |
|
|
37,807 |
|
|
39,922 |
EBITDA |
$ |
37,414 |
|
$ |
21,709 |
|
$ |
92,696 |
|
$ |
34,657 |
Liquidity and Capital Resources
On September 30, 2013, we had $334.5 million in cash and equivalents, excluding restricted cash, comprised of $190.0 million held at our parent company and the remainder at our subsidiaries. We also had up to an additional $159.1 million available under revolving credit agreements at our subsidiaries, some of which was subject to borrowing base restrictions or other specified lending conditions at September 30, 2013. Funds held at our subsidiaries are generally required for their ongoing operational needs and distributions from our subsidiaries are restricted pursuant to their credit agreements. At September 30, 2013, there were approximately $548.4 million of net assets at our subsidiaries that were not available to be transferred to the parent company in the form of dividends, loans or advances due to restrictions contained in the credit facilities of these subsidiaries.
We incurred capital expenditures of $12.6 million in the first nine months of 2013 for various projects, including grain storage expansion at our grain elevators and ethanol plants. Capital spending for the remainder of 2013 is expected to be approximately $7.4 million. The remainder of our capital spending is expected to be financed with available borrowings under our credit facilities and cash provided by operating activities.
Net cash provided by operating activities was $121.1 million for the nine months ended September 30, 2013 compared to net cash used by operating activities of $17.4 million for the same period in 2012. Operating activities were affected by a decrease in working capital for the nine months ended September 30, 2013, primarily consisting of a reduction in grain inventory, partially offset by cash outlays related to payments for deferred grain contract payables and accrued expenses. Cash used by operating activities for the nine months ended September 30, 2012 included cash outflows for deferred grain contract payables and an increase in inventories. Additionally, during the nine months ended September 30, 2013, we had net income of $17.9 million compared with a net loss of $21.3 million for the same period in 2012. Net cash used by investing activities was $31.0 million for the nine months ended September 30, 2013, due primarily to the acquisition of an ethanol plant in June 2013 and $12.6 million in capital expenditures. Net cash used by financing activities was $9.8 million for the nine months ended September 30, 2013 due to the payment of a short-term note payable of $27.2 million related to a 2012 common stock repurchase, a $47.6 million net decrease in short-term debt and inventory financing arrangements and $44.9 million in principal payments, net of advances, on long-term debt. These net cash outflows were partially offset by proceeds from the issuance of $120.0 million of convertible senior notes. Financing activities were also affected by the payment of loan fees for the convertible senior notes and payment of a cash dividend to shareholders in September 2013. Green Plains Trade and Green Plains Grain utilize revolving credit facilities to finance working capital requirements. These facilities are frequently drawn upon and repaid, resulting in significant cash movements that are reflected on a gross basis within financing activities as proceeds from and payments on short-term borrowings.
Our business is highly impacted by commodity prices, including prices for corn, ethanol, distillers grains and natural gas. We attempt to reduce the market risk associated with fluctuations in commodity prices through the use of derivative financial instruments. Sudden changes in commodity prices may require cash deposits with brokers or margin calls. Depending on our open derivative positions, we may require significant liquidity with little advanced notice to meet margin calls. We continuously monitor our exposure to margin calls and believe that we will continue to maintain adequate liquidity to cover such margin calls from operating results and borrowings. Increases in grain prices and hedging activity have led to more frequent and larger margin calls.
We were in compliance with our debt covenants at September 30, 2013. We believe we will maintain compliance with our debt covenants at each of our subsidiaries for the upcoming twelve months, or if necessary have sufficient liquidity available at the parent company to resolve a subsidiary’s noncompliance; however, no obligation exists to provide such liquidity for a subsidiary’s compliance. No assurance can be provided that actual operating results will approximate our forecasts or that we will inject the necessary capital into a subsidiary to maintain compliance with its respective covenants. In
36
the event actual results differ significantly from our forecasts and a subsidiary is unable to comply with its respective debt covenants under its credit facility, such subsidiary’s lenders may determine that an event of default has occurred. Upon the occurrence of an event of default, and following notice, the lenders may terminate any commitment and declare the entire unpaid balance due and payable.
On August 22, 2013, we announced that our Board of Directors approved the initiation of a quarterly cash dividend. An initial dividend of $0.04 per common share was paid in September 2013. We anticipate declaring a cash dividend in future quarters on a regular basis; however, future declarations of dividends are subject to Board approval and may be adjusted as our cash position, business needs or market conditions change.
We believe that we have sufficient working capital for our existing operations. However, a sustained period of unprofitable operations may strain our liquidity and make it difficult to maintain compliance with our financing arrangements. While we may seek additional sources of working capital in response, we can provide no assurance that we will be able to secure this funding if necessary. We may sell additional equity or borrow additional amounts to improve or preserve our liquidity, expand our existing businesses, or build additional or acquire existing businesses. We can provide no assurance that we will be able to secure the funding necessary for these additional projects or for additional working capital needs at reasonable terms, if at all.
Debt
For additional information related to our debt, see Note 7 – Debt included herein as part of the Notes to Consolidated Financial Statements and Note 10 – Debt included as part of the Notes to Consolidated Financial Statements included in our annual report on Form 10-K for the year ended December 31, 2012.
Ethanol Production Segment
Each of our ethanol production segment subsidiaries have credit facilities with lender groups that provide for term and revolving term loans to finance construction and operation of the production facilities.
The Green Plains Bluffton loan is comprised of a $70.0 million amortizing term loan and a $20.0 million revolving term loan. At September 30, 2013, $27.4 million related to the amortizing term loan was outstanding, along with the entire revolving term loan. The amortizing term loan requires monthly principal payments of approximately $0.3 million. The loans mature on January 31, 2015 with expected outstanding balances upon maturity of $23.3 million and $20.0 million on the amortizing term loan and revolving term loan, respectively.
The Green Plains Central City loan is comprised of a $55.0 million amortizing term loan and a $30.5 million revolving term loan as well as a revolving line of credit of up to $11.0 million. At September 30, 2013, $34.5 million related to the amortizing term loan was outstanding, along with $28.6 million on the revolving term loan and $10.6 million on the revolving line of credit. The amortizing term loan requires monthly principal payments of $0.5 million. The amortizing term loan and the revolving term loan mature on July 1, 2016 with expected outstanding balances upon maturity of $17.9 million and $28.6 million, respectively, and the revolving line of credit matures on November 26, 2013. We expect to extend or refinance the revolving credit facility prior to its maturity date.
The Green Plains Holdings II loan is comprised of a $26.4 million amortizing term loan and a $51.1 million revolving term loan. At September 30, 2013, $17.4 million was outstanding on the amortizing term loan, along with $42.6 million on the revolving term loan. The amortizing term loan requires quarterly principal payments of $1.5 million. The revolving term loan requires semi-annual principal payments of approximately $2.7 million. The maturity dates of the amortizing term loan and revolving term loan are July 1, 2016 and October 1, 2018, respectively, with no outstanding balance expected upon maturity on the amortizing term loan and an expected outstanding balance upon maturity of $3.8 million on the revolving term loan.
The Green Plains Obion loan is comprised of a $60.0 million amortizing term loan and a revolving term loan of $37.4 million. At September 30, 2013, $6.3 million related to the amortizing term loan was outstanding along with the entire revolving term loan. The amortizing term loan requires quarterly principal payments of $2.4 million. The amortizing term loan matures on May 20, 2014 and the revolving term loan matures on June 1, 2018 with no expected outstanding balances upon maturity on the amortizing term loan or the revolving term loan.
The Green Plains Ord loan is comprised of a $25.0 million amortizing term loan and a $13.0 million revolving term loan as well as a revolving line of credit of up to $5.0 million. At September 30, 2013, $15.8 million related to the amortizing term
37
loan was outstanding, $12.2 million on the revolving term loan, along with $4.7 million on the revolving line of credit. The amortizing term loan requires monthly principal payments of approximately $0.2 million. The amortizing term loan and the revolving term loan mature on July 1, 2016 with expected outstanding balances upon maturity of $8.2 million and $12.2 million, respectively, and the revolving line of credit matures on November 26, 2013. We expect to extend or refinance the revolving credit facility prior to maturity.
The Green Plains Otter Tail loan is comprised of a $30.3 million amortizing term loan and a $4.7 million revolver. At September 30, 2013, $19.2 million related to the term loan and the entire revolver were outstanding. The amortizing term loan requires monthly principal payments of approximately $0.4 million. The amortizing term loan matures on September 1, 2018 with an expected outstanding balance of $4.8 million and the revolver matures on November 18, 2013. We expect to extend or refinance the revolver prior to maturity.
The Green Plains Shenandoah loan is comprised of a $17.0 million revolving term loan. At September 30, 2013, $16.0 million on the revolving term loan was outstanding. The revolving term loan matures on March 1, 2018 with an expected outstanding balance upon maturity of $7.0 million.
The Green Plains Superior loan is comprised of a $40.0 million amortizing term loan and a $10.0 million revolving term loan. At September 30, 2013, $11.1 million related to the amortizing term loan was outstanding, along with the entire revolving term loan. The amortizing term loan requires quarterly principal payments of $1.4 million. The amortizing term loan matures on July 20, 2015 and the revolving term loan matures on July 1, 2017 with an expected outstanding balance upon maturity of $1.5 million on the amortizing term loan and no expected outstanding balance upon maturity on the revolving term loan.
Each term loan, except for the Green Plains Holdings II and Green Plains Otter Tail agreements, has a provision that requires us to make annual special payments ranging from 65% to 75% of the available free cash flow from the related entity’s operations (as defined in the respective loan agreements), subject to certain limitations. With certain exceptions, the revolving term loans within this segment are generally available for advances throughout the life of the commitment with interest-only payments due each month until the final maturity date.
The term loans and revolving term loans bear interest at LIBOR plus 3.00% to 4.50% or lender-established prime rates. Some have established a floor on the underlying LIBOR index. In some cases, the lender may allow us to elect to pay interest at a fixed interest rate to be determined. As security for the loans, the lenders received a first-position lien on all personal property and real estate owned by the respective entity borrowing the funds, including an assignment of all contracts and rights pertinent to construction and on-going operations of the plant. Additionally, debt facilities of Green Plains Central City and Green Plains Ord are cross-collateralized. These borrowing entities are also required to maintain certain combined financial and non-financial covenants during the terms of the loans.
Green Plains Bluffton issued a $22.0 million Subordinate Solid Waste Disposal Facility Revenue Bond with the city of Bluffton, Indiana, of which $15.8 million remained outstanding at September 30, 2013. The revenue bond requires: semi-annual principal and interest payments of approximately $1.5 million through March 1, 2019; and a final principal and interest payment of $3.745 million on September 1, 2019. The revenue bond bears interest at 7.50% per annum.
Green Plains Otter Tail also issued $19.2 million in senior notes under New Market Tax Credits financing of which $19.1 million remained outstanding at September 30, 2013. The notes bear interest at a rate equal to the prime rate (as defined) plus 1.5%, but not less than 4.0%, payable monthly, and require monthly principal payments of approximately $0.3 million beginning in September 2014. The notes mature on September 1, 2018 with an expected outstanding balance of $4.7 million upon maturity.
Agribusiness Segment
Green Plains Grain has a $125.0 million senior secured revolving credit facility with various lenders, as amended on August 27, 2013, to provide the agribusiness segment with working capital funding subject to a borrowing base as defined in the facility. The revolving credit facility matures on August 26, 2016. The revolving credit facility includes total revolving credit commitments of $125.0 million and an accordion feature whereby amounts available under the facility may be increased by up to $75.0 million of new lender commitments upon agent approval. The facility also allows for additional seasonal borrowings up to $50.0 million. The total commitments outstanding under the facility cannot exceed $250.0 million. As security for the revolving credit facility, the lender received a first priority lien on certain cash, inventory, accounts receivable and other assets owned by subsidiaries of the agribusiness segment. Advances on the revolving credit facility are subject to interest charges at a rate per annum equal to the LIBOR rate for the outstanding period, or the base rate, plus the
38
respective applicable margin. At September 30, 2013, $38.0 million on the revolving credit facility was outstanding. As security for the revolving credit facility, the lender received a first priority lien on certain cash, inventory, accounts receivable and other assets owned by subsidiaries of the agribusiness segment.
Marketing and Distribution Segment
Green Plains Trade has a senior secured asset-based revolving credit facility of up to $130.0 million, subject to a borrowing base value equal to the sum of percentages of eligible receivables and eligible inventories, less certain miscellaneous adjustments. At September 30, 2013, $58.4 million was outstanding on the revolving credit facility. The revolving credit facility expires on April 25, 2016 and bears interest at the lender’s commercial floating rate plus the applicable margin or LIBOR plus the applicable margin. As security for the loan, the lender received a first-position lien on substantially all of the assets of Green Plains Trade, including accounts receivable, inventory and other property and collateral owned by Green Plains Trade.
In June 2013, certain of our subsidiaries executed a New Markets Tax Credits financing transaction. In order to facilitate this financing transaction, we were required to issue promissory notes payable in the amount of $10.0 million and a note receivable in the amount of $8.1 million. The promissory notes payable and note receivable bear interest at 1% per annum, payable quarterly. Beginning in March 2020, the promissory notes and note receivable each require quarterly principal and interest payments of approximately $0.2 million; the Company retains the right to call $8.1 million of the promissory notes in 2020. The promissory notes payable and note receivable mature on September 15, 2031 and will be fully amortized upon maturity. In connection with the New Markets Tax Credits financing transaction, income tax credits were generated for the benefit of the lender. We have guaranteed the lender the face value of these income tax credits over their statutory lives, a period of seven years, in the event that the income tax credits are recaptured or reduced. The value of the income tax credits was anticipated to be $5.0 million at the time of the transaction. We believe the likelihood of recapture or reduction of the income tax credits is remote, and therefore we have not established a liability in connection with this guarantee.
Corporate Activities
On September 20, 2013, we issued $120.0 million of 3.25% Convertible Senior Notes due 2018, or the 3.25% Notes. The 3.25% Notes represent senior, unsecured obligations, with interest payable on April 1 and October 1 of each year. Conversion of the 3.25% Notes may only be settled in shares of common stock unless shareholder approval is received to allow for flexible settlement consisting of, at our election, cash, shares of our common stock, or a combination of cash and shares of our common stock (and cash in lieu of fractional shares) until the close of business on the scheduled trading day immediately preceding the maturity date. As a result, the 3.25% Notes contain liability and equity components which were bifurcated and accounted for separately. The liability component of the 3.25% Notes, as of the issuance date, was calculated by estimating the fair value of a similar liability issued at an 8.21% effective interest rate, which was determined by considering the rate of return investors would require our debt structure. The amount of the equity component was calculated by deducting the fair value of the liability component from the principal amount of the 3.25% Notes, resulting in the initial recognition of $24.5 million as debt discount costs recorded in additional paid-in capital. The carrying amount of the 3.25% Notes will be accreted to the principal amount over the remaining term to maturity and we will record a corresponding amount of non-cash interest expense. Additionally, we incurred debt issuance costs of $5.1 million related to the 3.25% Notes and allocated $4.0 million of debt issuance costs to the liability component of the 3.25% Notes. These costs will be amortized to non-cash interest expense over the five-year term of the 3.25% Notes. Prior to April 1, 2018, the 3.25% Notes will not be convertible unless certain conditions are satisfied. The initial conversion rate is 47.9627 shares of common stock per $1,000 principal amount of 3.25% Notes, which is equal to an initial conversion price of approximately $20.85 per share. The conversion rate is subject to adjustment upon the occurrence of certain events, including the payment of a quarterly cash dividend that exceeds $0.04 per share. In addition, we may be obligated to increase the conversion rate for any conversion that occurs in connection with certain corporate events, including calling the 3.25% Notes for redemption.
We may redeem for cash all, but not less than all, of the 3.25% Notes at any time on or after October 1, 2016 if the sale price of our common stock equals or exceeds 140% of the applicable conversion price for a specified time period ending on the trading day immediately prior to the date we deliver notice of the redemption. The redemption price will equal 100% of the principal amount of the 3.25% Notes, plus any accrued and unpaid interest to, but excluding, the redemption date. In addition, upon the occurrence of a fundamental change, such as a change in control, holders of the 3.25% Notes will have the right, at their option, to require us to repurchase their 3.25% Notes in cash at a price equal to 100% of the principal amount of the 3.25% Notes to be repurchased, plus accrued and unpaid interest. Default with respect to any loan in excess of $10.0 million constitutes an event of default under the 3.25% Notes, which could result in the 3.25% Notes being declared due and payable.
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We have $90.0 million of 5.75% Convertible Senior Notes due 2015, or the 5.75% Notes. The 5.75% Notes represent senior, unsecured obligations, with interest payable on May 1 and November 1 of each year. The 5.75% Notes may be converted into shares of our common stock and cash in lieu of fractional shares of the common stock based on a conversion rate equal to 69.9527 shares of the common stock per $1,000 principal amount of 5.75% Notes, which is equal to a conversion price of approximately $14.30 per share. The conversion rate is subject to adjustment upon the occurrence of specified events, including the payment of a cash dividend. The conversion rate was adjusted to reflect the payment of a cash dividend of $0.04 per common share paid on September 26, 2013 to all shareholders of record as of September 5, 2013. We may redeem for cash all, but not less than all, of the 5.75% Notes at any time on or after November 1, 2013, if the last reported sale price of our common stock equals or exceeds 140% of the applicable conversion price for a specified time period, at a redemption price equal to 100% of the principal amount of the 5.75% Notes, plus accrued and unpaid interest. Default with respect to any loan in excess of $10.0 million constitutes an event of default under the 5.75% Notes, which could result in the 5.75% Notes being declared due and payable.
Contractual Obligations
Our contractual obligations as of September 30, 2013 were as follows (in thousands):
|
Payments Due By Period |
||||||||
Contractual Obligations |
Total |
|
Less than 1 year |
|
1-3 years |
|
3-5 years |
|
More than 5 years |
Long-term and short-term debt obligations (1) |
$ 671,667 |
|
$ 159,278 |
|
$ 284,196 |
|
$ 65,587 |
|
$ 162,606 |
Interest and fees on debt obligations (2) |
80,990 |
|
27,824 |
|
36,144 |
|
14,608 |
|
2,414 |
Operating lease obligations (3) |
57,033 |
|
15,716 |
|
25,997 |
|
12,266 |
|
3,054 |
Deferred tax liabilities |
84,414 |
|
- |
|
- |
|
- |
|
84,414 |
Purchase obligations |
|
|
|
|
|
|
|
|
|
Forward grain purchase contracts (4) |
188,936 |
|
188,575 |
|
361 |
|
- |
|
- |
Other commodity purchase contracts (5) |
39,253 |
|
39,253 |
|
- |
|
- |
|
- |
Other |
450 |
|
449 |
|
1 |
|
- |
|
- |
Total contractual obligations |
$ 1,122,743 |
|
$ 431,095 |
|
$ 346,699 |
|
$ 92,461 |
|
$ 252,488 |
|
|||||||||
(1) Includes the current portion of long-term debt. |
|||||||||
(2) Interest amounts are calculated over the terms of the loans using current interest rates, assuming scheduled principle and interest amounts are |
|||||||||
paid pursuant to the debt agreements. Includes administrative and/or commitment fees on debt obligations. |
|||||||||
(3) Operating lease costs are primarily for railcars and office space. |
|||||||||
(4) Purchase contracts represent index-priced and fixed-price contracts. Index purchase contracts are valued at current quarter-end prices. |
|||||||||
(5) Includes fixed-price ethanol, dried distillers grains and natural gas purchase contracts. |
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to various market risks, including changes in commodity prices and interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices. In the ordinary course of business, we enter into various types of transactions involving financial instruments to manage and reduce the impact of changes in commodity prices and interest rates. At this time, we do not expect to have exposure to foreign currency risk as we expect to conduct all of our business in U.S. dollars.
Interest Rate Risk
We are exposed to market risk from changes in interest rates. Exposure to interest rate risk results primarily from holding term and revolving loans that bear variable interest rates. Specifically, we had $647.2 million outstanding in debt as of September 30, 2013, $425.2 million of which is variable-rate in nature. Interest rates on our variable-rate debt are determined based upon the market interest rate of either the lender’s prime rate or LIBOR, as applicable. A 10% change in interest rates would affect our interest cost on such debt by approximately $1.9 million per year in the aggregate. Other details of our outstanding debt are discussed in the notes to the consolidated financial statements included as a part of this report.
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Commodity Price Risk
We produce ethanol, distillers grains and corn oil from corn and our business is sensitive to changes in the prices of each of these commodities. The price of corn is subject to fluctuations due to unpredictable factors such as weather; corn planted and harvested acreage; changes in national and global supply and demand; and government programs and policies. We use natural gas in the ethanol production process and, as a result, our business is also sensitive to changes in the price of natural gas. The price of natural gas is influenced by such weather factors as extreme heat or cold in the summer and winter, or other natural events like hurricanes in the spring, summer and fall. Other natural gas price factors include North American exploration and production, and the amount of natural gas in underground storage during both the injection and withdrawal seasons. Ethanol prices are sensitive to world crude-oil supply and demand; crude-oil refining capacity and utilization; government regulation; and consumer demand for alternative fuels. Distillers grains prices are sensitive to various demand factors such as numbers of livestock on feed, prices for feed alternatives, and supply factors, primarily production by ethanol plants and other sources.
We attempt to reduce the market risk associated with fluctuations in the price of corn, natural gas, ethanol, distillers grains and corn oil by employing a variety of risk management and economic hedging strategies. Strategies include the use of forward fixed-price physical contracts and derivative financial instruments, such as futures and options executed on the Chicago Board of Trade and the New York Mercantile Exchange.
We focus on locking in operating margins based on a model that continually monitors market prices of corn, natural gas and other input costs against prices for ethanol and distillers grains at each of our production facilities. We create offsetting positions by using a combination of forward fixed-price physical purchases and sales contracts and derivative financial instruments. As a result of this approach, we frequently have gains on derivative financial instruments that are conversely offset by losses on forward fixed-price physical contracts or inventories and vice versa. In our ethanol production segment, gains and losses on derivative financial instruments are recognized each period in operating results while corresponding gains and losses on physical contracts are generally designated as normal purchases or normal sales contracts and are not recognized until quantities are delivered or utilized in production. For cash flow hedges, any ineffectiveness is recognized in current period results, while other unrealized gains and losses are deferred in accumulated other comprehensive income until gains and losses from the underlying hedged transaction are realized. In the event that it becomes probable that a forecasted transaction will not occur, we would discontinue cash flow hedge treatment, which would affect earnings. During the nine months ended September 30, 2013, revenues included net losses of $62.6 million and cost of goods sold included net gains of $1.8 million from derivative financial instruments. To the extent net gains or losses from settled derivative instruments are related to hedging current period production, they are generally offset by physical commodity purchases or sales resulting in the realization of the intended operating margins. However, our results of operations are impacted when there is a mismatch of gains or losses associated with the change in fair value of derivative instruments at the reporting period when the physical commodity purchase or sales has not yet occurred since they are designated as a normal purchase or normal sale.
In our agribusiness segment, inventory positions, physical purchase and sale contracts, and financial derivatives are marked to market with gains and losses included in results of operations. The market value of derivative financial instruments such as exchange-traded futures and options has a high, but not perfect, correlation to the underlying market value of grain inventories and related purchase and sale contracts.
Ethanol Production Segment
A sensitivity analysis has been prepared to estimate our ethanol production segment exposure to ethanol, corn, distillers grains and natural gas price risk. Market risk related to these factors is estimated as the potential change in net income resulting from hypothetical 10% changes in prices of our expected corn and natural gas requirements, and ethanol and distillers grains output for a one-year period from September 30, 2013. This analysis includes the impact of risk management activities that result from our use of fixed-price purchase and sale contracts and derivatives. The results of this analysis, which may differ from actual results, are as follows (in thousands):
41
Commodity |
|
Estimated Total Volume Requirements for the Next 12 Months (1) |
|
Unit of Measure |
|
Net Income Effect of Approximate 10% Change in Price |
|
Ethanol |
|
790,000 |
|
Gallons |
|
$ |
63,857 |
Corn |
|
280,000 |
|
Bushels |
|
$ |
59,056 |
Distillers grains |
|
2,240 |
|
Tons (2) |
|
$ |
17,747 |
Natural gas |
|
21,830 |
|
MMBTU (3) |
|
$ |
3,986 |
|
|
|
|
|
|
|
|
(1) Assumes production at full capacity. |
|
|
|||||
(2) Distillers grains quantities are stated on an equivalent dried ton basis. |
|
|
|||||
(3) Millions of British Thermal Units. |
|
|
|
Corn Oil Production Segment
A sensitivity analysis has been prepared to estimate our corn oil production segment exposure to corn oil price risk. Market risk related to these factors is estimated as the potential change in net income resulting from hypothetical 10% changes in prices of our expected corn oil output for a one-year period from September 30, 2013. This analysis includes the impact of risk management activities that result from our use of fixed-price sale contracts. Market risk at September 30, 2013, based on the estimated net income effect resulting from a hypothetical 10% change in such prices, was approximately $2.2 million.
Agribusiness Segment
The availability and price of agricultural commodities are subject to wide fluctuations due to unpredictable factors such as weather, plantings, foreign and domestic government farm programs and policies, changes in global demand created by population changes and changes in standards of living, and global production of similar and competitive crops. To reduce price risk caused by market fluctuations in purchase and sale commitments for grain and grain held in inventory, we enter into exchange-traded futures and options contracts that function as economic hedges. The market value of exchange-traded futures and options used for hedging has a high, but not perfect correlation, to the underlying market value of grain inventories and related purchase and sale contracts. The less correlated portion of inventory and purchase and sale contract market value, known as basis, is much less volatile than the overall market value of exchange-traded futures and tends to follow historical patterns. We manage this less volatile risk by constantly monitoring our position relative to the price changes in the market. In addition, inventory values are affected by the month-to-month spread relationships in the regulated futures markets, as we carry inventories over time. These spread relationships are also less volatile than the overall market value and tend to follow historical patterns, but also represent a risk that cannot be directly mitigated. Our accounting policy for our futures and options, as well as the underlying inventory held for sale and purchase and sale contracts, is to mark them to the market and include gains and losses in the consolidated statement of operations in sales and merchandising revenues.
A sensitivity analysis has been prepared to estimate agribusiness segment exposure to market risk of our commodity position (exclusive of basis risk). Our daily net commodity position consists of inventories related to purchase and sale contracts and exchange-traded contracts. The fair value of our position, which is a summation of the fair values calculated for each commodity by valuing each net position at quoted futures market prices, is approximately $15.5 million at September 30, 2013. Market risk at that date, based on the estimated net income effect resulting from a hypothetical 10% change in such prices, was approximately $0.9 million.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, or Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial disclosure.
As of the end of the period covered by this report, our management carried out an evaluation, under the supervision of and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).
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Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. These disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial disclosure. Based upon that evaluation, our management, including our Chief Executive Officer and the Chief Financial Officer, concluded that our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining effective internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with generally accepted accounting principles. There were no material changes in our internal control over financial reporting that occurred during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
We are currently involved in litigation that has arisen in the ordinary course of business; however, we do not believe that any of this litigation will have a material adverse effect on our financial position, results of operations or cash flows.
Investors should carefully consider the discussion of risks and the other information included in our annual report on Form 10-K for the year ended December 31, 2012 and in this quarterly report on Form 10-Q, including Cautionary Information Regarding Forward-Looking Information, which is included in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Although we have attempted to discuss key factors, our investors need to be aware that other risks may prove to be important in the future. New risks may emerge at any time and we cannot predict such risks or estimate the extent to which they may affect our financial performance.
The following risk factors should be considered in conjunction with the other information included in, or incorporated by reference in, this quarterly report on Form 10-Q.
The ethanol industry is highly dependent on government usage mandates affecting ethanol production and any changes to such regulation could adversely affect the market for ethanol and our results of operations.
The domestic market for ethanol is largely dictated by federal mandates for blending ethanol with gasoline. The RFS II mandate level for conventional biofuels for 2013 of 13.8 billion gallons approximates current domestic production levels. Future demand will be largely dependent upon the economic incentives to blend based upon the relative value of gasoline versus ethanol, taking into consideration the relative octane value of ethanol, environmental requirements and the RFS II mandate. Any significant increase in production capacity beyond the RFS II mandated level might have an adverse impact on ethanol prices.
Additionally, under the provisions of the Energy Independence and Security Act, the EPA has the authority to waive the mandated RFS II requirements in whole or in part. To grant the waiver, the EPA administrator must determine, in consultation with the Secretaries of Agriculture and Energy, that one of two conditions has been met: (1) there is inadequate domestic renewable fuel supply or (2) implementation of the requirement would severely harm the economy or environment of a state, region or the United States. In the third quarter of 2012, the governors of North Carolina and Arkansas, as well as a number of livestock groups, filed waiver requests with the EPA based on drought conditions. In November 2012, the agency decided not to grant the requested waiver. In August 2013, the EPA announced that in its forthcoming proposed rule, it will propose adjustments to the 2014 volume requirements, including to both the advanced biofuel and total renewable fuel categories. The EPA stated it expects that in preparing the 2014 proposed rule, it will estimate the available supply of cellulosic and advanced biofuels, assess the E10 blend wall and current infrastructure and market-based limitations for blends above E10, and establish volume requirements that are reasonably attainable. Moreover, the EPA expects to utilize the notice and comment process to fully engage the public in consideration of a reasonable path forward that appropriately addresses the blend wall and other constraints. The EPA further stated it believes the statute provides it with the authority and tools needed to make appropriate adjustments in volume requirements. The proposed rule is by regulation, and is required to be issued no
43
later than November 30, 2013. Our operations could be adversely impacted if the EPA reduces the 2014 mandate levels for conventional biofuels or grants a waiver in the future.
Due to drought conditions in 2012 and claims that blending of ethanol into the motor fuel supply will be constrained by unwillingness of the market to accept greater than ten percent ethanol blends, or the blend wall, legislation aimed at reducing or eliminating the renewable fuel use required by RFS II has been introduced in Congress. On April 10, 2013 the Renewable Fuel Standard Elimination Act was introduced as H.R. 1461. The bill is targeted to repeal the renewable fuel program of the Environmental Protection Agency, or EPA. Also introduced on April 10, 2013 was the RFS Reform Bill, H.R. 1462, which would prohibit more than ten percent ethanol in gasoline and reduce the RFS II mandated volume of renewable fuel. On May 14, 2013, the Domestic Alternatives Fuels Act of 2013 was introduced in the U.S. House of Representatives as H.R. 1959 to allow ethanol produced from natural gas to be used to meet the RFS II mandate. These bills were assigned to a congressional committee, which will consider them before possibly sending any on to the House or Senate as a whole. We believe RFS II is a significant component of national energy policy that reduces dependence on foreign oil by the United States. Our operations could be adversely impacted if the RFS Reform Bill of 2013, the RFS Elimination Bill of 2013, or other legislation reducing the RFS II mandate is enacted.
The compliance mechanism for RFS II is generation of renewable identification numbers, or RINs, which are generated and attached to renewable fuels such as the ethanol we produce and detached when the renewable fuel is blended into the transportation fuel supply. Detached RINs may be retired by obligated parties to demonstrate compliance with RFS II or may be separately traded in the market. The market price of detached RINs may affect the price of ethanol in certain U.S. markets as obligated parties may factor these costs into their purchasing decisions. Moreover, at certain price levels for various types of RINs, it becomes more economical to import foreign sugar cane ethanol. If changes to RFS II result in significant changes in the price of various types of RINs, it could negatively affect the price of ethanol, and our operations could be adversely impacted.
Federal law mandates the use of oxygenated gasoline in the winter in areas that do not meet Clean Air Act standards for carbon monoxide. If these mandates are repealed, the market for domestic ethanol could be diminished. Additionally, flexible-fuel vehicles receive preferential treatment in meeting corporate average fuel economy, or CAFE, standards. However, high blend ethanol fuels such as E85 result in lower fuel efficiencies. Absent the CAFE preferences, it may be unlikely that auto manufacturers would build flexible-fuel vehicles. Any change in these CAFE preferences could reduce the growth of E85 markets and result in lower ethanol prices, which could adversely impact our operating results.
To the extent that such federal or state laws or regulations are modified, the demand for ethanol may be reduced, which could negatively and materially affect our ability to operate profitably.
We may be required to pay substantial penalties if we inadvertently trade fraudulent RINs.
In the past, one of our wholly-owned subsidiaries has traded ethanol and associated RINs acquired from third-parties, and may make such trades in the future. In 2012, it was discovered that some entities in the biodiesel industry sold fraudulent biodiesel RINs (biodiesel RINs registered with the EPA that had no physical renewable fuel associated with them). The EPA brought enforcement actions against purchasers of the fraudulent biodiesel RINs, even though they had purchased the RINs without knowledge of their fraudulent nature. If it were to be discovered that we had purchased ethanol and associated RINs that were determined to be fraudulent ethanol RINs, albeit unknowingly, we could be subject to penalties. If assessed at the maximum amount allowed by law, such penalties could be very substantial. EPA policy has been to assess very modest penalties for unknowing purchase of fraudulent RINs prior to 2013. With the industry now on notice of the possibility of fraudulent RINs, the EPA may assess much higher penalties going forward, and if we were subject to such penalties, it could have an adverse impact on our profitability.
The accounting for our convertible debt securities could have a material effect on our reported financial results and may restrict our ability to take advantage of future opportunities.
In September 2013, we sold $120.0 million aggregate principal amount of 3.25% Convertible Senior Notes due 2018, or the 3.25% Notes. We will be required to pay interest until the 3.25% Notes come due, are called by us or are converted, and the payment of that interest will reduce our net income. Based on terms within the debt instrument, in certain circumstances the 3.25% Notes may be wholly or partially settled in cash. U.S. generally accepted accounting principles require an entity to separately account for the liability and equity components of convertible debt instruments whose conversion may be settled entirely or partially in cash (such as the 3.25% Notes) in a manner that reflects the issuer’s economic interest cost for non-convertible debt. The liability component of the 3.25% Notes was initially valued at the fair value of a similar debt instrument that does not have an associated equity component and is reflected as a liability on our consolidated balance sheet.
44
The equity component of $24.5 million is included in additional paid-in capital within stockholders’ equity on our consolidated balance sheet, and the value of the equity component was treated as a debt discount. The debt discount will be amortized to non-cash interest expense over the term of the 3.25% Notes. Accordingly, we will report lower net income in our financial results, which could adversely affect our future financial results, the trading price of our common stock and the trading price of the 3.25% Notes.
We are currently required to include the number of shares of our common stock into which the 3.25% Notes are convertible in our calculation of earnings per share on an if-converted basis. We may seek shareholder approval for a flexible conversion option that would allow us to pay, upon the conversion of these notes, in cash, shares of our common stock, or a combination of cash and shares of our common stock. If approved, the flexible conversion option may change the way the 3.25% Notes affect our earnings per share calculation. Approval of a flexible conversion option may allow us to include the 3.25% Notes in our earnings per share calculation using the treasury stock method. Under this method, the shares issuable upon conversion of the 3.25% Notes would not be included in the calculation of diluted earnings per share unless the conversion value of the 3.25% Notes exceeds their principal amount. The number of shares included in the calculation of diluted earnings per share would be equal to the number of shares of common stock that would be necessary to settle the excess, if we elected to settle the excess, in shares. We cannot guarantee that we will seek shareholder approval, that shareholders will approve or that, if approved, the flexible conversion option would result in the accounting treatment described above. In addition, the treasury stock method may result in lower diluted earnings per share depending upon our earnings levels and stock prices.
The 3.25% Notes may be converted, under the conditions and at the premium specified in those notes, into shares of our common stock and, if the flexible conversion option is approved, into the cash equivalent of shares of our common stock. If converted into shares, the 3.25% Notes will result in the dilution of our shareholders. If converted into cash, the 3.25% Notes will require the payment of significant additional amounts above the initial principal. The repayment of principal and payment of the conversion premium, if either or both are settled in cash, could require the use of a substantial amount of our cash, and if such cash is not available, we may be required to enter into alternate financing arrangements at terms that may or may not be desirable. The obligations we incurred by issuing the 3.25% Notes may restrict our ability to take advantage of certain future opportunities, such as engaging in future debt or equity financing activities, which may reduce or impair our ability to acquire new businesses or invest in our existing businesses.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Employees surrender shares upon the vesting of restricted stock grants to satisfy payroll tax withholding obligations. No restricted stock vested during the third quarter of 2013 and therefore no shares were surrendered.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
None.
45
Item 6. Exhibits.
Exhibit Index
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Exhibit No. |
Description of Exhibit |
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4.1 |
Indenture relating to the 3.25% Convertible Senior Notes due 2018, dated as of September 20, 2013, between Green Plains Renewable Energy, Inc. and Wilmington Trust, National Association, including the form of Global Note attached as Exhibit A thereto (Incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed September 20, 2013) |
10.1 |
Seventh Amendment dated August 26, 2013 to the Credit Agreement, as amended, dated July 2, 2009 by and among Green Plains Central City LLC, Green Plains Holdings LLC, AgStar Financial Services, PCA as Administrative Agent and the Banks named therein |
10.2 |
Sixth Amendment dated August 26, 2013 to the Credit Agreement, as amended, dated July 2, 2009 by and among Green Plains Ord LLC, Green Plains Holdings LLC, AgStar Financial Services, PCA as Administrative Agent and the Banks named therein |
10.3 |
Third Amendment dated August 27, 2013 to Credit Agreement, as amended, dated October 28, 2011 by and among Green Plains Grain Company LLC, Green Plains Grain Company TN LLC, Green Plains Essex Inc., BNP Paribas, as the administrative agent under the Credit Agreement, and the lenders party to the Credit Agreement |
10.4 |
Amendment dated October 15, 2013 to the Master Loan Agreement, as amended, dated September 28, 2011 by and among Green Plains Shenandoah LLC and Farm Credit Services of America, FLCA |
10.5 |
Amendment dated October 24, 2013 to the Master Loan Agreement, as amended, dated June 20, 2011 by and among Green Plains Superior LLC and Farm Credit Services of America, FLCA |
31.1 |
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 |
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 |
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.2 |
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101 |
The following information from Green Plains Renewable Energy, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013, formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Cash Flows, and (v) the Notes to Consolidated Financial Statements |
46
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.
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GREEN PLAINS RENEWABLE ENERGY, INC. (Registrant)
By: /s/ Todd A. Becker _
Todd A. Becker (Principal Executive Officer)
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By: /s/ Jerry L. Peters _
Jerry L. Peters (Principal Financial Officer)
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47
Exhibit 10.1
CREDIT AGREEMENT
THIS SEVENTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is entered into to be effective as of August 26, 2013 (the “Effective Date”), among GREEN PLAINS CENTRAL CITY LLC, a Delaware limited liability company (“GPCC”), GREEN PLAINS HOLDINGS LLC, a Delaware limited liability company (“Holdings” and together with GPCC the “Borrower”), AGSTAR FINANCIAL SERVICES, PCA (“AgStar”) and the other commercial, banking or financial institutions whose signatures appear on the signature pages to the Credit Agreement (collectively, the “Banks”), and AGSTAR FINANCIAL SERVICES, PCA, and its successors and assigns, as Administrative Agent for itself and the other Banks (“Agent”).
RECITALS
A.Borrower, Agent and the Banks entered into a Credit Agreement dated as of July 2, 2009, a First Amendment to Credit Agreement dated as of December 31, 2010, a Second Amendment to Credit Agreement dated as of June 30, 2011, a Third Amendment to Credit Agreement dated as of June 30, 2011, a Fourth Amendment to Credit Agreement dated as of June 28, 2012, a Fifth Amendment to Credit Agreement dated as of September 28, 2012, and a Sixth Amendment to Credit Agreement dated as of June 27, 2013 (together, as amended, restated or otherwise modified from time to time, the “Credit Agreement”) under which the Banks agreed to extend certain financial accommodations to Borrower.
B. At the request of Borrower, the Banks have agreed to make certain modifications to the Credit Agreement in accordance with the terms and conditions of this Amendment.
C.All terms used and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.
AGREEMENT
1.Credit Agreement Amendments. As of the Effective Date:
a.The following defined term as used in the Credit Agreement and other Loan Documents shall be amended, restated and replaced by the following:
“Revolving Line of Credit Loan Maturity Date” means November 26, 2013.
2.Effect on Credit Agreement. Except as expressly amended by this Amendment, all of the terms of the Credit Agreement shall be unaffected by this Amendment and shall remain in full force and effect. Nothing contained in this Amendment shall be deemed to constitute a waiver of any rights of the Banks or to affect, modify, or impair any of the rights of the Banks as provided in the Credit Agreement.
3.Conditions Precedent to Effectiveness of this Amendment. The obligations of the Banks hereunder are subject to the conditions precedent that Agent shall have received the following, in form and substance satisfactory to Agent:
a.this Amendment duly executed by Borrower and Agent;
b.payment in cash of an amendment fee in the amount of $25,000.00; and
1
Exhibit 10.1
c.all other documents, instruments, or agreements required to be delivered to Agent under the Credit Agreement and not previously delivered to Agent.
4. Representations and Warranties of Borrower. Borrower hereby agrees with, reaffirm, and acknowledge as follows:
a.The execution, delivery and performance by Borrower of this Amendment is within Borrower’s power, has been duly authorized by all necessary action, and does not contravene: (i) the certificates of formation or operating agreements of Borrower; or (ii) any law or any contractual restriction binding on or affecting Borrower; and does not result in or require the creation of any lien, security interest or other charge or encumbrance upon or with respect to any of its properties;
b.This Amendment is, and each other Loan Document to which Borrower is a party when delivered will be, legal, valid and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditor’s rights generally and by general principles of equity; and
c.All other representations, warranties and covenants contained in the Credit Agreement and the other Loan Documents are true and correct and in full force and effect.
5. Counterparts. It is understood and agreed that this Amendment may be executed in counterparts each of which shall, for all purposes, be deemed an original and all of which, taken together, shall constitute one and the same agreement even though all of the parties hereto may not have executed the same counterpart of this Amendment. Electronic delivery of an executed counterpart of a signature page to this Amendment shall be effective as delivery of an original executed counterpart to this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers and duly authorized, as of the date first above written.
[SIGNATURE PAGE TO IMMEDIATELY FOLLOW THIS PAGE]
2
Exhibit 10.1
SIGNATURE PAGE TO
SEVENTH AMENDMENT TO CREDIT AGREEMENT
BY AND AMONG
GREEN PLAINS CENTRAL CITY LLC (as Borrower),
GREEN PLAINS HOLDINGS LLC (as Borrower),
AGSTAR FINANCIAL SERVICES, PCA (AS AGENT), AND
THE BANKS
Dated to be effective as of August 26, 2013
BORROWER:
GREEN PLAINS CENTRAL CITY LLC,
a Delaware limited liability company
/s/ Jerry L. Peters______________
By: Jerry L. Peters
Its: Chief Financial Officer
and
GREEN PLAINS HOLDINGS LLC,
a Delaware limited liability company
/s/ Jerry L. Peters______________
By: Jerry L. Peters
Its: Chief Financial Officer
3
Exhibit 10.1
SIGNATURE PAGE TO
SEVENTH AMENDMENT TO CREDIT AGREEMENT
BY AND AMONG
GREEN PLAINS CENTRAL CITY LLC (as Borrower),
GREEN PLAINS HOLDINGS LLC (as Borrower),
AGSTAR FINANCIAL SERVICES, PCA (AS AGENT), AND
THE BANKS
Dated to be effective as of August 26, 2013
AGENT:
AGSTAR FINANCIAL SERVICES, PCA,
as Administrative Agent
/s/ Ron Monson______________________
By: Ron Monson
Its: Vice President
4
Exhibit 10.2
CREDIT AGREEMENT
THIS SIXTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is entered into to be effective as of August 26, 2013 (the “Effective Date”), among GREEN PLAINS ORD LLC, a Delaware limited liability company (“GPO”), GREEN PLAINS HOLDINGS LLC, a Delaware limited liability company (“Holdings” and together with GPO the “Borrower”), AGSTAR FINANCIAL SERVICES, PCA (“AgStar”) and the other commercial, banking or financial institutions whose signatures appear on the signature pages to the Credit Agreement (collectively, the “Banks”), and AGSTAR FINANCIAL SERVICES, PCA, and its successors and assigns, as Administrative Agent for itself and the other Banks (“Agent”).
RECITALS
A.Borrower, Agent and the Banks entered into a Credit Agreement dated as of July 2, 2009, a First Amendment to Credit Agreement dated as of June 30, 2011, a Second Amendment to Credit Agreement dated as of June 30, 2011, a Third Amendment to Credit Agreement dated as of June 28, 2012, a Fourth Amendment to Credit Agreement dated as of September 28, 2012, and a Fifth Amendment to Credit Agreement dated as of June 27, 2013 (together, as amended, restated or otherwise modified from time to time, the “Credit Agreement”) under which the Banks agreed to extend certain financial accommodations to Borrower.
B. At the request of Borrower, the Banks have agreed to make certain modifications to the Credit Agreement in accordance with the terms and conditions of this Amendment.
C.All terms used and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.
AGREEMENT
1.Credit Agreement Amendments. As of the Effective Date:
a.The following defined term as used in the Credit Agreement and other Loan Documents shall be amended, restated and replaced by the following:
“Revolving Line of Credit Loan Maturity Date” means November 26, 2013.
2.Effect on Credit Agreement. Except as expressly amended by this Amendment, all of the terms of the Credit Agreement shall be unaffected by this Amendment and shall remain in full force and effect. Nothing contained in this Amendment shall be deemed to constitute a waiver of any rights of the Banks or to affect, modify, or impair any of the rights of the Banks as provided in the Credit Agreement.
3.Conditions Precedent to Effectiveness of this Amendment. The obligations of the Banks hereunder are subject to the conditions precedent that Agent shall have received the following, in form and substance satisfactory to Agent:
a.this Amendment duly executed by Borrower and Agent;
1
Exhibit 10.2
b.payment in cash of an amendment fee in the amount of $25,000.00; and
c.all other documents, instruments, or agreements required to be delivered to Agent under the Credit Agreement and not previously delivered to Agent.
4. Representations and Warranties of Borrower. Borrower hereby agrees with, reaffirm, and acknowledge as follows:
a.The execution, delivery and performance by Borrower of this Amendment is within Borrower’s power, has been duly authorized by all necessary action, and does not contravene: (i) the certificates of formation or operating agreements of Borrower; or (ii) any law or any contractual restriction binding on or affecting Borrower; and does not result in or require the creation of any lien, security interest or other charge or encumbrance upon or with respect to any of its properties;
b.This Amendment is, and each other Loan Document to which Borrower is a party when delivered will be, legal, valid and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditor’s rights generally and by general principles of equity; and
c.All other representations, warranties and covenants contained in the Credit Agreement and the other Loan Documents are true and correct and in full force and effect.
5. Counterparts. It is understood and agreed that this Amendment may be executed in counterparts each of which shall, for all purposes, be deemed an original and all of which, taken together, shall constitute one and the same agreement even though all of the parties hereto may not have executed the same counterpart of this Amendment. Electronic delivery of an executed counterpart of a signature page to this Amendment shall be effective as delivery of an original executed counterpart to this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers and duly authorized, as of the date first above written.
[SIGNATURE PAGE TO IMMEDIATELY FOLLOW THIS PAGE]
2
Exhibit 10.2
SIGNATURE PAGE TO
SIXTH AMENDMENT TO CREDIT AGREEMENT
BY AND AMONG
GREEN PLAINS ORD LLC (as Borrower),
GREEN PLAINS HOLDINGS LLC (as Borrower),
AGSTAR FINANCIAL SERVICES, PCA (AS AGENT), AND
THE BANKS
Dated to be effective as of August 26, 2013
BORROWER:
GREEN PLAINS ORD LLC,
a Delaware limited liability company
/s/ Jerry L. Peters______________
By: Jerry L. Peters
Its: Chief Financial Officer
and
GREEN PLAINS HOLDINGS LLC,
a Delaware limited liability company
/s/ Jerry L. Peters______________
By: Jerry L. Peters
Its: Chief Financial Officer
3
Exhibit 10.2
SIGNATURE PAGE TO
SIXTH AMENDMENT TO CREDIT AGREEMENT
BY AND AMONG
GREEN PLAINS ORD LLC (as Borrower),
GREEN PLAINS HOLDINGS LLC (as Borrower),
AGSTAR FINANCIAL SERVICES, PCA (AS AGENT), AND
THE BANKS
Dated to be effective as of August 26, 2013
AGENT:
AGSTAR FINANCIAL SERVICES, PCA,
as Administrative Agent
/s/ Ron Monson______________________
By: Ron Monson
Its: Vice President
4
Exhibit 10.3
CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT (this “Third Amendment”) dated as of August 27, 2013 is among GREEN PLAINS GRAIN COMPANY LLC, a Delaware limited liability company (“GPG”), GREEN PLAINS GRAIN COMPANY TN LLC, a Delaware limited liability company (“TN”), GREEN PLAINS ESSEX INC., an Iowa corporation (“Essex” and together with GPG and TN, the “Borrower”), the Lenders party thereto and BNP PARIBAS, as Administrative Agent. Capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Credit Agreement (as defined below).
WITNESSETH:
WHEREAS, the Borrower, the Lenders, Sole Bookrunner, the Syndication Agent, the Administrative Agent, the Collateral Agent, the Swing Line Lender and the Issuing Lender are parties to a Credit Agreement dated as of October 28, 2011 (as amended, supplemented or otherwise modified from time to time prior to the Effective Date, the “Existing Credit Agreement” and, as amended by this Third Amendment, and as further amended, supplemented or otherwise modified from time to time, the “Credit Agreement”);
WHEREAS, the New Lender (as defined in Section 2 below) desires to become a Lender and to be bound by, and entitled to the benefits of, the provisions applicable to Lenders in the Credit Agreement and the other Loan Documents;
WHEREAS, the New Lender desires to replace ABN AMRO Capital USA LLC as the Documentation Agent; and
WHEREAS, the Borrower has requested certain amendments to the Credit Agreement, and the parties hereto have agreed to amend the Credit Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Amendments. |
Upon the occurrence of the Effective Date (as defined in Section 3 below), the Existing Credit Agreement is hereby amended as follows:
(a) Section 1.1 is amended as follows: |
(i) The definition of “Affiliate” is amended and restated in its entirety as follows: |
““Affiliate”: as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person (including, with its
correlative meanings, “controlled by” and “under common control with”) means the power, directly or indirectly, either to (a) vote more than (i) with respect to BioProcess Algae LLC, a Delaware limited liability company, 35% or (ii) with respect to any other Person, 10%, of the securities or other equity interests having ordinary voting power for the election of directors (or managers) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.”
(ii) The definition of “Agent Fee Letter” is amended by deleting “August 19, 2011” and replacing it with “August 2, 2013”. |
(iii) The definition of “Applicable Commitment Fee Rate” is amended by deleting “0.375%” and replacing it with “0.50%”. |
(iv) The definition of “Applicable LC Fee Rate” is amended by deleting “3.00%” and replacing it with “3.25%”. |
(v) The definition of “Applicable Margin” is amended and restated as follows: |
“Applicable Margin”: on any date with respect to each Type of Loan, the applicable rate per annum set forth below:
Type |
Revolving/Seasonal Line |
Base Rate Loans |
2.25% |
LIBO Rate Loans |
3.25%. |
(vi) The definition of “Available Commitment” is amended and restated in its entirety as follows: |
““Available Commitment”: as to any Lender at any time, an amount equal to the excess, if any, of (a) the amount of such Lender’s Commitment at such time over (b) such Lender’s Commitment Percentage of the Aggregate Outstanding Extensions of Credit (other than Seasonal Line Loans) at such time.”
(vii) The definition of “Available Facility Amount” is inserted in its appropriate alphabetical place as follows: |
““Available Facility Amount”: the product of Working Capital (as set forth on the most recently delivered written calculation thereof, whether in a compliance certificate in accordance with Section 7.2(b) or as required under Section 7.1(a), provided that if such compliance certificate or other calculation shall not have been delivered timely, Working Capital for purposes of this definition shall be as calculated by the Administrative Agent) multiplied by 6.25.”
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(viii) The definition of “Available Seasonal Line Commitment” is inserted in its appropriate alphabetical place as follows: |
““Available Seasonal Line Commitment”: as to any Seasonal Line Lender at any time in respect of a Seasonal Line, an amount equal to the excess, if any, of (a) the amount of such Lender’s Seasonal Line Commitment at such time over (b) such Lender’s Seasonal Line Commitment Percentage of the aggregate Seasonal Line Loans outstanding at such time.”
(ix) The definition of “Borrowing Base” is amended as follows: |
(A) Clause (ix) is amended and restated in its entirety as follows: |
“85% of Eligible Affiliate Accounts Receivable; plus”
(B) Clauses (c), (e) and (f) of the paragraph at the end of the definition of Borrowing Base are amended and restated as follows: |
“(c) the aggregate amount of Eligible Net Unrealized Gain on Forward Contracts, after giving effect to the applicable advance rate, exceed an amount equal to thirty percent (30%) of the Borrowing Base at such time,”;
“(e) the aggregate amount of Eligible Affiliate Accounts Receivable and Eligible Net Unrealized Gain on Forward Contracts in categories (ix) and (xi), after giving effect to the applicable advance rate, exceed $50,000,000 for all Affiliate counterparty exposure, and (f) the aggregate amount with respect to any counterparty included in categories (iv), (v), (ix) and (xi) exceed the applicable Counterparty Limit (such Counterparty Limits to be location specific in respect of clause (ix), in accordance with clause (i) of the proviso in the definition of Eligible Affiliate Account Receivable).”
(x) Clauses (c) and (d) of the definition of “Borrowing Base Report” are amended and restated as follows: |
“(c) for Eligible Grain Inventory and Eligible Non-Grain Inventory, (I) a schedule of (A) warehouse receipts, (B) Inventory locations, (C) market value and Inventory quantities by location and type of product, and (D) Inventory in transit and (II) copies of recent USDA inspection reports (in form and substance satisfactory to the Administrative Agent);
(d) intentionally omitted;”
(xi) The definition of “Borrowing Date” is amended and restated in its entirety as follows: |
““Borrowing Date”: any Business Day specified in a notice pursuant to Section 2.2 as a date on which a Revolving Loan or Seasonal Line Loan requested by the Borrower is to be made.”
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(xii) The definition of “Class” is inserted in its appropriate alphabetical place as follows: |
““Class”: Lenders with Commitments shall be one Class and Lenders with Seasonal Line Commitments shall be a separate Class.”
(xiii) The definition of “Commitment Percentage” is amended by inserting “(other than Seasonal Line Loans)” after each reference to “Loans” (but not, for the avoidance of doubt, after references to “Swing Line Loans”). |
(xiv) The definition of “Credits Commitment” is amended by deleting “$195,000,000” and replacing it with “$20,000,000”. |
(xv) Clause (j) of the definition of “Eligible Account Receivable” is amended and restated in its entirety as follows: |
“(j) the Account Debtor of such Account Receivable (a) is not an Affiliate of the Borrower, and no officer or employee of such Account Debtor is an officer, employee, agent or other Affiliate of the Borrower, (b) purchased the goods giving rise to the relevant Account Receivable in an arm’s length bona fide transaction conducted in the ordinary course of business in compliance with all applicable laws, (c) is not determined by the Administrative Agent (in its sole discretion) to be uncreditworthy, provided, that the Administrative Agent shall deliver written notice to the Borrower promptly upon the determination that any Account Receivable is ineligible pursuant to this clause (c) and (d) is not in contractual default in respect of such Accounts Receivable or any other Indebtedness or obligation to the Borrower or any of its Subsidiaries, and the Borrower does not reasonably anticipate that any such other Indebtedness or other obligation or newly arising Indebtedness or other obligation of such Account Debtor, will not be paid when due;”.
(xvi) The definition of “Eligible Affiliate Account Receivable” is inserted in its appropriate alphabetical place as follows: |
““Eligible Affiliate Account Receivable”: an Account Receivable which would qualify as an Eligible Account Receivable, but for the failure to comply with clause (j)(a) thereof, is owing from a Plant Entity and was generated at a plant location set forth in Section IV of Schedule 1.0H hereof, provided that (i) the aggregate amount of Eligible Affiliate Accounts Receivable owing from each Plant Entity at any time which were generated at the applicable plant location set forth on Schedule 1.0H shall not exceed the applicable Counterparty Limit, (ii) such Account Receivable shall have a maximum due date of no more than five (5) days from the original invoice date for such Account Receivable, (iii) such Account Receivable shall have been outstanding for no more than seven (7) days from the original invoice date for such Account Receivable, (iv) if at any time, 25% or more of all Accounts Receivable owing by any Plant Entity to the Borrower are past due, all Accounts Receivable owing by such Plant Entity to the
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Borrower shall not be Eligible Affiliate Accounts Receivable, until such time that no Accounts Receivable owing by such Plant Entity to the Borrower are past due, (v) if any Plant Entity guarantees or otherwise provides credit support for Indebtedness (or other liabilities) of the Parent and/or any Affiliate of the Parent or such Plant Entity, in an aggregate principal amount (in respect of such Indebtedness or liabilities so guaranteed or otherwise credit supported) in excess of such Plant Entity’s Guaranty Limit, all Accounts Receivable owing by such Plant Entity to the Borrower shall not be Eligible Affiliate Accounts Receivable and (vi) if any one or a combination of Plant Entities guarantee or otherwise provide credit support for Indebtedness (or other liabilities) of the Parent and/or any Affiliate of the Parent or such Plant Entity, in an aggregate principal amount (in respect of such Indebtedness or liabilities so guaranteed or otherwise credit supported) in excess of $50,000,000, all Accounts Receivable owing to the Borrower by each such Plant Entity that has provided such guarantees or other credit support shall not be Eligible Affiliate Accounts Receivable.”
(xvii) The definition of “Eligible Net Unrealized Gain on Forward Contracts” is amended and restated in its entirety as follows: |
““Eligible Net Unrealized Gain on Forward Contracts”: as of any date of determination thereof (on a counterparty by counterparty basis), an amount equal to the lesser of (a) the net unrealized gain less unrealized losses that results from the Marked-to-Market Value as of such date of the Borrower’s aggregate Eligible Forward Contracts (with such counterparty) which have a maximum tenor of eighteen (18) months from such date and (b) the net unrealized gain less unrealized losses that results from the Marked-to-Market Value as of such date of the Borrower’s aggregate net Eligible Forward Contracts (with such counterparty) of any tenor, in each case, if such amount is a positive number; provided, that notwithstanding anything contained herein to the contrary: (x) the amount of Eligible Net Unrealized Gain on Forward Contracts with a single counterparty that is not an Approved Commodity Contract Counterparty (other than Plant Entities) shall not exceed $1,000,000, (y) the amount of Eligible Net Unrealized Gain on Forward Contracts with a single party that is an Approved Commodity Contract Counterparty or Plant Entity shall not exceed $5,000,000, or any larger amount approved by Required Lenders and (z) the amount of Eligible Net Unrealized Gain on Forward Contracts shall be reduced by all disputes, offsets, and any margin delivered or posted by such counterparty to or for the benefit of the Borrower.”
(xviii) The definition of “Fixed Charge Coverage Ratio” is amended and restated as follows: |
““Fixed Charge Coverage Ratio”: (a)(i) the sum of EBITDA, plus cash equity investments received by Borrower from Parent, net of any and all dividends and distributions made by the Borrower to the Parent, during such period, minus (ii) the sum of maintenance Capital Expenditures and actual Interest Expense of working capital financings, divided by (b) the sum of actual scheduled principal payments made on Long-Term Indebtedness plus actual Interest Expenses on Long-Term Indebtedness incurred during any period, as shown on the combined financial statements of the Borrower.”
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(xix) The definition of “Guaranty Limit” is inserted in its appropriate alphabetical place as follows: |
““Guaranty Limit”: with respect to each Plant Entity set forth below, the applicable Guaranty Limit set forth opposite it below:
Plant Entity |
Guaranty Limit |
Green Plains Bluffton LLC |
$10,000,000 |
Green Plains Central City LLC |
$10,000,000 |
Green Plains Holdings II LLC |
$10,000,000 |
Green Plains Obion LLC |
$10,000,000 |
Green Plains Ord LLC |
$3,000,000 |
Green Plains Otter Tail LLC |
$3,000,000 |
Green Plains Shenandoah LLC |
$10,000,000 |
Green Plains Superior LLC |
$10,000,000 |
Green Plains Atkinson LLC |
$3,000,000” |
(xx) The definition of “Interest Period” is amended and restated in its entirety as follows: |
““Interest Period”: with respect to any LIBO Rate Loan:
(a) initially, the period commencing on the Borrowing Date or Conversion date, as the case may be, with respect to such LIBO Rate Loan and ending one, two, three, or (other than with respect to Seasonal Line Loans) six months thereafter, as selected by the Borrower in its irrevocable Notice of Borrowing or Notice of Continuation/Conversion, as the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last day of the immediately preceding Interest Period applicable to such LIBO Rate Loan and ending one, two, three, or (other than with respect to Seasonal Line Loans) six months thereafter, as selected by the Borrower by delivery of an irrevocable Notice of Continuation/Conversion to the Administrative Agent not less than three (3) Business Days prior to the last day of the then current Interest Period with respect thereto;
provided, that all of the foregoing provisions relating to Interest Periods are subject to the following:
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(i) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;
(ii) no Interest Period shall extend beyond the Termination Date or, in respect of Seasonal Line Loans, the earlier of the Termination Date and the last day of the applicable Seasonal Line Commitment Period; and
(iii) any Interest Period of one month or more that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the applicable calendar month.”
(xxi) The definition of “LC Participants” is amended and restated in its entirety as follows: |
““LC Participants”: with respect to any Credit, the collective reference to all of the Lenders with Commitments, other than the Issuing Lender thereof.”
(xxii) The definition of “Lenders” is hereby amended by adding the following at the end thereof: |
“For the avoidance of doubt, Lenders includes Seasonal Line Lenders.”
(xxiii) The definition of “Loan” is amended and restated in its entirety as follows: |
““Loan”: means any Revolving Loan, Seasonal Line Loan and any Swing Line Loan.”
(xxiv) The definition of “Loan Documents” is amended by deleting the phrase “the Term Intercreditor Agreement,” therefrom. |
(xxv) The definition of “Long-Term Indebtedness” is inserted in its appropriate alphabetical place as follows: |
“Long-Term Indebtedness”: all Indebtedness in respect of which the original maturity date is one year or more after the date of incurrence thereof, or which is otherwise classified as long-term debt on the consolidated balance sheet of the Borrower, in accordance with GAAP.”
(xxvi) The definition of “Plant Entities” is inserted in its appropriate alphabetical place as follows: |
““Plant Entities”: each of the entities set forth in Section IV of Schedule 1.0H hereto.”
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(xxvii) The definition of “Required Lenders” is amended and restated in its entirety as follows: |
““Required Lenders”: at any time, Lenders that hold Commitment Percentages and Seasonal Line Commitment Percentages (for purposes of this definition, both based on the sum of the Total Commitment plus the aggregate Seasonal Line Commitments) which aggregate more than fifty percent (50%), provided, that if any Lender shall be a Defaulting Lender at such time, then such Defaulting Lender’s Commitment and Seasonal Line Commitment shall be excluded from the determination of Required Lenders for so long as such Lender is a Defaulting Lender, provided further that for purposes of Section 3.8, the calculation of Required Lenders shall not include the Seasonal Line Commitment Percentages.”
(xxviii) The definitions of “Requested Seasonal Line Effective Date”, “Seasonal Line”, “Seasonal Line Commitment”, “Seasonal Line Commitment Amount”, “Seasonal Line Commitment Percentage”, “Seasonal Line Commitment Period”, “Seasonal Line Lender” and “Seasonal Line Loans” are inserted in their appropriate alphabetical places as follows: |
““Requested Seasonal Line Effective Date”: as defined in Section 4.1(c).
“Seasonal Line”: as defined in Section 4.1(c).
“Seasonal Line Commitment”: as defined in Section 4.1(c).
“Seasonal Line Commitment Amount”: as defined in Section 4.1(c).
“Seasonal Line Commitment Percentage”: as to any Seasonal Line Lender in respect of a Seasonal Line at any time, the percentage which such Seasonal Line Lender’s Seasonal Line Commitment then constitutes of the aggregate Seasonal Line Commitments in respect of such Seasonal Line (or, at any time after the applicable Seasonal Line Commitments shall have expired or terminated, the percentage which the aggregate principal amount of such Seasonal Line Lender’s Seasonal Line Loans under such Seasonal Line then outstanding constitutes of the aggregate principal amount of all Seasonal Line Loans under such Seasonal Line then outstanding).
“Seasonal Line Commitment Period”: in respect of any Seasonal Line, the period from and after the Requested Seasonal Line Effective Date through and including the earlier of the date that is 90 days thereafter or the Termination Date.”
“Seasonal Line Lender”: as defined in Section 4.1(c).
“Seasonal Line Loans”: as defined in Section 4.1(c).”
(xxix) The definition of “Termination Date” is amended and restated in its entirety as follows: |
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““Termination Date”: August 26, 2016 or, if such date shall not be a Business Day, the immediately preceding Business Day.”
(xxx) The definition of “Total Commitment” is amended and restated in its entirety as follows: |
““Total Commitment”: the total aggregate amount of all Commitments of all Lenders, as it may be reduced or increased in accordance with Section 4.1(a) and Section 4.1(b). The Total Commitment on August 27, 2013 is $125,000,000.”
(xxxi) The definitions of “Eligible Prepayments to Suppliers”, “Term Credit Agreement”, “Term Intercreditor Agreement” and “Term Lender” are hereby deleted in their entirety. |
(b) Section 2.1(a) is amended and restated in its entirety as follows: |
“(a) Subject to the terms and conditions hereof, each Lender severally agrees to make revolving credit loans (“Revolving Loans”) to the Borrower from time to time during the Commitment Period in an aggregate principal amount at any one time outstanding not to exceed such Lender’s Commitment minus the sum of (a) its Commitment Percentage of all LC Obligations at such time and (b) its Commitment Percentage of all Swing Line Loans outstanding at such time; provided, that after giving effect to any borrowing of Revolving Loans, (A) the Aggregate Outstanding Extensions of Credit shall not exceed the lesser of (i) the Borrowing Base at such time, (ii) the sum of the Total Commitment plus the aggregate Seasonal Line Commitments at such time and (iii) the Available Facility Amount at such time, (B) the Aggregate Outstanding Extensions of Credit (other than Seasonal Line Loans) shall not exceed the Total Commitment at such time, and (C) such Lender’s Commitment Percentage of the Aggregate Outstanding Extensions of Credit (other than Seasonal Line Loans) shall not exceed its Commitment at such time.”
(c) Section 2.2 is amended and restated in its entirety as follows: |
(a)Each borrowing of Revolving Loans and Seasonal Line Loans shall be made upon the Borrower’s irrevocable written request delivered to the Administrative Agent in the form of a Notice of Borrowing, which notice must be received by the Administrative Agent prior to 2:00 p.m. (New York City time) (i) in the case of a Base Rate Loan, on the date that is one Business Day prior to the requested Borrowing Date, and (ii) in the case of a LIBO Rate Loan, on the date which is three (3) Business Days prior to the requested Borrowing Date, specifying:
(i)the amount to be borrowed;
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(ii)the requested Borrowing Date;
(iii)the date the principal of such Revolving Loan or Seasonal Line Loan is due;
(iv)whether the borrowing is to be a LIBO Rate Loan, a Base Rate Loan or a combination thereof; and
(v)if the borrowing is to be entirely or partly of LIBO Rate Loans, the respective amounts of each such Type of Loan and the respective lengths of the initial Interest Periods therefor.
(b)The Administrative Agent will promptly notify each Lender of its receipt of any Notice of Borrowing and of the amount of such Lender’s Commitment Percentage or Seasonal Line Commitment Percentage, as applicable, of such borrowing, and shall deliver such other information contained therein as any Lender may request.
(c)(i) Each borrowing of Revolving Loans under the Commitments shall be in an amount equal to (x) in the case of Base Rate Loans, $250,000 or an integral multiple of $100,000 in excess thereof (or, if the then Available Commitments or the amount available hereunder for Loans are less than $250,000, such lesser amount) and (y) in the case of LIBO Rate Loans, $1,000,000 or an integral multiple of $500,000 in excess thereof.
(ii)Each borrowing of Seasonal Line Loans under the Seasonal Line Commitments shall be in an amount equal to (x) in the case of Base Rate Loans, $250,000 or an integral multiple of $100,000 in excess thereof (or, if the then Available Seasonal Line Commitments in respect of a Seasonal Line are less than $250,000, such lesser amount for such Seasonal Line) and (y) in the case of LIBO Rate Loans, $1,000,000 or an integral multiple of $500,000 in excess thereof.
(d)Subject to Section 6.2, as applicable, each Lender shall make the amount of its Commitment Percentage or Seasonal Line Commitment Percentage, as applicable, of such Loan available to the Administrative Agent for the account of the Borrower at the Administrative Agent’s office specified in Section 11.2 prior to 11:00 a.m., New York City time, on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative Agent. Such borrowing shall then be made available to the Borrower by the Administrative Agent by wire transfer to the account of the Borrower set forth on Schedule 2.2 (or such other accounts as may be notified in writing by the Borrower to the Administrative Agent from time to time) in like funds as received by the Administrative Agent.”
(d) Section 2.3(a) is amended and restated in its entirety as follows: |
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“(a) Subject to the terms and conditions hereof, the Swing Line Lender agrees to make a portion of the credit under this Agreement available to the Borrower by making swing line loans in United States Dollars (individually, a “Swing Line Loan” and collectively, the “Swing Line Loans”) to the Borrower from time to time during the Commitment Period in an aggregate principal amount at any one time outstanding not to exceed the Swing Line Commitment; provided, that no such Swing Line Loan shall be made if, after giving effect thereto, (i) the Aggregate Outstanding Extensions of Credit (other than Seasonal Line Loans) would exceed the Total Commitment or (ii) the Aggregate Outstanding Extensions of Credit would exceed the lesser of (i) the Borrowing Base at such time, (ii) the sum of the Total Commitment plus the aggregate Seasonal Line Commitments at such time and (iii) the Available Facility Amount at such time; provided, further that no Swing Line Loan shall be used to refinance an outstanding Swing Line Loan.”
(e) Section 2.3(i) is amended by inserting “(other than Seasonal Line Loans)” after the first and third references to “Base Rate Loans”. |
(f) Section 3.1(a) is amended and restated in its entirety as follows: |
“(a) Subject to the terms and conditions hereof, each Issuing Lender severally agrees to issue, amend and extend letters of credit (“Letters of Credit”) for the account of the Borrower from time to time during the Commitment Period, at the request of the Borrower in accordance with Section 3.3, in an aggregate face amount at any one time outstanding not to exceed the Total Commitment minus the Aggregate Outstanding Extensions of Credit (other than Seasonal Line Loans) at such time; provided, that after giving effect to any Letter of Credit or amendment or extension thereto requested by the Borrower, (i) the Aggregate Outstanding Extensions of Credit shall not exceed the lesser of (x) the Borrowing Base at such time, (y) the sum of the Total Commitment plus the aggregate Seasonal Line Commitments at such time and (z) the Available Facility Amount at such time, (ii) the Aggregate Outstanding Extensions of Credit (other than Seasonal Line Loans) shall not exceed the Total Commitment at such time, (iii) the aggregate outstanding amount of LC Obligations shall not exceed the Credits Commitment at such time, (iv) no Lender’s Commitment Percentage of the Aggregate Outstanding Extensions of Credit (other than Seasonal Line Loans) shall exceed its Commitment at such time, and (v) Section 3.2 shall not be contravened.”
(g) The title of Section 4.1, and Section 4.1(a) are amended and restated in their entirety as follows: |
“4.1 Increase, Reduction and Termination of Commitments; Seasonal Lines.
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(a) Reduction or Termination of Commitments. The Borrower shall have the right, upon not less than five Business Days’ notice to the Administrative Agent, to terminate the Commitments or, from time to time, to reduce the amount of the Commitments; provided, that no such termination or reduction shall be permitted if, after giving effect thereto and to any prepayments of the Loans made on the effective date thereof, the Aggregate Outstanding Extensions of Credit (other than Seasonal Line Loans) would exceed the Total Commitment then in effect. Any such reduction shall be in an amount equal to $1,000,000 or an integral multiple of $500,000 in excess thereof and shall reduce permanently the Commitments then in effect.”
(h) Section 4.1(b) is amended by (i) deleting “$55,000,000” and replacing it with “$75,000,000” and (ii) deleting in clause (i) “thirty (30)” and replacing it with “forty-five (45)”. |
(i) New Section 4.1(c) is inserted after Section 4.1(b) as follows: |
“(c)Seasonal Line. The Borrower may request additional commitments (the “Seasonal Line Commitments”) with a tenor of ninety (90) days to be available for Seasonal Line Loans, with the consent of the Administrative Agent, the Collateral Agent and the Seasonal Line Lenders, at any time prior to the Termination Date, in an aggregate principal amount of up to $50,000,000 at any one time (each, a “Seasonal Line”) as follows:
(i)Not more than forty-five (45) and not less than fifteen (15) days prior to the proposed effective date of such Seasonal Line Commitments, the Borrower may make a written request therefor to the Administrative Agent, who shall forward a copy of any such request to each of the Lenders. Each request by the Borrower pursuant to the immediately preceding sentence shall (x) specify a proposed effective date of such Seasonal Line Commitments (the “Requested Seasonal Line Effective Date”), (y) specify the aggregate amount of the requested Seasonal Line (the “Seasonal Line Commitment Amount”) which shall not be less than $25,000,000, provided that if two Seasonal Lines run concurrently (at any time), the second Seasonal Line shall not be less than $10,000,000, and (z) constitute an invitation to each Lender to provide a Seasonal Line Commitment.
(ii)Each Lender, acting it its sole discretion and with no obligation to provide a Seasonal Line Commitment pursuant to this Section 4.1(c), shall by written notice to the Borrower and the Administrative Agent advise the Borrower and the Administrative Agent whether or not such Lender agrees to all or any portion of such Seasonal Line. Any such Lender may, in its sole discretion, participate or decline to participate in each Seasonal Line. Promptly following the receipt of such
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acceptances or declinations, the Administrative Agent shall notify the Borrower of the results of such request to the Lenders.
(iii)If the aggregate amount of the Seasonal Line Commitments agreed to by the Lenders in accordance with clause (ii) of this Section 4.1(c) shall be less than the Seasonal Line Commitment Amount, the Borrower and the Administrative Agent (subject to the approval of the Agents) may offer to such additional Persons as may be agreed by the Borrower and the Administrative Agent (“New Seasonal Line Lenders”) the opportunity to make available such amount of Seasonal Line Commitments as may be required so that the aggregate Seasonal Line Commitments from the existing Lenders and Seasonal Line Commitments by the New Seasonal Line Lenders shall equal the Seasonal Line Commitment Amount. The effectiveness of all Seasonal Line Commitments are subject to the satisfaction of the following conditions: (A) each then existing Lender that so elects to participate in the Seasonal Line (the “Existing Seasonal Line Lenders”, and together with the New Seasonal Line Lenders, the “Seasonal Line Lenders”), each Seasonal Line Lender, the Administrative Agent and the Borrower shall have executed and delivered an agreement, substantially in the form of Exhibit E-1 (a “Seasonal Line Agreement”); (B) any fees and other amounts (including, without limitation, pursuant to Section 11.5) payable by the Borrower in connection with such Seasonal Line (including, without limitation, any upfront fees) shall have been paid; (C) any other amounts then due hereunder shall have been paid and (D) delivery of a certificate of a Responsible Officer of the Borrower as to the matters set forth in Section 6.2(b), Section 6.2(c), and Section 6.2(d).
(iv)Upon the Requested Seasonal Line Effective Date, Schedule 1.0 of the Seasonal Line Agreement, which shall reflect the Seasonal Line Commitments and Seasonal Line Commitment Percentages of the Seasonal Line Lenders at such time, shall be deemed added to Schedule 1.0B hereto without any further action or consent of any party. The Administrative Agent shall cause a copy of such revised Schedule 1.0B to be available to the Lenders.
(v)On the last day of the Seasonal Line Commitment Period for each Seasonal Line, the applicable Seasonal Line Commitments shall terminate and all Seasonal Line Loans under such Seasonal Line shall be repaid in full.
(vi)Notwithstanding anything to the contrary contained in this Agreement, no Revolving Loans shall be voluntarily repaid at any time when Seasonal Line Loans are outstanding. Any such voluntary repayments shall be applied to repay Seasonal Line Loans, pro rata.
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(vii)There shall not be more than two Seasonal Lines in any twelve (12) month period.
(viii)Seasonal Line Loans shall be denominated only in United States Dollars. Seasonal Line Loans may from time to time be (A) LIBO Rate Loans, (B) Base Rate Loans, or (C) a combination thereof, as determined by the Borrower and notified to the Administrative Agent in accordance with Section 2.2 and Section 4.4. No Seasonal Line Loan shall be made as a LIBO Rate Loan after the day that is one (1) month prior to the last day of the applicable Seasonal Line Commitment Period.
(ix)During the applicable Seasonal Line Commitment Period, the Borrower may borrow, prepay the Seasonal Line Loans in whole or in part, and reborrow, all in accordance with the terms and conditions hereof.
(x)After giving effect to each Seasonal Line, the sum of the Total Commitment plus the aggregate amount of Seasonal Line Commitments shall not exceed $250,000,000.
(xi)Seasonal Line Loans shall not be requested or borrowed at any time when Revolving Loans shall be available in accordance with Section 2.1.
(xii)The Borrower agrees to pay the Administrative Agent for the account of each Seasonal Line Lender a commitment fee for the period from and including the first day of the applicable Seasonal Line Commitment Period through but not including the last day of such Seasonal Line Commitment Period, computed at a rate equal to 0.375% on the average daily amount equal to the Seasonal Line Commitment of such Seasonal Line Lender minus such Lender’s Seasonal Line Commitment Percentage of the aggregate principal amount of outstanding Seasonal Line Loans during the period for which payment is made, payable monthly in arrears on the last Business Day of each month (or, if such day is not a Business Day, the next succeeding Business Day) and the last day of such Seasonal Line Commitment Period, commencing on the first of such dates to occur after the first day of the applicable Seasonal Line Commitment Period.
(xiii)Subject to the terms and conditions hereof, each Seasonal Line Lender in respect of a Seasonal Line severally agrees to make revolving credit loans (“Seasonal Line Loans”) to the Borrower from time to time during the applicable Seasonal Line Commitment Period in an aggregate principal amount at any one time outstanding not to exceed such Seasonal Line Lender’s Seasonal Line Commitment, provided that in no event shall any Seasonal Line Loans be made if after giving effect thereto, (A) the Aggregate Outstanding Extensions of Credit shall exceed the lesser of (i) the Borrowing Base at such time, (ii) the sum of the Total
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Commitment plus the aggregate Seasonal Line Commitments at such time and (iii) the Available Facility Amount at such time or (B) any Seasonal Line Lender’s Seasonal Line Commitment Percentage of the aggregate principal amount of Seasonal Line Loans under a Seasonal Line shall exceed its Seasonal Line Commitment under such Seasonal Line at such time.
(xiv)Once a Seasonal Line has become effective, the Borrower may not terminate or reduce the Seasonal Line Commitments thereunder prior to the last day of the applicable Seasonal Line Commitment Period.
(j) Section 4.2 is amended and restated in its entirety as follows: |
The Borrower agrees to pay the Administrative Agent for the account of each Lender a commitment fee for the period from and including the first day of the Commitment Period to but not including the Termination Date, computed at the Applicable Commitment Fee Rate on the average daily amount equal to the Commitment of such Lender minus such Lender’s Commitment Percentage of the Aggregate Outstanding Extensions of Credit (excluding the aggregate principal amount of Swing Line Loans and Seasonal Line Loans) during the period for which payment is made, payable monthly in arrears on the last Business Day of each month (or, if such day is not a Business Day, the next succeeding Business Day) and the Termination Date, commencing on the first of such dates to occur after the date hereof.”
(k) Section 4.3(d) is amended by inserting “and each Seasonal Line Loan” after “Revolving Loan”. |
(l) Section 4.4(a) is amended by deleting the proviso to the final sentence thereof and replacing it as follows: “provided, that no Base Rate Loan may be Converted into a LIBO Rate Loan after the date that is (x) one month prior to the Termination Date or (y) in respect of Seasonal Line Loans, one month prior to the last day of the applicable Seasonal Line Commitment Period.” |
(m) Section 4.6(a) is amended by inserting “, Seasonal Line Loans” after “Revolving Loans”. |
(n) Section 4.6(c) is amended by inserting “and Seasonal Line Commitments” after “Commitment”. |
(o) Section 4.6(e) is amended by inserting “or Exhibit G-1, as applicable” after “Exhibit G”. |
(p) Section 4.8 is amended and restated in its entirety as follows: |
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“(a) Subject to Section 4.15, if at any time: (i) the Aggregate Outstanding Extensions of Credit exceed the lesser of (x) the Borrowing Base at such time, (y) the sum of the Total Commitment plus the aggregate Seasonal Line Commitments at such time and (z) the Available Facility Amount at such time, then the Borrower shall, within two (2) Business Days after the occurrence thereof, prepay the Loans and/or Cash Collateralize Credits in an amount so that after giving effect to any such action, the Aggregate Outstanding Extensions of Credit do not exceed the lesser of (x) the Borrowing Base at such time, (y) the sum of the Total Commitment plus the aggregate Seasonal Line Commitments at such time and (z) the Available Facility Amount at such time, (ii) the Aggregate Outstanding Extensions of Credit (other than Seasonal Line Loans) exceed the Total Commitments at such time then the Borrower shall, within two (2) Business Days after the occurrence thereof, prepay the Revolving Loans and/or Cash Collateralize Credits in an amount so that after giving effect to any such action, the Aggregate Outstanding Extensions of Credit (other than Seasonal Line Loans) do not exceed the Total Commitment at such time; or (iii) the aggregate principal amount of Seasonal Line Loans under a Seasonal Line exceeds the applicable Seasonal Line Commitments at such time then the Borrower shall, within two (2) Business Days after the occurrence thereof, prepay the Seasonal Line Loans in an amount so that after giving effect to any such action, the aggregate principal amount of Seasonal Line Loans do not exceed the applicable Seasonal Line Commitments at such time.
(b) Each prepayment of Loans under Section 4.8(a) shall be applied first to Swing Line Loans, second to Seasonal Line Loans (as applicable) and third to Revolving Loans.”
(q) Section 4.11(a) is amended and restated in its entirety as follows: |
“(a)(i) Each borrowing of Revolving Loans hereunder, each participation in Swing Line Loans, each participation in Credits, each reduction of the Total Commitment and each payment of the fees under Section 3.4(a) and Section 4.2 shall be made pro rata according to the respective Commitment Percentages of the Lenders. Each payment (including each prepayment) by the Borrower on account of principal of and interest on the Revolving Loans and Reimbursement Obligations shall be made pro rata according to the respective outstanding principal amounts of the Revolving Loans and Reimbursement Obligations (or participations therein) then held by the Lenders, but principal payments shall be applied first to Reimbursement Obligations, second to Base Rate Loans, and third to LIBO Rate Loans.
(ii) Each borrowing of Seasonal Line Loans under a Seasonal Line hereunder and each payment of the fees under Section 4.1(c) in respect of a Seasonal Line shall be made pro rata according to the respective
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Seasonal Line Commitment Percentages of the applicable Seasonal Line Lenders under such Seasonal Line. Each payment (including each prepayment) by the Borrower on account of principal of and interest on the Seasonal Line Loans under a Seasonal Line shall be made pro rata according to the respective outstanding principal amounts of the Seasonal Line Loans under such Seasonal Line then held by the applicable Seasonal Line Lenders, but principal payments shall be applied first to Base Rate Loans, and second to LIBO Rate Loans.”
(r) Section 4.11(c) is amended by inserting after each reference to “Commitment Percentage” the following “or Seasonal Line Commitment Percentage, as applicable,”. |
(s) Section 4.13(b) is amended by inserting after each reference to “capital adequacy” the following “or liquidity”. |
(t) Section 4.15 is amended and restated in its entirety as follows: |
“The Borrower agrees to indemnify each Lender (and solely with respect to subsection (a) below, each prospective New Seasonal Line Lender) and to hold each Lender (and solely with respect to subsection (a) below, each prospective New Seasonal Line Lender) harmless from any actual loss or expense (including, without limitation, any loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender or prospective New Seasonal Line Lender) which such Lender (and solely with respect to subsection (a) below, each prospective New Seasonal Line Lender) may sustain or incur resulting from (a) any failure by the Borrower in making a borrowing of, Conversion into or Continuation of LIBO Rate Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, including, without limitation, LIBO Rate Loans that are Seasonal Line Loans that have been requested prior to the effectiveness of the applicable Seasonal Line Commitment Period, (b) any failure by the Borrower in making any prepayment after the Borrower has given a notice thereof in accordance with the provisions of this Agreement, or (c) the making of a payment or prepayment of LIBO Rate Loans (whether optional or mandatory, whether from proceeds of Collateral or otherwise) on a day which is not the last day of an Interest Period with respect thereto. A certificate as to any amounts payable pursuant to this Section 4.15 submitted to the Borrower by any Lender shall be presumptively correct in the absence of manifest error. This covenant shall survive the termination of this Agreement and the payment of the Loans, Reimbursement Obligations and all other amounts payable hereunder.”
(u) Sections 4.17(a) and (b) are amended by inserting “and its Seasonal Line Commitment, if any” after “Commitment”. |
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(v) Section 4.17(c)(i) is amended and restated in its entirety as follows: |
“(i) Fees pursuant to Section 4.2 shall cease to accrue on such Defaulting Lender’s unused Commitment until such time as such Lender is no longer a Defaulting Lender, at which time fees pursuant to Section 4.2 shall resume to accrue and be payable in accordance with Section 4.2. Fees pursuant to Section 4.1(c)(xiii) shall cease to accrue on such Defaulting Lender’s unused Seasonal Line Commitments until such time as such Lender is no longer a Defaulting Lender, at which time fees pursuant to Section 4.1(c)(xiii) shall resume to accrue and be payable in accordance with Section 4.1(c)(xiii).”
(w) Section 4.17(d) is amended by inserting after “Commitment Percentage” the following “or Seasonal Line Commitment Percentage, as applicable,”. |
(x) Section 4.17(e) is amended by inserting after each reference to “Commitments” the following “, Seasonal Line Commitments” and inserting after “Commitment Percentage”, “and Seasonal Line Commitment Percentage, as applicable,”. |
(y) New Section 5.25 is inserted after Section 5.24 as follows: |
“5.25 Plant Entities. (a) No Accounts Receivable owing by Plant Entities are outstanding for more than seven (7) days past the original invoice date of such Accounts Receivable.
(b) (i) No Plant Entity has guaranteed or otherwise provided credit support for Indebtedness (or other liabilities) of the Parent and/or any Affiliate of the Parent or such Plant Entity in an aggregate principal amount (in respect of such Indebtedness or liabilities so guaranteed or otherwise credit supported) greater than its Guaranty Limit and (ii) no Plant Entity or combination of Plant Entities have guaranteed or otherwise provided credit support for Indebtedness (or other liabilities) of the Parent and/or any Affiliate of the Parent or such Plant Entity in an aggregate principal amount (in respect of such Indebtedness or liabilities so guaranteed or otherwise credit supported) greater than $50,000,000.”
(z) Section 6.1(a)(ii) is amended and restated in its entirety as follows: |
“(ii) intentionally omitted;”
(aa) Section 6.1(b) is amended and restated in its entirety as follows: |
“(b) Intentionally Omitted.”
(bb) Section 6.2(e) is amended and restated as follows: |
“(e) Borrowing Availability. (i) The Aggregate Outstanding Extensions of Credit (other than Seasonal Line Loans), after giving effect to such
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Extension of Credit requested to be made on such date, shall not exceed the Total Commitment at such time, (ii) the Aggregate Outstanding Extensions of Credit, after giving effect to such Extension of Credit requested to be made on such date, shall not exceed the lesser of (x) the Borrowing Base at such time, (y) the sum of the Total Commitment plus the aggregate Seasonal Line Commitments at such time and (z) the Available Facility Amount at such time and (iii) the aggregate principal amount of Seasonal Line Loans under a Seasonal Line after giving effect to such Seasonal Line Loans requested to be made on such date, shall not exceed the applicable Seasonal Line Commitments at such time.”
(cc) The lead-in language in Section 7 is amended by inserting “or Seasonal Line Commitments” after “Commitments”. |
(dd) Section 7.1(a) is amended by inserting the following at the end thereof (before the “;”): “, along with a detailed written calculation of Working Capital of the Borrower as at the end of such fiscal month (in form and substance satisfactory to the Administrative Agent)”. |
(ee) Section 7.1(b) is amended by inserting after “each fiscal quarter of the Parent” the following: “(other than the fourth fiscal quarter)”. |
(ff) Section 7.2(c) is amended and restated in its entirety as follows: |
“(c)as soon as available, but in any event within ten (10) Business Days after the fifteenth (15th) and last day of each month, a Borrowing Base Report dated as of the close of business on such fifteenth (15th) and last day of each month (as applicable) (provided, that if such day is not a Business Day, such Borrowing Base Report shall be as of the Business Day preceding such fifteenth (15th) or last day of each month), showing the Borrowing Base and the Aggregate Outstanding Extensions of Credit as of the close of business on such date, provided, that in the event (x) the Borrowing Base is less than or equal to $80,000,000 and the sum of the Available Commitment plus the Available Seasonal Line Commitment equals less than five percent (5%) of the sum of the Total Commitment plus the aggregate Seasonal Line Commitments then in effect (in each case as determined on the date of the most recent Borrowing Base Report), the Borrowing Base Report shall be delivered within five (5) Business Days after the end of each week, or (y) the Borrowing Base is greater than $80,000,000 and the sum of the Available Commitment plus the Available Seasonal Line Commitment equals less than ten percent (10%) of the sum of the Total Commitment plus the aggregate Seasonal Line Commitments then in effect (in each case as determined on the date of the most recent Borrowing Base Report), the Borrowing Base Report shall be delivered within five (5) Business Days after the end of each week, provided further, that if a Borrowing Base Report delivered pursuant to clause (x) or clause (y) above evidences that neither clause (x) nor clause (y) remains
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applicable, a Borrowing Base Report that is then required to be delivered under this clause (c) (before giving effect to the provisos herein) within seven (7) days after the date of delivery of such Borrowing Base Report under such clause (x) or clause (y), shall not be required to be delivered;”
(gg) Section 7.16 is amended and restated in its entirety as follows: |
“7.16 Intentionally omitted.”
(hh) The lead-in language in Section 8 is amended by inserting “or Seasonal Line Commitments” after “Commitments”. |
(ii) Section 8.1(g) and (i) are amended and restated in their entirety as follows: |
“(g) Long-Term Indebtedness of the Borrower incurred in connection with the financing (including any refinancing) by the Borrower of its Capital Expenditures, equipment, or other fixed assets, so long as before and after giving effect thereto the Borrower shall be in compliance with Section 8.17(f);”; and
“(i) intentionally omitted.”
(jj) Section 8.2(k) is amended and restated in its entirety as follows: |
“(k)intentionally omitted; and”
(kk) Section 8.4 is amended and restated in its entirety as follows: |
“8.4 Limitation on Fundamental Changes.
Enter into any merger or consolidation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Convey all or substantially all of its property, business or assets, provided that Green Plains Essex Inc., an Iowa corporation (“Essex”) may merge with and into Green Plains Grain Company LLC, a Delaware limited liability company (“GPG”), so long as contemporaneously with the effectiveness thereof, GPG shall have delivered to the Administrative Agent (i) an agreement (in form and substance satisfactory to the Administrative Agent) under which GPG assumes all Obligations of Essex under this Agreement and the other Loan Documents and re-affirms the grant of Liens by GPG to the Collateral Agent in all of its personal property (including, without limitation, the assets acquired from Essex), (ii) a legal opinion of counsel to GPG (in form and substance satisfactory to the Administrative Agent) opining as to, among other things, the effectiveness of the merger, the assumption by GPG of the obligations (including, without limitation, the Obligations) of Essex, the validity of the Liens granted by GPG over its assets (including, without limitation, the assets acquired from Essex) and such other matters as the Required Lenders shall request and (iii) such
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other documentation (in form and substance satisfactory to the Required Lenders) as shall be requested by the Required Lenders.”
(ll) Section 8.6 is amended and restated in its entirety as follows: |
“8.6 Limitation on Restricted Payments.
Declare or pay any dividend or distribution (other than dividends or distributions payable solely in common stock or common membership interests of the Borrower or any Subsidiary) on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any shares of any class of Capital Securities of the Borrower or any Subsidiary or any warrants or options to purchase any such Capital Securities, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of the Borrower or any Subsidiary, or enter into any derivative or other transaction with any financial institution, commodities or stock exchange or clearinghouse (a “Derivatives Counterparty”) obligating the Borrower or any Subsidiary to make payments to such Derivatives Counterparty as a result of any change in market value of any such Capital Securities (such declarations, dividends, payments, setting apart, purchases, redemptions, defeasances, retirements, acquisitions and distributions, and such transactions with any Derivatives Counterparties, being herein called “Restricted Payments”); provided, that (a) any Subsidiary may make Restricted Payments to the Borrower and (b) during any Fiscal Year, (I) Restricted Payments by the Borrower to the Parent may be made to return temporary Investments (in the same form received) made by the Parent in the Borrower for the purpose of satisfying Section 8.17(c) so long as (i) before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing and no mandatory prepayment under Section 4.8 is then required, and (ii) the Borrower shall have delivered to the Administrative Agent a certificate in the form of Exhibit B certified by a Responsible Officer, showing that after giving effect thereto the Borrower shall be in compliance with the covenants in Section 8.17 and (II) any other Restricted Payments may be made so long as (i) the aggregate amount of all Restricted Payments in such Fiscal Year does not exceed fifty percent (50%) of the pre-tax Net Income of the Borrower during the preceding Fiscal Year, (ii) before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing and no mandatory prepayment under Section 4.8 is then required, and (iii) the Borrower shall have delivered to the Administrative Agent a certificate in the form of Exhibit B certified by a Responsible Officer, showing that after giving effect thereto the Borrower shall be in compliance with the covenants in Section 8.17 and clause II(i) above.”
(mm) Section 8.13 is amended and restated in its entirety as follows: |
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“8.13 Documentation Evidencing Long-Term Indebtedness and Governing Documents.
Amend or otherwise modify (a) any document, instrument and/or agreement evidencing any Long-Term Indebtedness of the Borrower to (i) modify the maturity date, or (ii) change any scheduled payments or mandatory prepayment dates or amounts, or (b) its Governing Documents, each without the prior written consent of the Administrative Agent.”
(nn) Section 8.17 is amended and restated in its entirety as follows: |
(a)Minimum Tangible Net Worth. Permit the combined Tangible Net Worth of the Borrower calculated as of the last day of any fiscal quarter of the Borrower to be less than the greater of (i) 21% of the sum of the then current Total Commitment plus the aggregate Seasonal Line Commitments and (ii) the sum of $23,000,000 plus to the extent positive, 50% of the Net Income for the most recently ended Fiscal Year (commencing with the Fiscal Year ending December 31, 2013);
(b)Leverage Ratio. Permit the Leverage Ratio to be greater than 6.0 to 1.0 as of the last day of any fiscal quarter of the Borrower;
(c)Working Capital. Permit the Working Capital of the Borrower calculated as of the last day of any fiscal quarter of the Borrower to be less than the sum of $18,000,000 plus to the extent positive, 50% of the Net Income for the most recently ended Fiscal Year (commencing with the Fiscal Year ending December 31, 2013);
(d)Consolidated Net Position. Permit the Consolidated Net Position, at any time, for (i) any type of Grain Inventory individually to exceed at any time 100,000 bushels, or (ii) all Grain Inventory in the aggregate to exceed at any time 200,000 bushels; for purposes of this clause (d), corn and milo shall be considered the same type of Grain Inventory;
(e)Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio for any consecutive four (4) fiscal quarter period to be less than 1.25 to 1.0 as of the last day of any fiscal quarter of the Borrower; and
(f)Maximum Long Term Capitalization. Permit, as at the last day of any fiscal quarter of the Borrower, the ratio of Long-Term Indebtedness (excluding Indebtedness under this Agreement) to Long-Term Indebtedness plus Tangible Net Worth to be greater than 0.40 to 1.0.”
(oo) Section 8.19 is amended and restated in its entirety as follows: |
“8.19 Maximum Capital Expenditures.
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Make, incur or commit to make (by way of the acquisition of securities of a Person or otherwise) any Capital Expenditures in excess of the following during the following periods:
Amount |
Fiscal Year Ending |
$15,000,000 in the aggregate |
December 31, 2013 |
$15,000,000 in the aggregate |
December 31, 2014 |
$8,000,000 in the aggregate |
December 31, 2015 |
$8,000,000 in the aggregate |
December 31, 2016 |
plus, for each such Fiscal Year, the amount of cash equity investments made by Parent in Borrower during such Fiscal Year (which cash equity investments are designated for purposes of this Agreement for use only on such Capital Expenditures); provided that the Capital Expenditure availability under this Section 8.19 for any Fiscal Year (excluding any “carry forward” availability from the prior Fiscal Year) that is not used by the Borrower or its Subsidiaries in such Fiscal Year may be “carried forward” to the next Fiscal Year, such “carry forward” availability to be used prior to utilization of the base Capital Expenditure availability in such next Fiscal Year.”
(pp) Section 9.1(d) is amended and restated in its entirety as follows: |
“(d) The Borrower shall default in the observance or performance of any other covenant or agreement contained in this Agreement or any other Loan Document (other than as provided in Section 9.1(a) through Section 9.1(c)), and such default shall continue unremedied for a period of fifteen (15) consecutive days from the earlier of (i) the date of delivery by the Administrative Agent to the Borrower of notice of the occurrence of such default or (ii) the date on which an officer of the Borrower knew or should have known of such default, provided, that in respect of Section 8.17, the Borrower shall be entitled to cure any non-compliance thereof by receiving sufficient cash equity Investments and delivering a new written calculation of the breached covenant (in form and substance satisfactory to the Administrative Agent) showing compliance therewith after giving effect to such cash equity Investments, within thirty (30) days after the test date provided for in each covenant therein, provided further, that during such thirty (30) day period, such non-compliance (as described under the immediately preceding proviso) shall not be a Default, but on the last day of such thirty (30) day period, if such cure shall not have been made in accordance with the foregoing, such non-compliance shall be an immediate Event of Default with no grace period, notwithstanding the fifteen (15) day grace period set forth above; or”.
(qq) The last paragraph of Section 9.1 is amended by inserting “and the Seasonal Line Commitments” after each reference to “Commitments”. |
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(rr) Section 9.3 is amended and restated as follows: |
Except as expressly provided in this Agreement, all amounts received or recovered under this Agreement or any other Loan Document, the exercise of remedies by the Administrative Agent or the Collateral Agent under any of the Loan Documents, liquidation of collateral or otherwise, shall be applied for the benefit of the Secured Parties in the following manner (or as otherwise provided in the Swap Intercreditor Agreement):
(i) First, to the payment, pro rata, of all Obligations consisting of out of pocket costs, reasonable expenses, reasonable fees, indemnities and other amounts payable to the Administrative Agent and the Collateral Agent in their respective capacities as such or incurred in connection with the administration, enforcement, preservation or exercise of any rights or remedies under this Agreement and the Loan Documents (including, without limitation, the reasonable fees and disbursements of their respective counsel and agents); |
(ii) Second, without duplication of amounts applied pursuant to clause First above, to the payment in full in cash, pro rata, of interest and fees constituting Obligations owing to Lenders (other than in their capacities as Swap Parties), in each case ratably in accordance with the respective amounts thereof then due and owing; |
(iii) Third, to the payment in full in cash, pro rata, of the principal amount of the Obligations owing to the Lenders (including, without limitation, principal of Loans, Reimbursement Obligations, and obligations to cash collateralize Credits) and any breakage, termination or other payments due to Swap Parties under Swap Contracts and any interest accrued thereon, in each case ratably in accordance with the respective amounts thereof then due and owing; |
(iv) Fourth, to the payment in full in cash, pro rata, of all other Obligations; and |
(v) Fifth, the balance to the Borrower or whosoever shall be lawfully entitled thereto.” |
(ll) Section 10.7 is amended by (i) inserting after “Commitment Percentages” the following “and Seasonal Line Commitment Percentages (both calculated based on the sum of the Total Commitment plus the aggregate Seasonal Line Commitments)” and (ii) inserting after “Commitments,” the following “the Seasonal Line Commitments,”. |
(mm) Section 10.12(a) is amended and restated in its entirety as follows: |
“(a)Each Lender hereby authorizes the Administrative Agent and the Collateral Agent to enter into each Repurchase Intercreditor Agreement on its behalf and agrees to be bound by the terms thereof.”
(nn) Section 11.1(a)(iii) is amended and restated in its entirety as follows: |
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“(iii) increase the Commitment, the Seasonal Line Commitment, the Commitment Percentage or Seasonal Line Commitment Percentage of any Lender, without the written consent of such Lender, or”
(oo) Section 11.1(b) is amended and restated in its entirety as follows: |
“(b) Notwithstanding anything to the contrary herein, any Lender that is a Defaulting Lender shall not have any right to approve or disapprove of any amendment, waiver or consent hereunder; provided, however, except as otherwise provided in Section 4.17, (i) the Commitment and if applicable, the Seasonal Line Commitment of such Defaulting Lender may not be increased or extended without the consent of such Defaulting Lender, (ii) the Commitment Percentage and if applicable the Seasonal Line Commitment Percentage of such Defaulting Lender may not be increased without the consent of such Defaulting Lender, and (iii) no payment to such Defaulting Lender shall be decreased or postponed without the consent of such Defaulting Lender.”
(pp) New Section 11.1(e) is inserted after Section 11.1(d) as follows: |
“(e) Notwithstanding anything to the contrary set forth in this Section 11.1, any amendment, waiver or modification of this Agreement or any other Loan Document that by its terms affects the rights or duties hereunder or thereunder of one Class of Lenders (but not the other Class of Lenders) may only be effected by an agreement in writing by the requisite percentage in interest of the affected Class of Lenders that would be required to consent thereto under this Section 11.1 if such Class of Lenders were the only Class of Lenders hereunder at the time.”
(qq) The addresses for notices to the Administrative Agent set forth in Section 11.2(a) are amended and restated in their entirety as follows: |
“The Administrative Agent:BNP Paribas
787 Seventh Avenue
New York, New York 10019
Attention: Karlien Zumpolle
Fax: 212.340.5340
Phone: 212.841.2797
Email:
with a copy to:Emmet, Marvin & Martin, LLP
120 Broadway
New York, New York 10271
Attention: Stephen J. Angelson, Esq.
Fax: 212.238.3100
Phone: 212.238.3102
Email: ”
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(rr) Section 11.6(g) is amended by inserting after the reference to “Federal Reserve Bank” the following “or any other central bank”. |
(ss) Section 11.7(a) is amended and restated in its entirety as follows: |
“(a)(i) If any Lender (a “Benefited Lender”) shall at any time receive any payment of all or part of its Revolving Loans or Reimbursement Obligations, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 9.1(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender with a Commitment, if any, in respect of such other Lender’s Revolving Loans or Reimbursement Obligations, or interest thereon, such Benefited Lender shall purchase for cash from the other Lenders with Commitments a participating interest in such portion of each such other Lender’s Revolving Loans or Reimbursement Obligations, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders with Commitments; except that with respect to any Lender with a Commitment that is a Defaulting Lender by virtue of such Lender failing to fund its Commitment Percentage of any Revolving Loan, Swing Line Loan, LC Obligation, or participation therein, such Defaulting Lender’s pro rata share of the excess payment shall be allocated to the Lender (or the Lenders, pro rata) that funded such Defaulting Lender’s Commitment Percentage; provided, however, that (i) if all or any portion of such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned to the Benefited Lender, to the extent of such recovery, but without interest and (ii) the provisions of this Section 11.7(a)(i) shall not be construed to apply to (x) any payment made pursuant to and in accordance with the express terms of this Agreement (including, without limitation, Section 4.1 and Section 4.11 and the application of funds arising from the existence of a Defaulting Lender) or (y) any payment obtained by a Lender with a Commitment as consideration for the assignment or sale of a participation in or other interest in any of its Loans (other than Seasonal Line Loans) and Reimbursement Obligations. The Borrower agrees that each Lender so purchasing a portion of another Lender’s Loan or Reimbursement Obligations may exercise all rights of payment (including, without limitation, rights of set-off) with respect to such portion as fully as if such Lender were the direct holder of such portion.
(ii) If any Seasonal Line Lender (a “Benefited Seasonal Line Lender”) shall at any time receive any payment of all or part of its Seasonal Line Loans or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 9.1(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Seasonal Line Lender, if any, in respect of such other Lender’s Seasonal Line Loans or interest thereon, such Benefited Seasonal Line Lender shall purchase for cash from the other Seasonal Line Lenders a participating interest in such portion of each such other Seasonal Line Lender’s Seasonal Line Loans, or shall provide such other Seasonal Line Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such Benefited Seasonal Line Lender to share the excess payment or
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benefits of such collateral or proceeds ratably with each of the Seasonal Line Lenders; except that with respect to any Seasonal Line Lender that is a Defaulting Lender by virtue of such Lender failing to fund its Seasonal Line Commitment Percentage of any Seasonal Line Loan, such Defaulting Lender’s pro rata share of the excess payment shall be allocated to the Seasonal Line Lender (or the Seasonal Line Lenders, pro rata) that funded such Defaulting Lender’s Seasonal Line Commitment Percentage; provided, however, that (i) if all or any portion of such excess payment or benefits is thereafter recovered from such Benefited Seasonal Line Lender, such purchase shall be rescinded, and the purchase price and benefits returned to the Benefited Seasonal Line Lender, to the extent of such recovery, but without interest and (ii) the provisions of this Section 11.7(a)(ii) shall not be construed to apply to (x) any payment made pursuant to and in accordance with the express terms of this Agreement (including, without limitation, Section 4.1 and Section 4.11 and the application of funds arising from the existence of a Defaulting Lender) or (y) any payment obtained by a Seasonal Line Lender as consideration for the assignment or sale of a participation in or other interest in any of its Seasonal Line Loans. The Borrower agrees that each Seasonal Line Lender so purchasing a portion of another Seasonal Line Lender’s Loan may exercise all rights of payment (including, without limitation, rights of set-off) with respect to such portion as fully as if such Seasonal Line Lender were the direct holder of such portion.”
(tt) The preamble to the Credit Agreement is amended by deleting “ABN AMRO CAPITAL USA LLC” and replacing it with “ING CAPITAL LLC” and all references in the Loan Documents to the Documentation Agent shall be references to ING CAPITAL LLC in such capacity. |
(uu) Schedules 1.0B, 1.0C and 1.0H are amended and restated in its entirety as set forth on Annex A hereto. |
(vv) Exhibits A and A-1 are amended as set forth on Annex B hereto. |
(ww) Annex I and II are amended and restated in their entirety as set forth on Annex C hereto. |
(xx) Exhibit G-1 is inserted after Exhibit G as set forth on Annex D hereto. |
(yy) Exhibit B is amended and restated in its entirety as set forth on Annex E hereto. |
(zz) Exhibit E-1 is inserted after Exhibit E as set forth on Annex F hereto. |
SECTION 2. Departing and New Lender Provisions. |
(a) |
On the Effective Date (immediately prior to giving effect to this Third Amendment (and for the avoidance of doubt, each of the parties hereto acknowledges that the Departing Lenders (as defined below) shall not be deemed to have consented to any of the amendments to the Existing Credit Agreement set forth in Section 1 hereof and none of such amendments shall be effective until the requirements of this Section 2(a) have been satisfied)), the Borrower shall repay in full all outstanding Loans and other Obligations (including, without
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limitation, any amounts payable under Section 4.15 of the Credit Agreement in connection with such repayment) owing to ABN AMRO Capital USA LLC, U.S. Bank National Association, AGCountry Farm Credit Services, PCA and BOKF, N.A. d/b/a Bank of Oklahoma (together, the “Departing Lenders”) and upon such repayment, each Departing Lender shall cease to be a Lender, each Departing Lender’s Commitment shall terminate and each Departing Lender’s rights and obligations under the Loan Documents (and the rights under the Repurchase Intercreditor Agreement) shall terminate except for any such rights under Sections 4.13, 4.14 and 11.5 of the Credit Agreement and any other rights that expressly survive such termination. |
(i) |
All payments made under clause (i) above shall be retained solely by the Departing Lenders and shall not be subject to the pro rata sharing provisions set forth in the Loan Documents. |
(b) |
ING Capital LLC (the “New Lender”), has agreed to make its Commitment as governed by the Credit Agreement on the terms and subject to the conditions set forth therein and in this Third Amendment. Effective upon the Effective Date (as defined in Section 3 below), the Commitments for each Lender (including the New Lender) shall be as set forth in Schedule 1.0B to the Credit Agreement. |
(c) |
The New Lender hereby agrees to make Revolving Loans to the Borrower and participate in Credits and Swing Line Loans for the account of, the Borrower, from time to time until the Termination Date in an aggregate principal amount at any one time outstanding not to exceed its Commitment (as set forth on Schedule 1.0B to the Credit Agreement). From and after the Effective Date, the New Lender shall be a party to the Credit Agreement and, to the extent provided in this Agreement, have the rights and obligations of a Lender under the Credit Agreement and under the other Loan Documents and shall be bound by the provisions thereof. |
(i) |
The New Lender shall hold an undivided interest in and to (A) all the rights and obligations of a Lender under the Credit Agreement in connection with its new Commitment in the principal amount set forth on Schedule 1.0B to the Credit Agreement and (B) all rights and obligations of a Lender in connection therewith under the other Loan Documents. |
(d) |
The New Lender acknowledges and agrees that no Lender party to the Existing Credit Agreement (A) has made any representation or warranty or shall have any responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, any other Loan Documents or any other instrument or document furnished pursuant thereto or in connection therewith or (B) has made any representation or warranty or has any responsibility with respect to the financial condition of the Borrower or any other obligor or the performance or observance by the Borrower or any obligor of any of their respective obligations under the Credit Agreement or any other Loan Documents or any other instrument or document furnished pursuant hereto or thereto. |
(i) |
The New Lender (A) represents and warrants that it is legally authorized to enter into this Third Amendment, (B) confirms that it has received a copy of the Existing Credit Agreement, together with copies of the financial statements delivered pursuant to
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Section 7.1 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Third Amendment, (C) agrees that it will, independently and without reliance upon the other Lenders or the Administrative Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto or in connection herewith or therewith, (D) appoints and authorizes the Administrative Agent and Collateral Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto as are delegated to the Administrative Agent and Collateral Agent by the terms thereof, together with such powers as are incidental thereto, (E) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender including, if it is organized under the laws of a jurisdiction outside the United States, its obligation pursuant to subsection 4.14(f) of the Credit Agreement and (F) agrees that it will be bound by the provisions of the Repurchase Intercreditor Agreement. |
SECTION 3. Effectiveness of Amendment. |
This Third Amendment shall become effective on the date (the “Effective Date”) on which:
(a) each of the Borrower, the Administrative Agent, the Swing Line Lender, the Issuing Lender and the Lenders (including the Departing Lenders and the New Lender) shall have duly executed this Third Amendment; |
(b) the Borrower shall have paid to the Departing Lenders all amounts owing under Section 2(a) above; |
(c) the Borrower shall have paid to the Administrative Agent for its own account in immediately available funds, the fees to be paid to BNP Paribas for its own account as set forth in the fee letter dated August 2, 2013 among the Administrative Agent, the Lead Arranger and the Borrower; |
(d) the Borrower shall have paid to the Administrative Agent for the account of each Lender (other than Departing Lenders, but including the New Lender) a fully earned, non-refundable upfront fee in immediately available funds, in an amount for each Lender equal to such Lender’s Commitment (after giving effect to this Third Amendment) multiplied by (i) 0.75% if such Commitment is equal to or greater than $30,000,000 and (ii) 0.50% if such Commitment is less than $30,000,000; |
(e) the Borrower shall have delivered to the Administrative Agent a report as of the date hereof (in form and substance satisfactory to the Administrative Agent), setting forth each guarantee or other credit support provided by each Plant Entity for Indebtedness (or other liabilities) of the Parent and/or any Affiliate of the Parent or such Plant Entity, and the principal
- 29 -
amount of such Indebtedness or liabilities so guaranteed or otherwise credit supported, certified as true and correct by a Responsible Officer; and |
(f) the Borrower shall have delivered to the Administrative Agent such opinions of counsel and authorization and organizational documents, in each case as the Administrative Agent or the Lenders shall request. |
SECTION 4. Effect of Amendment; Ratification; Representations; etc. |
(a) On and after the Effective Date, this Third Amendment shall be a part of the Credit Agreement, all references to the Credit Agreement in the Credit Agreement and the other Loan Documents shall be deemed to refer to the Credit Agreement as amended by this Third Amendment, and the term “this Agreement”, and the words “hereof”, “herein”, “hereunder” and words of similar import, as used in the Credit Agreement, shall mean the Credit Agreement as amended hereby. |
(b) Except as expressly set forth herein, this Third Amendment shall not constitute an amendment, waiver or consent with respect to any provision of the Credit Agreement and the Credit Agreement is hereby ratified, approved and confirmed in all respects. |
(c) In order to induce the Administrative Agent and the Lenders to enter into this Third Amendment, each Borrower represents and warrants to the Administrative Agent and the Lenders that before and after giving effect to the execution and delivery of this Third Amendment: |
(i) the representations and warranties of such Borrower set forth in the Credit Agreement and in the other Loan Documents are true and correct in all material respects as if made on and as of the date hereof, except for those representations and warranties that by their terms were made as of a specified date which were true and correct on and as of such date; and |
(ii) no Default or Event of Default has occurred and is continuing. |
(d) Notwithstanding anything to the contrary contained in the Credit Agreement or in any other Loan Document, any Collateral or Loan Document which is or may be released (or terminated) upon termination of all Commitments (among other things) shall not be released until the Seasonal Line Commitments are also terminated and all Seasonal Line Loans shall have been repaid in full. |
This Third Amendment may be executed by one or more of the parties to this Third Amendment on any number of separate counterparts (including by facsimile or email transmission of signature pages hereto), and all of said counterparts taken together shall be deemed to constitute one and the same agreement. A set of the copies of this Third Amendment signed by all the parties shall be lodged with the Borrower and the Administrative Agent.
- 30 -
Any provision of this Third Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
THIS THIRD AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
EACH OF THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS THIRD AMENDMENT AND FOR ANY COUNTERCLAIM THEREIN.
[Remainder of Page Intentionally Left Blank; Signature Pages Follow]
- 31 -
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be duly executed as of the day and year first above written.
GREEN PLAINS GRAIN COMPANY LLC, as a Borrower
By:Green Plains Renewable Energy, Inc., its sole member
By:/s/ Patrich Simpkins
Name: Patrich Simpkins
Title: EVP Finance and Treasurer
GREEN PLAINS GRAIN COMPANY TN LLC, as a Borrower
By:Green Plains Grain Company LLC, its sole member
By:/s/ Patrich Simpkins
Name: Patrich Simpkins
Title: EVP Finance and Treasurer
GREEN PLAINS ESSEX INC.,
as a Borrower
By:/s/ Patrich Simpkins
Name: Patrich Simpkins
Title: EVP Finance and Treasurer
BNP PARIBAS, as Administrative Agent, Swing Line Lender, Issuing Lender and a Lender
By:/s/ William B. Murray
Name: William B. Murray
Title: Managing Director
By:/s/ Karlien Zumpolle
Name: Karlien Zumpolle
Title: Vice President
BANK OF THE WEST, as a Lender
By:/s/ Charles Greenway
Name: Charles Greenway
Title: Vice President
ABN AMRO CAPITAL USA LLC, as a Departing Lender
By:/s/ Javier Ramirez
Name: Javier Ramirez
Title: Vice President
By:/s/ Urvashi Zutshi
Name: Urvashi Zutshi
Title: Managing Director
RABO AGRIFINANCE, INC., as a Lender
By:/s/ Judy Cochran
Name: Judy Cochran
Title: Assistant Vice President
FARM CREDIT BANK OF TEXAS, as a Lender
By:/s/ Alan Robinson
Name: Alan Robinson
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION, as a Departing Lender
By:/s/ Scott A. Meradith
Name: Scott A. Meradith
Title: Vice President
MACQUARIE BANK LIMITED, as a Lender
By:/s/ Andrew McGrath
Name: Andrew McGrath
Title: Executive Director
By:/s/ Nathan Booker
Name: Nathan Booker
Title: Associate Director
(Macquarie POA Ref: #938 dated 22 November 2012, signed in Sydney)
AGCOUNTRY FARM CREDIT SERVICES, PCA, as a Departing Lender
By:/s/ James F. Baltezore
Name: James F. Baltezore
Title: Vice President
BOKF, N.A. dba BANK OF OKLAHOMA, as a Departing Lender
By:/s/ J. Anderson
Name: J. Anderson
Title: Vice President
ING CAPITAL LLC, as the New Lender
By:/s/ Daniel W. Lamprecht
Name: Daniel W. Lamprecht
Title: Managing Director
ANNEX A
SCHEDULE 1.0B
Lenders, Commitments, and Applicable Lending Offices
Lender and Applicable Lending Office |
Commitment |
Applicable Lending Office: 787 Seventh Avenue New York, New York 10019
Operations/Administrative Contact: Marla Jennings Phone: (214) 953-9314 Fax: (214) 969-9332 Email: marla.jennings@us.bnpparibas.com
Account Officer: Karlien Zumpolle Phone: (214) 841-2797 Fax: (214) 969-9332 Email: karlien.zumpolle @us.bnpparibas.com
|
|
Bank of the West Applicable Lending Office: 2001 Pine Lake Rd., Suite 350 Lincoln, NE 68512
Operations/Administrative Contact: Sandra Fox 1977 Saturn Street Monterey Park, CA 91755 Phone: (323) 727-3065 Email: sandra.fox@bankofthewest.com
Account Officer: Charles Greenway Phone: (402) 473-0851 Email: charles.greenway@bankofthewest.com
|
$13,500,000.00 |
Rabo Agrifinance, Inc. Applicable Lending Office: 12443 Olive Blvd., Suite 50 St. Louis, MO 63141
Operations/Administrative Contact: Ty Beard/Brian Chackes (Participations Desk-Servicing; Re: Green Plains #10346400) Phone: (314) 817-8000 Email: agservicing@raboag.com
Account Officer: Mark Reinert Phone: (970) 397-0859 Email: mark.reinert@raboag.com
|
$27,000,000.00 |
Farm Credit Bank of Texas Applicable Lending Office: 4801 Plaza on the Lake Drive Austin, TX 78746
Operations/Administrative Contact: Sarah Shumate Phone: (512) 465-0621 Email: sarah.shumate@farmcreditbank.com
Account Officer: Alan Robinson Phone: (512) 465-0627 Email: alan.robinson@farmcreditbank.com
|
$20,000,000.00 |
Macquarie Bank Limited Applicable Lending Office: 1 Martin Place Sydney NSW 2000 Australia
Operations/Administrative Contact: 125 West 55th Street New York, NY 10019 Paul Casey Phone: (212) 231-2122 Email: scfcollateralmanagement@macquarie.com
Account Officer: Darren Muller Phone: (212) 231-2138 Email: darren.muller@macquarie.com
|
$15,000,000.00 |
ING Capital LLC Applicable Lending Office: 1325 Avenue of the Americas New York, NY 10019
Operations/Administrative Contact: 1325 Avenue of the Americas New York, NY 1 0019 |
$27,000,000.00 |
Frenklin Christian Phone: (646) 424-8244 Email:
Account Officer: Evelin Herrera Phone: (646) 424-6457 Email:
|
|
Total: |
$125,000,000.00 |
Schedule 1.0C
Approved Storage Locations
I. |
Owned Storage Locations |
(a) Iowa Locations |
(1) |
Everly (701 N Main St.) |
(2) |
Greenville (1111 Railroad Ave.) |
(3) |
Langdon (2980 254th Ave.) |
(4) |
Spencer (701 4th Ave. W) |
(5) |
Milford (1110 P Ave.) |
(6) |
Gruver (300 Agricultural Ave.) |
(7) |
Superior (603 Railroad Ave.) |
(8) |
Essex (411 North St.) |
(b) Missouri Locations |
(1) |
Hopkins (Highway 148) |
(c) Tennessee Locations |
(1) |
Como (10870 Highway 54) |
(2) |
Dyer (347 South Main St.) |
(3) |
Kenton (201 Church St.) |
(4) |
Trenton (102 Wilson St.) |
(5) |
Union City (315 W Martin Luther King Dr.) |
II. |
Leased Storage Locations (with an executed Landlord Waiver and Consent Agreement) |
(a) Tennessee Locations |
(1) |
Peyton Harper – Trenton (25 Gibson Road) |
(2) |
Eric Partee – Trenton (408 W. Eaton St.) |
(3) |
Crop Production Services, Inc. – Union City (Tract 1, N Fifth St.) |
(4) |
Green Plains Obion LLC – Rives (1918 McDonald Road) |
(b)Indiana Locations
(1)Green Plains Bluffton, LLC – 11441 S. Adams Street, Bluffton, IN 46714
Exhibit 10.3
SCHEDULE 1.0H
Counterparty Limits
I. Tier I — Greater than or equal to $7,000,000, but less than or equal to $15,000,000
Name
(a) |
CHS/CHS Oilseed Processing |
(b) |
Tyson Foods Inc. |
(c) |
ADM |
(d) |
Lansing Grain |
(e) |
Cargill |
(f) |
Valero |
(g) |
Bunge Corporation |
(h) |
AGP |
II. Tier II — Greater than $1,000,000, but less than $7,000,000
Name
(a) |
Rembrandt Enterprises (Grain) |
(b) |
Lathrop Feed & Grain |
(c) |
Penn Pak Inc. |
(d) |
Bartlett Grain Co. LP |
(e) |
Cottonwood Trading |
(f) |
ADM Growmark |
(g) |
Central State Enterprises |
(h) |
Lifeline Foods Inc. |
(i) |
Marshall Durbin Company |
(j) |
Pilgrim's Pride Corporation |
(k) |
FC Feed Everly, Farnhamville |
(l) |
Interstate Commodities Inc. |
III. Tier III — Less than or equal to $1,000,000
(a) |
Any commodity contract counterparty that is not an Approved Commodity Contract Counterparty |
IV.Plant Entities
|
Plant Location |
Ethanol Production Capacity (mmgy)
|
Counterparty Limit |
Green Plains Bluffton LLC |
Bluffton, Indiana |
120 |
$10,000,000 |
Green Plains Central City LLC |
Central City, Nebraska |
100 |
$9,000,000 |
Green Plains Holdings II LLC |
Lakota, Iowa |
100 |
$9,000,000 |
Green Plains Obion LLC |
Obion, Tennessee |
120 |
$10,000,000 |
Green Plains Ord LLC |
Ord, Nebraska |
55 |
$5,000,000 |
Green Plains Otter Tail LLC |
Otter Tail, Minnesota |
60 |
$5,000,000 |
Green Plains Holdings II LLC |
Riga, Michigan |
60 |
$5,000,000 |
Green Plains Shenandoah LLC |
Shenandoah, Iowa |
65 |
$6,000,000 |
Green Plains Superior LLC |
Superior, Iowa |
60 |
$5,000,000 |
Green Plains Atkinson LLC |
Atkinson, Nebraska |
50 |
$5,000,000 |
Total |
|
790 |
$69,000,000 |
|
Subject to Aggregate Plant Entity Cap: |
$50,000,000 |
ANNEX B
EXHIBIT A
FORM OF BORROWING BASE REPORT
Date:[_________], 20[__]
BNP Paribas, as Administrative Agent
787 Seventh Avenue
New York, New York 10019
Attention: Ms. Karlien Zumpolle
For:Credit Agreement, dated as of October 28, 2011
Ladies and Gentlemen:
This certificate is delivered pursuant to Section 6.1(d) and/or 7.2(c) of the Credit Agreement, as applicable, dated as of October 28, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Green Plains Grain Company LLC, Green Plains Grain Company TN LLC, and Green Plains Essex Inc. (collectively, jointly and severally, the “Borrower”), the Lenders from time to time parties thereto, BNP Paribas, as Administrative Agent and Collateral Agent (in such capacity, together with its successors and assigns, the “Agent”). Capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Credit Agreement.
The undersigned Responsible Officer hereby certifies to the Agent and the Lenders that:
(a)such Responsible Officer is qualified and acting in the office of the Borrower indicated below such Responsible Officer’s name below;
(b)the information reflected on the reports and schedules attached hereto are true and correct in all material respects as of the date hereof;
(c)the amounts indicated on Annex I attached hereto were, to the best of my knowledge, true and accurate as of the date of preparation;
(d) the Borrower has not exceeded the maximum allowed Consolidated Net Position for any type of Grain Inventory individually or all Grain Inventory in the aggregate;
(e)no Accounts Receivable owing by Plant Entities which are included in the Borrowing Base have been outstanding for more than seven (7) days from the original invoice date;
(f)with respect to each Plant Entity, (i) such Plant Entity is in compliance with all of its material agreements and obligations, (ii) such Plant Entity has not guaranteed or otherwise provided credit support for Indebtedness (or other liabilities) of the Parent and/or any Affiliate of the Parent or such Plant Entity in an aggregate principal amount (in respect of such Indebtedness
or liabilities so guaranteed or otherwise credit supported) greater than its Guaranty Limit, (iii) no Plant Entity or combination of Plant Entities have guaranteed or otherwise provided credit support for Indebtedness (or other liabilities) of the Parent and/or any Affiliate of the Parent or such Plant Entity in an aggregate principal amount (in respect of such Indebtedness or liabilities so guaranteed or otherwise credit supported) greater than $50,000,000, (iv) no breach or other default has occurred and is continuing under any of such Plant Entity’s financing agreements or other material agreements, and (v) there has been no development or event which has had or could reasonably be expected to have a material adverse effect on the business, assets, income, property, liabilities (actual or contingent), operations or condition (financial or otherwise), or prospects of such Plant Entity, such that, such Plant Entity would be required to provide notice of such development or event under any of such Plant Entity’s financing agreements or other material agreements;
(g)no Default or Event of Default has occurred and is continuing;
(h)no event or development which has had or could reasonably be expected to have a Material Adverse Effect has occurred; [; and]
[(f) the amounts indicated on the Position Report attached hereto as Annexes III and IV, to the best of my knowledge, true and accurate as of the date of preparation.]
[Remainder of page intentionally blank; signature page follows.]
The foregoing certifications together with the supporting information and reports with respect to which this Borrowing Base Report is delivered, are made and delivered as of the date first written above.
GREEN PLAINS GRAIN COMPANY LLC, as a Borrower
By:Green Plains Renewable Energy, Inc., its sole member
By:
Name:
Title:
GREEN PLAINS GRAIN COMPANY TN LLC, as a Borrower
By:Green Plains Grain Company LLC, its sole member
By:
Name:
Title:
GREEN PLAINS ESSEX INC.,
as a Borrower
By:
Name:
Title:
c/o Green Plains Grain Company LLC
450 Regency Parkway, Suite 400
Omaha, Nebraska 68114
Attention: Mr. Jerry Peters
Fax: (402) 884-8776
Phone: (402) 315-1603
Email: jerry.peters@gpreinc.com
ANNEX I
TO
BORROWING BASE REPORT
Borrowing Base
As of [________], 20[__]
|
Gross Value |
Advance Rate |
Borrowing Base Value |
I. Collateral Type |
|
|
|
1.Eligible Cash Collateral, less unpaid checks, overdrafts, or other unpaid amounts related thereto for which any Person has a prior unpaid claim, plus |
$[_______] |
100% |
$[_______] |
2.Eligible Net Liquidation Value in Brokerage Accounts, plus |
$[_______] |
100% |
$[_______] |
3.Eligible Net Liquidation Value in Third Party Brokerage Accounts, plus |
$[_______] |
90% |
$[_______] |
4.Eligible Accounts Receivable, plus |
$[_______] |
85% |
$[_______] |
5.Eligible Accounts Receivable that are backed by a letter of credit in a form and from an issuing bank, in each case, as approved by the Administrative Agent in its Permitted Discretion, plus |
$[_______] |
90% |
$[_______] |
6.Eligible Grain Inventory evidenced by warehouse receipts, plus |
$[_______] |
90% |
$[_______] |
7.Eligible Grain Inventory not evidenced by warehouse receipts, plus |
$[_______] |
85% |
$[_______] |
8.Eligible Non-Grain Inventory, subject to permitted product approval by the Administrative Agent, plus |
$[_______] |
75% |
$[_______] |
9.Eligible Affiliate Accounts Receivable, plus |
$[_______] |
85% |
$[_______] |
10.Eligible Grain Inventory In Transit |
|
|
$[_______] |
(a) Unadjusted Eligible Grain Inventory In Transit |
$[_______] |
85% |
$[_______] |
(b) 10% of Borrowing Base |
$[_______] |
|
|
11.Eligible Net Unrealized Gain on Forward Contracts |
|
|
$[_______] |
ANNEX I - 1
(a) Unadjusted Eligible Net Unrealized Gain on Forward Contracts |
$[_______] |
75% |
$[_______] |
(b) 30% of Borrowing Base |
$[_______] |
|
|
12.Less, all payables related to Grain Inventory which are subject to any statutory liens |
$[_______] |
100% |
$[_______] |
13.Less, all prepayments from Borrower’s customers |
$[_______] |
100% |
$[_______] |
14.Less, the amount of any Obligations owed to a Swap Party under a Swap Contract with Borrower which Obligations are secured pursuant to the Security Agreement |
$[_______] |
100% |
$[_______] |
15.Less, the amount of any excess Eligible Accounts Receivable of Affiliates and Eligible Net Unrealized Gain on Forward Contracts of Affiliates over the applicable cap (15(d) minus 15(e), to the extent the difference is a positive number) |
|
100% |
$[_______] |
(a) Eligible Affiliate Accounts Receivable |
$[_______] |
85% |
$[_______] |
(b) Intentionally omitted |
|
|
|
(c) Eligible Net Unrealized Gain on Forward Contracts of Affiliates |
$[_______] |
75% |
$[_______] |
(d) Aggregate total of Eligible Accounts Receivable and Eligible Net Unrealized Gain on Forward Contracts of Affiliates(Sum of 15(a) plus 15(c)) |
|
|
$[_______] |
(e) Applicable cap |
|
|
$50,000,000 |
16.Total Collateral (Sum of I.1 through I.11, minus I.12 through I.15) |
|
|
$[_______] |
II. Extensions of Credit |
|
|
|
1.Letters of Credit |
|
|
$[_______] |
2.Revolving Loans |
|
|
$[_______] |
3.Swing Line Loans |
|
|
$[_______] |
4. Seasonal Line Loans |
|
|
$[_______] |
5.Subtotal (II.1 + II.2 + II.3 + II.4) |
|
|
$[_______] |
ANNEX I - 2
ANNEX I - 3
ANNEX II
TO
BORROWING BASE REPORT
Enclosed with this Borrowing Base Report are all necessary schedules, supporting information, and reports with details for the above, pursuant to the requirements under Section 1.1 of the Credit Agreement.
ANNEX II - 1
ANNEX III
TO
BORROWING BASE REPORT
Position Report
A. Consolidated Net position for all Grain Inventory in the aggregate |
bushels* |
||
B. Net Position for each type of Grain Inventory individually |
|
||
Corn |
bushels* |
||
|
Aggregate Long Position for Corn and Milo |
bushels |
|
|
Aggregate Short Position for Corn and Milo |
bushels |
|
Soybeans |
bushels* |
||
|
Aggregate Long Position for Soybeans |
bushels |
|
|
Aggregate Short Position for Soybeans |
bushels |
|
Wheat |
bushels* |
||
|
Aggregate Long Position for Wheat |
bushels |
|
|
Aggregate Short Position for Wheat |
bushels |
|
|
|
||
|
|
|
|
|
|
|
|
[Each other type of Grain Inventory that Borrower and/or any Subsidiary has contracted to sell (whether by sale of a contract on a commodities exchange or otherwise) or which the Borrower and/or any Subsidiary will deliver in an exchange or under a Swap Contact] |
bushels* |
||
|
[Aggregate Long Position for each other type of Grain Inventory individually] |
bushels |
|
|
[Aggregate Short Position for each other type of Grain Inventory individually] |
bushels |
ANNEX III - 1
* If the Consolidated Net Position is an amount less than zero, it shall be expressed in each case as a positive number.
ANNEX III - 2
Exhibit 10.3
ANNEX IV
TO
BORROWING BASE REPORT
Summary of Commodity Repurchase Agreements
Type of Grain Inventory: |
[_______] |
|
1. |
Aggregate number of bushels of [insert type of Grain Inventory listed above] subject to the commodity repurchase agreements. |
bushels |
2. |
Initial selling price of [insert type of Grain Inventory listed above] subject to the commodity repurchase agreements. |
$[________] |
3. |
Locations of [insert type of Grain Inventory listed above] subject to the commodity repurchase agreements. |
|
(a) [insert name of Location 1] |
|
|
[(b) insert name of Location 2, if necessary] |
|
EXHIBIT A-1 - 1
EXHIBIT A - 1
FORM OF INTERIM BORROWING BASE REPORT
Date:[_________], 20[__]
BNP Paribas, as Administrative Agent
787 Seventh Avenue
New York, New York 10019
Attention: Ms. Karlien Zumpolle
For:Credit Agreement, dated as of October 28, 2011
Ladies and Gentlemen:
This certificate is delivered pursuant to the Credit Agreement, dated as of October 28, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Green Plains Grain Company LLC, Green Plains Grain Company TN LLC, and Green Plains Essex Inc. (collectively, jointly and severally, the “Borrower”), the Lenders from time to time parties thereto, BNP Paribas, as Administrative Agent and Collateral Agent (in such capacity, together with its successors and assigns, the “Administrative Agent”). Capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Credit Agreement.
The undersigned Responsible Officer hereby certifies to the Administrative Agent and the Lenders that:
(a)such Responsible Officer is qualified and acting in the office of the Borrower indicated below such Responsible Officer’s name below;
(b)the information reflected on the reports and schedules attached hereto are true and correct in all material respects as of the date hereof (except as noted below);
(c)the amounts indicated on Annex I attached hereto were, to the best of my knowledge, true and accurate as of the date of preparation (except as noted below);
(d) the Borrower has not exceeded the maximum allowed Consolidated Net Position for any type of Grain Inventory individually or all Grain Inventory in the aggregate;
(e)no Accounts Receivable owing by Plant Entities which are included in the Borrowing Base have been outstanding for more than seven (7) days from the original invoice date;
(f)with respect to each Plant Entity, (i) such Plant Entity is in compliance with all of its material agreements and obligations, (ii) such Plant Entity has not guaranteed or otherwise provided credit support for Indebtedness (or other liabilities) of the Parent and/or any Affiliate of the Parent or such Plant Entity in an aggregate principal amount (in respect of such Indebtedness or liabilities so guaranteed or otherwise credit supported) greater than its Guaranty Limit, (iii) no
EXHIBIT A-1 - 2
Plant Entity or combination of Plant Entities have guaranteed or otherwise provided credit support for Indebtedness (or other liabilities) of the Parent and/or any Affiliate of the Parent or such Plant Entity in an aggregate principal amount (in respect of such Indebtedness or liabilities so guaranteed or otherwise credit supported) greater than $50,000,000, (iv) no breach or other default has occurred and is continuing under any of such Plant Entity’s financing agreements or other material agreements, and (v) there has been no development or event which has had or could reasonably be expected to have a material adverse effect on the business, assets, income, property, liabilities (actual or contingent), operations or condition (financial or otherwise), or prospects of such Plant Entity, such that, such Plant Entity would be required to provide notice of such development or event under any of such Plant Entity’s financing agreements or other material agreements;
(g)no Default or Event of Default has occurred and is continuing; and
(h)no event or development which has had or could reasonably be expected to have a Material Adverse Effect has occurred.
[Remainder of page intentionally blank; signature page follows.]
EXHIBIT A-1 - 3
The foregoing certifications together with the supporting information and reports with respect to which this Borrowing Base Report is delivered, are made and delivered as of the date first written above.
GREEN PLAINS GRAIN COMPANY LLC, as a Borrower
By:Green Plains Renewable Energy, Inc., its sole member
By:
Name:
Title:
GREEN PLAINS GRAIN COMPANY TN LLC, as a Borrower
By:Green Plains Grain Company LLC, its sole member
By:
Name:
Title:
GREEN PLAINS ESSEX INC.,
as a Borrower
By:
Name:
Title:
c/o Green Plains Grain Company LLC
450 Regency Parkway, Suite 400
Omaha, Nebraska 68114
Attention: Mr. Jerry Peters
Fax: (402) 884-8776
Phone: (402) 315-1603
Email: jerry.peters@gpreinc.com
EXHIBIT A-1 - 4
ANNEX I
TO
INTERIM BORROWING BASE REPORT
Borrowing Base
As of [________], 20[__]
|
Gross Value |
Advance Rate |
Borrowing Base Value |
I. Collateral Type |
|
|
|
1.Eligible Cash Collateral (after giving effect to the proposed Extensions of Credit related to this Interim Borrowing Base Report), less unpaid checks, overdrafts, or other unpaid amounts related thereto for which any Person has a prior unpaid claim, plus |
$[_______] |
100% |
$[_______] |
2.Eligible Net Liquidation Value in Brokerage Accounts, plus |
$[_______] |
100% |
$[_______] |
3.Eligible Net Liquidation Value in Third Party Brokerage Accounts, plus |
$[_______] |
90% |
$[_______] |
4.Eligible Accounts Receivable, plus |
$[_______] |
85% |
$[_______] |
5.Eligible Accounts Receivable that are backed by a letter of credit in a form and from an issuing bank, in each case, as approved by the Administrative Agent in its Permitted Discretion, plus |
$[_______] |
90% |
$[_______] |
6.Eligible Grain Inventory evidenced by warehouse receipts, plus |
$[_______] |
90% |
$[_______] |
7.Eligible Grain Inventory not evidenced by warehouse receipts, plus |
$[_______] |
85% |
$[_______] |
8.Eligible Non-Grain Inventory, subject to permitted product approval by the Administrative Agent, plus |
$[_______] |
75% |
$[_______] |
9.Eligible Affiliate Accounts Receivable, plus |
$[_______] |
85% |
$[_______] |
10.Eligible Grain Inventory In Transit |
|
|
$[_______] |
(a) Unadjusted Eligible Grain Inventory In Transit |
$[_______] |
85% |
$[_______] |
(b) 10% of Borrowing Base |
$[_______] |
|
|
11.Eligible Net Unrealized Gain on Forward Contracts (lesser of 11(a) or 11(b)) |
|
|
$[_______] |
ANNEX I - 1
(a) Unadjusted Eligible Net Unrealized Gain on Forward Contracts |
$[_______] |
75% |
$[_______] |
(b) 30% of Borrowing Base |
$[_______] |
|
|
12.Less, all payables related to Grain Inventory which are subject to any statutory liens |
$[_______] |
100% |
$[_______] |
13.Less, all prepayments from Borrower’s customers |
$[_______] |
100% |
$[_______] |
14.Less, the amount of any Obligations owed to a Swap Party under a Swap Contract with Borrower which Obligations are secured pursuant to the Security Agreement |
$[_______] |
100% |
$[_______] |
15.Less, the amount of any excess Eligible Accounts Receivable of Affiliates and Eligible Net Unrealized Gain on Forward Contracts of Affiliates over the applicable cap (15(d) minus 15(e), to the extent the difference is a positive number) |
|
100% |
$[_______] |
(a) Eligible Affiliate Accounts Receivable |
$[_______] |
85% |
$[_______] |
(b) Intentionally omitted |
|
|
|
(c) Eligible Net Unrealized Gain on Forward Contracts of Affiliates |
$[_______] |
75% |
$[_______] |
(d) Aggregate total of Eligible Accounts Receivable and Eligible Net Unrealized Gain on Forward Contracts of Affiliates(Sum of 15(a) plus 15(c)) |
|
|
$[_______] |
(e) Applicable cap |
|
|
$50,000,000 |
16.Total Collateral (Sum of I.1 through I.11, minus I.12 through I.15) |
|
|
$[_______] |
II. Extensions of Credit (after giving effect to the proposed Extensions of Credit related to this Interim Borrowing Base Report) |
|
|
|
1.Letters of Credit |
|
|
$[_______] |
2.Revolving Loans |
|
|
$[_______] |
3.Swing Line Loans |
|
|
$[_______] |
4. Seasonal Line Loans |
|
|
$[_______] |
5.Subtotal (II.1 + II.2 + II.3 + II.4) |
|
|
$[_______] |
ANNEX I - 2
ANNEX I - 3
ANNEX II
TO
INTERIM BORROWING BASE REPORT
Enclosed with this Borrowing Base Report are all necessary schedules, supporting information, and reports with details for the above, pursuant to the requirements under Section 1.1 of the Credit Agreement.
(A) |
4 |
ANNEX C
ANNEX I
FORM OF NOTICE OF BORROWING
[Date]
BNP Paribas, as Administrative Agent
787 Seventh Avenue
New York, New York 10019
Attention: Ms. Karlien Zumpolle
Re:Green Plains Grain Company LLC, Green Plains Grain Company TN LLC, and Green Plains Essex Inc.
Ladies and Gentlemen:
This Notice of Borrowing is delivered to you pursuant to Sections 2.2(a) and 2.3(d) of the Credit Agreement dated as of October 28, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Green Plains Grain Company LLC, Green Plains Grain Company TN LLC, and Green Plains Essex Inc. (collectively, jointly and severally, the “Borrower”), the Lenders from time to time parties thereto, BNP Paribas, as Administrative Agent and Collateral Agent on behalf of the Lenders (in such capacity, together with its successors and assigns, the “Agent”). Capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Credit Agreement.
A. Request for a [Revolving Loan][Seasonal Line Loan]
1. |
The Borrower hereby requests a [Revolving Loan][Seasonal Line Loan] in the amount of $[_______]. |
(A) |
5 |
2. |
The requested Borrowing Date is ___________, 20[__]. |
3. |
The principal of such [Revolving Loan][Seasonal Line Loan] is due on or before ____________, 20[__]. |
4. |
The [Revolving Loan][Seasonal Line Loan] will be a: |
Base Rate Loan. [Insert amount if portion is to be allocated between Loans with different rates of interest]
LIBO Rate Loan. [Insert amount if portion is to be allocated between Loans with different rates of interest]
Combination of Base Rate Loan and LIBO Rate [Insert amount if portion is to be allocated between Loans with different rates of interest]
5. |
The Interest Period for the LIBO Rate Loan will be: |
six months.
B. Request for a Swing Line Loan
1. |
The Borrower hereby requests a Swing Line Loan in the amount of $[_______]. |
2. |
The Borrower will use the proceeds of the requested Swing Line Loan for the purposes described below: |
3. |
The requested Borrowing Date is ___________, 20[__]. |
4. |
The principal of such Swing Line Loan is due on or before ____________, 20[__]. |
(A) |
6 |
5. |
The Swing Line Loan will be a Base Rate Loan. |
The Borrower hereby represents and warrants, as of the date hereof and as of the date the Extension of Credit being requested hereby is made, before and after giving effect to the making of such Extension of Credit, that (i) each of the representations and warranties made by the Borrower in or pursuant to the Loan Documents is true and correct on and as of such dates as if made on and as of such dates, except for those representations and warranties that by their terms were made as of a specified date, which shall be true and correct, on and as of such specified date, (ii) no Default or Event of Default has occurred and is continuing, (iii) neither the Total Commitment nor the Borrowing Base have been exceeded, and (iv) with respect to each Plant Entity, (A) less than twenty-five percent (25%) of the outstanding Accounts Receivable owing from such Plant Entity to the Borrower are past due, (B) such Plant Entity is in full compliance with all financial covenant requirements under any of such Plant Entity’s financing agreements or other material agreements, (C) no breach or other default has occurred and is continuing under any of such Plant Entity’s financing agreements or other material agreements and (D) there has been no development or event which has had or could reasonably be expected to have a material adverse effect on the business, assets, income, property, liabilities (actual or contingent), operations or condition (financial or otherwise), or prospects of such Plant Entity, such that, such Plant Entity would be required to provide notice of such development or event under any of such Plant Entity’s financing agreements or other material agreements.
[Remainder of page intentionally blank; signature page follows.]
(A) |
7 |
The Borrower has caused this Notice of Borrowing to be executed and delivered, and the certification and warranties contained herein to be made, by its duly authorized officer(s) this [__] day of [___________], 20[__].
GREEN PLAINS GRAIN COMPANY LLC, as a Borrower
By:Green Plains Renewable Energy, Inc., its sole member
By:
Name:
Title:
GREEN PLAINS GRAIN COMPANY TN LLC, as a Borrower
By:Green Plains Grain Company LLC, its sole member
By:
Name:
Title:
GREEN PLAINS ESSEX INC.,
as a Borrower
By:
Name:
Title:
(A) |
[Green Plains] Promissory Note |
ANNEX II
FORM OF NOTICE OF CONTINUATION/CONVERSION
[Date]
BNP Paribas, as Administrative Agent
787 Seventh Avenue
New York, New York 10019
Attention: Ms. Karlien Zumpolle
Re:Green Plains Grain Company LLC, Green Plains Grain Company TN LLC, and Green Plains Essex Inc.
Ladies and Gentlemen:
This Continuation/Conversion is delivered to you pursuant to Section 4.4 of the Credit Agreement dated as of October 28, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Green Plains Grain Company LLC, Green Plains Grain Company TN LLC, and Green Plains Essex Inc. (collectively, jointly and severally, the “Borrower”), the Lenders from time to time parties thereto, BNP Paribas, as Administrative Agent and Collateral Agent on behalf of the Lenders (in such capacity, together with its successors and assigns, the “Agent”). Capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Credit Agreement.
The Borrower hereby requests that on [________], 20[__] (the “Continuation/Conversion Date”):
1.$[____] of the presently outstanding principal amount of the [Revolving Loans][Seasonal Line Loans] originally made on [____________], 20[__].
2.all presently being maintained as [Base Rate Loans] [LIBO Rate Loans],
3.be [converted into] [continued as],
- 9 -
4.[LIBO Rate Loans having an Interest Period of [one/two/three or (other than with respect to Seasonal Line Loans)/six] [month[s]]] [Base Rate Loans].
The undersigned hereby certifies that, on the date hereof, and on the proposed Continuation/Conversion Date, both before and after giving effect thereto and to the application of the proceeds therefrom, the foregoing [conversion] [continuation] complies with the terms and conditions of the Credit Agreement (including, without limitation, Section 4.4 of the Credit Agreement).
The undersigned hereby certifies that, on the date hereof, and on the proposed Continuation/Continuation Date, both before and after giving effect thereto and to the application of the proceeds therefrom, no Event of Default has occurred and is continuing.
[Remainder of page intentionally blank; signature page follows.]
- 10 -
The Borrower has caused this Notice of Continuation/Conversion to be executed and delivered, and the certification and warranties contained herein to be made, by its duly authorized officer(s) this [___] day of [_____________], 20[__].
GREEN PLAINS GRAIN COMPANY LLC, as a Borrower
By:Green Plains Renewable Energy, Inc., its sole member
By:
Name:
Title:
GREEN PLAINS GRAIN COMPANY TN LLC, as a Borrower
By:Green Plains Grain Company LLC, its sole member
By:
Name:
Title:
GREEN PLAINS ESSEX INC.,
as a Borrower
By:
Name:
Title:
- 11 -
ANNEX D
EXHIBIT G-1
FORM OF SEASONAL LINE NOTE
$[__________][____________], 20[__]
1. FOR VALUE RECEIVED, Green Plains Grain Company LLC, a Delaware limited liability company, Green Plains Grain Company TN LLC, a Delaware limited liability company, and Green Plains Essex Inc., an Iowa corporation (collectively, jointly and severally, the “Borrower”), hereby unconditionally promises to pay to the order of [__________], a [____________] (“Lender”), in immediately available funds, the principal amount of [__________________] DOLLARS ($[_________]), or so much of that sum as may be advanced under this promissory note (this “Note”), plus interest as specified in this Note. This Note evidences a loan (“Loan”) from the Lender to the Borrower. |
2. This Note is (i) one of the Notes referred to in that certain Credit Agreement, dated as of October 28, 2011 (as amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”), by and among the Borrower, the lenders party thereto from time to time (each a “Lender” and collectively the “Lenders”), BNP Paribas, as Administrative Agent (in such capacity, together with its successors and assigns, the “Agent”), (ii) entitled to the benefits thereof, (iii) secured as provided for therein, and (iv) subject to optional and mandatory prepayment in whole or in part as provided therein. Capitalized terms used herein and not otherwise defined herein shall have the meanings given to such terms in the Credit Agreement. |
3. All amounts payable under this Note, including interest payable on the unpaid principal amount hereof from time to time commencing from the date of disbursement at the rates per annum and on the dates, as provided in the Credit Agreement until paid in full (both before and after judgment), are payable in lawful money of the United States during normal business hours of the Lender at the office of the Agent or at such other place as the Lender from time to time may designate. Checks constitute payment only when collected. |
4. The holder of this Note is authorized to record the date and amount of each Seasonal Line Loan made by the Lender pursuant to Section 4.1 of the Credit Agreement, the date and amount of each payment or prepayment of principal thereof on the schedule annexed hereto and constituting a part hereof, or on a continuation thereof which shall be annexed hereto and constitute a part hereof, and, absent manifest error, any such recordation shall constitute prima facie evidence of the accuracy of the information so recorded, provided, that failure of the Lender to make any such recordation (or any error in such recordation) shall not affect the obligations of the Borrower under this Note or under the Credit Agreement. |
5. Upon the occurrence of any one or more Events of Default specified in the Credit Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable, all as provided therein. |
- 12 -
6. The Borrower expressly waives diligence, presentment, protest, demand, and other notices of any kind. |
7. This Note shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York, WITHOUT REFERENCE TO THE PRINCIPLES OF CONFLICTS OF LAWS OF THAT STATE. |
8. If any lawsuit, reference or arbitration is commenced which arises out of or relates to this Note, the Loan Documents or the Loan, the prevailing party shall be entitled to recover from each other party such sums as the court, referee or arbitrator may adjudge to be reasonable attorneys’ fees in the action, reference or arbitration, in addition to costs and expenses otherwise allowed by law. In all other situations, including any matter arising out of or relating to any Insolvency Proceeding, the Borrower agrees to pay all of Lender’s reasonable costs and expenses, including attorneys’ fees, which may be incurred in enforcing or protecting Lender’s rights or interests. From the time(s) incurred until paid to Lender, all such sums shall bear interest at the default rate provided in Section 4.3(c) of the Credit Agreement. |
9. The Borrower agrees that the holder of this Note may accept additional or substitute security for this Note, or release any security or any party liable for this Note, in each case without affecting the liability of Borrower under this Note. |
10. If Lender delays in exercising or fails to exercise any of its rights under this Note, that delay or failure shall not constitute a waiver of any of Lender’s rights, or of any breach, default or failure of condition of or under this Note. No waiver by Lender of any of its rights, or of any such breach, default or failure of condition shall be effective, unless the waiver is expressly stated in a writing signed by Lender. All of Lender’s remedies in connection with this Note or under applicable law shall be cumulative, and Lender’s exercise of any one or more of those remedies shall not constitute an election of remedies. |
11. This Note inures to and binds the successors and assigns of the Borrower and Lender; provided, however, that the Borrower may not assign this Note or any Loan funds, or assign or delegate any of its rights or obligations, without the prior written consent of Lender in each instance. |
12. As used in this Note, the terms “Lender,” “holder” and “holder of this Note” are interchangeable. As used in this Note, the word “include(s)” means “include(s), without limitation,” and the word “including” means “including, but not limited to.” |
13. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. |
[Remainder of page intentionally blank; signature pages follow.]
- 13 -
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed and delivered as of the day and year first above written.
BORROWER:
GREEN PLAINS GRAIN COMPANY LLC, as a Borrower
By:Green Plains Renewable Energy, Inc., its sole member
By:
Name:
Title:
GREEN PLAINS GRAIN COMPANY TN LLC, as a Borrower
By:Green Plains Grain Company LLC, its sole member
By:
Name:
Title:
GREEN PLAINS ESSEX INC.,
as a Borrower
By:
Name:
Title:
c/o Green Plains Grain Company LLC
450 Regency Parkway, Suite 400
Omaha, Nebraska 68114
Attention: Mr. Jerry Peters
Fax: (402) 884-8776
Phone: (402) 315-1603
Email: jerry.peters@gpreinc.com
(A) |
[Signature Page to Promissory Note] |
Schedule to Note
Date |
Amount of Loan |
Interest Rate |
Amount of Principal Repaid |
Unpaid Principal Balance of Loans |
Notation Made By |
[______] |
$[________] |
[___]% |
$[________] |
$[________] |
|
[______] |
$[________] |
[___]% |
$[________] |
$[________] |
|
[______] |
$[________] |
[___]% |
$[________] |
$[________] |
|
[______] |
$[________] |
[___]% |
$[________] |
$[________] |
|
[______] |
$[________] |
[___]% |
$[________] |
$[________] |
|
[______] |
$[________] |
[___]% |
$[________] |
$[________] |
|
[______] |
$[________] |
[___]% |
$[________] |
$[________] |
|
[______] |
$[________] |
[___]% |
$[________] |
$[________] |
|
[______] |
$[________] |
[___]% |
$[________] |
$[________] |
|
15
ANNEX E
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
Reference is made to the Credit Agreement dated as of October 28, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Green Plains Grain Company LLC, Green Plains Grain Company TN LLC, and Green Plains Essex Inc. (collectively, jointly and severally, the “Borrower”), the Lenders from time to time parties thereto, BNP Paribas, as Administrative Agent and Collateral Agent on behalf of the Lenders (in such capacity, together with its successors and assigns, the “Agent”). Capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Credit Agreement.
The undersigned does hereby certify that he/she is a Responsible Officer of the Borrower, and that as such is authorized to execute this Compliance Certificate on behalf of the Borrower, and DOES HEREBY FURTHER CERTIFY on behalf of the Borrower that:
1.This Compliance Certificate is given pursuant to Section 7.2(b) and/or 8.6 of the Credit Agreement, as applicable.
2.He/she has reviewed the terms of the Credit Agreement and has made a detailed review of the transactions and conditions of the Borrower during the accounting period(s) covered by the financial statements with respect to which this Compliance Certificate is being delivered;
3.The examination described in paragraph 2 above did not disclose, and he/she has no notice or knowledge of the existence of, any condition or event which constitutes a Default or Event of Default during or at the end of the accounting period covered by the financial statements with respect to which this Compliance Certificate is being delivered or as of the date of this Compliance Certificate, except as set forth below:
List, in detail, the nature of the condition or event, the period during which it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition or event:
_______________________________________________
_______________________________________________
4.The representations and warranties contained in the Credit Agreement and in the other Loan Documents are true and correct on and as of the date hereof, as though made on and as of the date hereof, except for those representations and warranties that by their terms were made as of a specified date, which are true and correct on and as of such specified date.
5.The Borrower has observed or performed and is in compliance with all of the covenants and other agreements contained in the Credit Agreement and the other Loan
16
Documents and all conditions in the Credit Agreement and the other Loan Documents to be observed, performed or satisfied by it have been observed, performed or satisfied.
6.The financial statements with respect to which this Compliance Certificate is being delivered fairly present the Borrower’s financial condition, results of operations and cash flows in accordance with GAAP (subject to normal year-end audit adjustments and absence of footnotes).
7.As of the date of the financial statements with respect to which this Compliance Certificate is being delivered, (i) the amount of the “present fair saleable value” of the assets of the Borrower exceeds the amount of all “liabilities of the Borrower contingent or otherwise”, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (ii) the present fair saleable value of the assets of the Borrower are greater than the amount that will be required to pay the liabilities of the Borrower on its respective debts as such debts become absolute and matured, (iii) the Borrower does not have an “unreasonably small amount of capital” with which to conduct its respective businesses, as such quoted term is determined in accordance with applicable U.S. federal and state Laws governing the determination of insolvency of debtors and (iv) the Borrower will be able to pay their respective debts as they mature. For purposes of this paragraph 7, “debt” means “liability on a claim”, “claim” means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured and (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.
8.As of the date of the financial statements with respect to which this Compliance Certificate is being delivered, the Tangible Net Worth of the Borrower was $[________]. The minimum required Tangible Net Worth of the Borrower is the greater of (i) 21% of the sum of the then current Total Commitment plus the aggregate Seasonal Line Commitments and (ii) the sum of $23,000,000 plus to the extent positive, 50% of the Net Income for the most recently ended Fiscal Year (commencing with the Fiscal Year ending December 31, 2013). The Borrower is [not] in compliance with this requirement.
9.As of the date of the financial statements with respect to which this Compliance Certificate is being delivered the Leverage Ratio was [__] to 1.0. The maximum permitted Leverage Ratio is 6.0 to 1.0. The Borrower is [not] in compliance with this requirement.
10.As of the date of the financial statements with respect to which this Compliance Certificate is being delivered, the Working Capital of the Borrower was $[______]. The minimum required Working Capital of the Borrower is the sum of $18,000,000 plus to the extent positive, 50% of the Net Income for the most recently ended Fiscal Year (commencing with the Fiscal Year ending December 31, 2013). The Borrower is [not] in compliance with this requirement.
11.The maximum allowed Consolidated Net Position of the Borrower is 100,000 bushels for each type of Grain Inventory individually, and 200,000 bushels under for all Grain
17
Inventory in the aggregate. For purposed of this paragraph no. 11, corn and milo shall be considered the same type of Grain Inventory. As of the date of the financial statements with respect to which this Compliance Certificate is being delivered, the Borrower is [not] in compliance with this requirement.
12.As of the date of the financial statements with respect to which this Compliance Certificate is being delivered, the Fixed Charge Coverage Ratio of the Borrower was [____]:1. The minimum allowed Fixed Charge Coverage Ratio of the Borrower for any consecutive four (4) fiscal quarter period is 1.25 to 1 as of the last day of any fiscal quarter of the Borrower. The Borrower is [not] in compliance with this requirement.
13.As of the date of the financial statements with respect to which this Compliance Certificate is being delivered, the ratio of Long-Term Indebtedness (excluding Indebtedness under the Credit Agreement) to Long-Term Indebtedness plus Tangible Net Worth was [____]:1. The maximum allowed ratio of Long-Term Indebtedness (excluding Indebtedness under this Agreement) to Long-Term Indebtedness plus Tangible Net Worth is 0.40 to 1.0 as of the last day of any fiscal quarter of the Borrower. The Borrower is [not] in compliance with this requirement.
14.(a) As of the date of the financial statements with respect to which this Compliance Certificate is being delivered, the Borrower has made Capital Expenditures during the current Fiscal Year in the aggregate amount of $[______].
(b) Of the aggregate sum of Capital Expenditures reported in clause (a) above, $[______] are cash equity investments made by Parent in Borrower during the current Fiscal Year (which cash equity investments are designated for use only on such Capital Expenditures).
(c) Of the aggregate sum of Capital Expenditures reported in clause (a) above, $[______] was used as “carry-forward” availability from the prior Fiscal Year.
(d) The aggregate sum of Capital Expenditures reported in clause (a) above may not exceed [$15,000,000 during the Fiscal Year ending December 31, 2013] [$15,000,000 during the Fiscal Year ending December 31, 2014] [$8,000,000 during the Fiscal Year ending December 31, 2015] [$8,000,000 during the Fiscal Year ending December 31, 2016] plus, the amount set forth in clause (b) above plus the amount set forth in clause (c) above. The Borrower is [not] in compliance with this requirement.
15.(a) After the Closing Date, as of the date of the financial statements with respect to which this Compliance Certificate is being delivered, the Borrower has made, incurred, assumed, or suffered to exist Investments in the aggregate amount of $[______].
(b) Of the aggregate sum of Investments reported in clause (a) above, $[______] are cash equity investments made by Parent in Borrower from and after the Closing (which cash equity investments are designated for use only on such Investments).
(c) The aggregate sum of Investments after the Closing Date reported in clause (a) above minus the aggregate sum of Investments reported in clause (b) above may not exceed $1,000,000. The Borrower is [not] in compliance with this requirement.
18
16.As of the date of the financial statements with respect to which this Compliance Certificate is being delivered, the aggregate principal amount of Indebtedness of Borrower under commodity repurchase agreements related to physical inventory was $[_________]. The maximum aggregate principal amount of Indebtedness of Borrower under commodity repurchase agreements related to physical inventory is $50,000,000. The Borrower is [not] in compliance with this requirement.
17. The Borrower has entered into commodity repurchase agreements with each of the contract counterparties listed on Annex 5 hereto. Borrower may only enter into commodity repurchase agreements with Approved Repurchase Contract Counterparty and shall have entered into a Repurchase Intercreditor Agreement with the Collateral Agent on terms and conditions satisfactory to the Administrative Agent. The Borrower is [not] in compliance with this requirement.
18.Enclosed with this Compliance Certificate is all necessary supporting information and reports with details for the above.
19.Attached hereto as Annex 7 is a report as of the date hereof (in form and substance satisfactory to the Administrative Agent), setting forth each guarantee or other credit support provided by each Plant Entity for Indebtedness (or other liabilities) of the Parent and/or any Affiliate of the Parent or such Plant Entity, and the principal amount of such Indebtedness or liabilities so guaranteed or otherwise credit supported, certified as true and correct by a Responsible Officer.
[Remainder of page intentionally blank; signature page follows.]
19
The foregoing certifications together with the financial statements with respect to which this Compliance Certificate is delivered, in support of this Compliance Certificate, are made and delivered this [__] day of [_________], 20[__].
GREEN PLAINS GRAIN COMPANY LLC, as a Borrower
By:Green Plains Renewable Energy, Inc., its sole member
By:
Name:
Title:
GREEN PLAINS GRAIN COMPANY TN LLC, as a Borrower
By:Green Plains Grain Company LLC, its sole member
By:
Name:
Title:
GREEN PLAINS ESSEX INC.,
as a Borrower
By:
Name:
Title:
Annex 1 to Compliance Certificate
Tangible Net Worth
Calculation
1. |
Total Assets of the Borrower |
$ |
2. |
Total Liabilities of the Borrower |
$ |
3. |
To the extent included in the calculation of 1 above: |
|
|
(a) the total book value of the Total Assets of the Borrower properly classified as intangible assets under GAAP, including such items as goodwill, trademarks, trade names, service marks, brand names, copyrights, patents and licenses, rights with respect to the foregoing, and organizational or developmental expenses |
$ |
|
(b) any subscriptions receivable |
$ |
|
(c) loans by Borrower to, investments in and receivables and other obligations from Borrower’s Capital Securities holders, Subsidiaries, other Affiliates, officers, employees or directors of the Borrower not in the ordinary course of business |
$ |
|
(d) any treasury stock |
$ |
|
(e) sum of (a)+(b)+(c)+(d) |
$ |
4. |
Tangible Net Worth of the Borrower (1 – 2 – 3(e)) |
$ |
|
IS TEST PASSED (i.e., is 4 greater than or equal to the greater of (i) 21% of the sum of the then current Total Commitment plus the aggregate Seasonal Line Commitments and (ii) the sum of $23,000,000 plus to the extent positive, 50% of the Net Income for the most recently ended Fiscal Year (commencing with the Fiscal Year ending December 31, 2013)? |
[ ]Yes [ ]No |
Annex 1 to Compliance Certificate
Annex 2 to Compliance Certificate
Leverage Ratio
Calculation
1. |
The amount which, in accordance with GAAP, would be set forth opposite the caption “total liabilities” on the balance sheet of Borrower for such period. |
$ |
2. |
Tangible Net Worth of the Borrower (Item 4 from Annex 1) |
$ |
3. |
Leverage Ratio |
______: 1 |
|
IS TEST PASSED (i.e., is 3 less than 6.0 to 1.0)? |
[ ]Yes [ ]No |
* Supporting financial information to be attached.
Annex 2 to Compliance Certificate
Annex 3 to Compliance Certificate
Working Capital
Calculation
1. |
Current Assets of the Borrower |
$ |
2. |
Current Liabilities of the Borrower |
$ |
3. |
To the extent included in the calculation of 1 above: |
$ |
|
(a) the total book value of the Total Assets of the Borrower properly classified as goodwill, trademarks, trade names, service marks, brand names, copyrights, patents and licenses, rights with respect to the foregoing, and organizational or developmental expenses |
$ |
|
(b) any subscriptions receivable |
$ |
|
(c) loans by Borrower to, investments in and receivables and other obligations from Borrower’s Capital Securities holders, Subsidiaries, other Affiliates, officers, employees or directors of the Borrower not in the ordinary course of business |
$ |
|
(d) any treasury stock |
$ |
|
(e) sum of (a)+(b)+(c)+(d) |
$ |
4. |
Working Capital of the Borrower (1 – 2 – 3(e)) |
$ |
|
IS TEST PASSED (i.e., is 4 greater than or equal to the sum of $18,000,000 plus to the extent positive, 50% of the Net Income for the most recently ended Fiscal Year (commencing with the Fiscal Year ending December 31, 2013))? |
[ ]Yes [ ]No |
* Supporting financial information to be attached.
Annex 4 to Compliance Certificate
Fixed Charge Coverage Ratio
Calculation
A. |
EBITDA of Borrower (A.1 + A.2) |
$_____________ |
|
1. |
Net Income (1(a) – 1(b) – 1(c) – 1(d)) |
$_____________ |
|
|
(a) the net income (or loss) of the Borrower;* |
$________ |
|
|
(b) (i) any net non-cash gain or loss during such period arising from the sale, exchange, retirement, or other disposition of capital assets (such term to include all fixed assets and all securities) other than in the ordinary course of business, and (ii) the cumulative effect of any change in GAAP. |
$________ |
|
|
(c) the net income of any Person accrued prior to the date it becomes a Subsidiary of, or has merged into or consolidated with, Borrower or another Subsidiary |
$________ |
|
|
(d) the net income of any Person in which Borrower or any of its Subsidiaries has an equity interest in, but which Person is not Borrower, except to the extent of the amount of dividends or other distributions actually paid to Borrower during such period |
$________ |
|
2. |
To the extent reflected as a charge in the statement of Net Income |
$_____________ |
|
|
(a) income tax expense; |
$________ |
|
|
(b) Interest Expense; |
$________ |
|
|
(c) depreciation and amortization expense; |
$________ |
|
|
(d) any write-down of noncurrent assets |
$________ |
|
|
(e) the EBITDA of any Person accrued prior to the date it becomes a Subsidiary of, or has merged into or consolidated with Borrower or another Subsidiary |
$________ |
|
|
(f) the net income of any Person in which Borrower or any of its Subsidiaries has an equity interest in, but which Person is not a Borrower, except to the extent of the amount of dividends or other distributions actually paid to Borrower during such period |
$________ |
|
B. |
Cash equity investments received by Borrower from Parent, net of any and all dividends and distributions made by the Borrower to the Parent, during the applicable period. |
$_____________ |
|
C. |
All expenditures made by Borrower during such period that should be classified as a maintenance capital expenditure |
$_____________ |
|
D. |
Actual interest expense of working capital financings |
$_____________ |
|
E. |
Debt Service Payments (E.1 + E.2) |
$_____________ |
|
1. |
Actual scheduled principal payments made on Long-Term Indebtedness |
$_____________ |
|
2. |
Actual Interest Expenses on Long-Term Indebtedness incurred during any period, as shown on the combined financial statements of the Borrower. |
$_____________ |
|
F. |
Debt Service Coverage Ratio (A + B – (C + D)) : E |
$_____________ |
|
|
IS TEST PASSED (i.e., is F less than 1.25:1)? |
[ ]Yes [ ]No |
Annex 4 to Compliance Certificate
Annex 4 to Compliance Certificate
Annex 5 to Compliance Certificate
Summary of Grain Inventory Subject to Commodity Repurchase Agreements
*Provided for each type of Grain Inventory individually.
A. |
Type of Grain Inventory: |
[_______] |
1. |
Name of contract counterparty with which Borrower has entered into commodity repurchase agreements. |
[_______] |
2. |
Is contract counterparty an Approved Repurchase Contract Counterparty? |
[ ]Yes [ ]No |
3. |
Has contract counterparty entered into a Repurchase Intercreditor Agreement with the Collateral Agent? |
[ ]Yes [ ]No |
4. |
Aggregate number of bushels of [insert type of Grain Inventory listed above] subject to the commodity repurchase agreements. |
bushels |
5. |
Initial selling price of [insert type of Grain Inventory listed above] subject to the commodity repurchase agreements. |
$[________] |
6. |
Locations of [insert type of Grain Inventory listed above] subject to the commodity repurchase agreements. |
|
(a) [insert name of Location 1] |
|
|
[(b) insert name of Location 2, if necessary] |
|
|
7. TOTAL INDEBTEDNESS FOR ALL COMMODITY REPURCHASE AGREEMENTS COVERING [insert type of Grain Inventory listed above] |
$[________] |
[__]. |
Type of Grain Inventory: |
[_______] |
1. |
Name of contract counterparty with which Borrower has entered into commodity repurchase agreements. |
[_______] |
2. |
Is contract counterparty an Approved Repurchase Contract Counterparty? |
[ ]Yes [ ]No |
3. |
Has contract counterparty entered into a Repurchase Intercreditor Agreement with the Collateral Agent? |
[ ]Yes [ ]No |
4. |
Aggregate number of bushels of [insert type of Grain Inventory listed above] subject to the commodity repurchase agreements. |
bushels |
5. |
Initial selling price of [insert type of Grain Inventory listed above] subject to the commodity repurchase agreements. |
$[________] |
6. |
Locations of [insert type of Grain Inventory listed above] subject to the commodity repurchase agreements. |
|
(a) [insert name of Location 1] |
|
|
[(b) insert name of Location 2, if necessary] |
|
|
7. TOTAL INDEBTEDNESS FOR ALL COMMODITY REPURCHASE AGREEMENTS COVERING [insert type of Grain Inventory listed above] |
$[________] |
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AGGREGATE AMOUNT OF INDEBTEDNESS FOR ALL COMMODITY REPURCHASE AGREEMENTS |
$[________] |
IS TEST PASSED (i.e., is A.7 plus [__].7 less than or equal to $50,000,000)? |
$[________] |
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Annex 6 to Compliance Certificate
Long Term Capitalization Ratio
Calculation
1. |
Long-Term Indebtedness (excluding Indebtedness |
under the Credit Agreement) $_______________
2. |
Tangible Net Worth (Item 4 from Annex 1)$_______________ |
3. |
Long-Term Capitalization Ratio (1:1+2)______________:1 |
IS TEST PASSED (i.e., is 3 less than 0.40:1)?
*Supporting financial information to be attached.
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Annex 7 to Compliance Certificate
[Plant Entity Guarantee Report]
To be attached.
-29-
ANNEX F
EXHIBIT E-1
FORM OF SEASONAL LINE AGREEMENT
SEASONAL LINE AGREEMENT, dated as of [______], 20[__] (this “Agreement”), prepared pursuant to Section 4.1(c) of the Credit Agreement dated as of October 28, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Green Plains Grain Company LLC (“GPG”), Green Plains Grain Company TN LLC (“GPG TN”), and Green Plains Essex Inc. (“GPE”) (collectively, jointly and severally, the “Borrower”), the Lenders from time to time parties thereto, BNP Paribas, as Administrative Agent and Collateral Agent (in such capacity, together with its successors and assigns, the “Agent”). Capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Credit Agreement.
RECITALS
Pursuant to Section 4.1(c) of the Credit Agreement, the undersigned Lenders parties to the Credit Agreement (the “Existing Seasonal Line Lenders”) and the undersigned Persons not party to the Credit Agreement (the “New Seasonal Line Lenders” and, together with the Existing Seasonal Line Lenders, the “Seasonal Line Lenders”), have agreed to make available their Seasonal Line Commitments as governed by the Credit Agreement on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Administrative Agent and the Seasonal Line Lenders hereby agree as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the Credit Agreement are used herein as therein defined. |
SECTION 9. Seasonal Line Commitment Agreement. |
(a) Each Seasonal Line Lender party to this Agreement hereby agrees to make Seasonal Line Loans to the Borrower, from time to time in accordance with Section 4.1(c) until the end of the applicable Seasonal Line Commitment Period in an aggregate principal amount at any one time outstanding not to exceed its respective Seasonal Line Commitment (as set forth on Schedule 1), such agreement to be effective as of the Seasonal Line Effective Date. From and after the Seasonal Line Effective Date, New Seasonal Line Lender shall be a party to the Credit Agreement and, to the extent provided in this Agreement, have the rights and obligations of a Lender under the Credit Agreement and under the other Loan Documents and shall be bound by the provisions thereof. |
(b) With respect to the Seasonal Line Commitments, each Seasonal Line Lender shall hold an undivided interest in and to (A) all the rights and obligations of a Lender under the Credit Agreement in connection with its Seasonal Line Commitment in the principal amount set forth on Schedule 1 hereto and (B) all rights and obligations of a Lender in connection therewith under the other Loan Documents. |
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SECTION 10. Seasonal Line Commitments. Effective upon the Seasonal Line Effective Date, the Seasonal Line Commitments for each Seasonal Line Lender shall be as set forth in Schedule 1. |
SECTION 11. Conditions Precedent. This Agreement shall become effective upon the satisfaction of the following conditions precedent (the “Seasonal Line Effective Date”): |
(a) Seasonal Line Documents. The Administrative Agent shall have received (each of the following documents being referred to herein as a “Seasonal Line Document”): |
(i) this Agreement, executed and delivered by a duly authorized officer of the Borrower and each Seasonal Line Lender, |
(ii) for the account of each Lender requesting the same, a Note of the Borrower conforming to the requirements of the Credit Agreement, and reflecting the Seasonal Line Commitment of such Lender after giving effect to this Agreement, executed by a duly authorized officer of such Borrower, and |
(iii) a reaffirmation of each of the Security Documents, executed and delivered by a duly authorized officer of the Borrower, with a counterpart or a conformed copy for each Lender. |
(b) Secretary’s Certificate. |
(i) The Administrative Agent shall have received a secretary’s certificate dated as of the Seasonal Line Effective Date, substantially in the form provided by GPG, GPG TN, and GPE on the Closing Date, with appropriate insertions and attachments, satisfactory in form and substance to the Administrative Agent, executed by the Secretary of each of GPG, GPG TN, and GPE. |
(ii) The Administrative Agent shall have received a secretary’s certificate dated as of the Seasonal Line Effective Date for each Subsidiary Guarantor, substantially in the form provided by Borrower on the Closing Date, with appropriate insertions and attachments, satisfactory in form and substance to the Administrative Agent, executed by the Secretary of such Subsidiary Guarantor. |
(c) Consent of Board of Directors. The Administrative Agent shall have received a true and complete copy of a Consent of the appropriate authority of each of GPG, GPG TN, and GPE, certified as of the date hereof as a complete and correct copy thereof and in full force and effect on the Seasonal Line Effective Date by the Secretary of each of GPG, GPG TN, and GPE and shall be in form and substance satisfactory to the Administrative Agent. |
(d) Good Standing Certificates. The Administrative Agent shall have received certificates dated as of a recent date from the Secretary of State or other appropriate authority, evidencing the good standing of each Loan Party (i) in the jurisdiction of its organization and (ii) in each other jurisdiction where its ownership, lease or operation of property or the conduct of its business requires it to qualify as a foreign Person. |
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(e) Consents, Licenses and Approvals. The Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower either (i) attaching copies of all Consents (each such Consent to be in form and substance satisfactory to the Administrative Agent) and stating that such Consents are in full force and effect or (ii) stating that no such Consents are so required. |
(f) Legal Opinions. The Administrative Agent shall have received, with a counterpart for each Seasonal Line Lender, the executed legal opinion of [_________], counsel to the Borrower and each Subsidiary Guarantor organized under the laws of a State of the United States and any other legal opinions requested by the Administrative Agent. Such legal opinions shall cover such matters incident to the transactions contemplated by this Agreement as the Administrative Agent and the Seasonal Line Lenders may reasonably require. |
(g) Material Adverse Change. There has been no change in the facts or information regarding the Borrower that was represented to the Administrative Agent and the Lenders by the Borrower that could reasonably be expected to be materially adverse to the Administrative Agent and the Lenders. |
(h) Other Conditions. Each of the other conditions to the Seasonal Line Effective Date provided in Section 4.1(c) of the Credit Agreement. |
SECTION 12. Representations and Warranties. To induce the undersigned Lenders to enter into this Agreement, the Borrower hereby represents and warrants to the undersigned Lenders that, after giving effect to the Seasonal Line Commitments and the other modifications to the Credit Agreement provided for herein, the representations and warranties contained in the Credit Agreement and the other Loan Documents will be true and correct as if made on such date, except for those representations and warranties that by their terms were made as of a specified date which shall be true and correct on and as of such date, and that no Default or Event of Default shall have occurred and be continuing. |
SECTION 13. Disclaimer. Each Seasonal Line Lender acknowledges and agrees that no Lender party to the Credit Agreement (i) has made any representation or warranty and shall have no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, any other Loan Documents or any other instrument or document furnished pursuant thereto or in connection therewith; (ii) has made any representation or warranty and has any responsibility with respect to the financial condition of the Borrower or any other obligor or the performance or observance by the Borrower or any obligor of any of their respective obligations under the Credit Agreement or any other Loan Documents or any other instrument or document furnished pursuant hereto or thereto. Each Seasonal Line Lender represents and warrants that it is legally authorized to enter into this Agreement, and each New Seasonal Line Lender (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements delivered pursuant to Section 7.1 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (ii) agrees that it will, independently and without reliance upon the other Lenders or the Administrative Agent and based on such documents and information as it shall deem appropriate at the time, continue to
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make its own credit decisions in taking or not taking action under the Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto or in connection herewith or therewith; (iii) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto as are delegated to the Administrative Agent by the terms thereof, together with such powers as are incidental thereto; and (iv) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender including, if it is organized under the laws of a jurisdiction outside the United States, its obligation pursuant to Section 4.14(f) of the Credit Agreement. |
SECTION 14. No Other Amendments or Waivers. Except as expressly amended or waived hereby, the Credit Agreement and the other Loan Documents shall remain in full force and effect in accordance with their respective terms, without any waiver, amendment or modification of any provision thereof. |
SECTION 15. Counterparts. This Agreement may be executed by one or more of the parties hereto on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Signatures hereto that are faxed or scanned into portable document format (“.pdf”) shall be of the same force and effect as an original of a manually signed copy. |
SECTION 16. Applicable Law. This Agreement shall be governed by, and construed and interpreted in accordance with, the law of the state of New York. |
[Remainder of page intentionally blank; signature pages follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.
GREEN PLAINS GRAIN COMPANY LLC, as a Borrower
By:Green Plains Renewable Energy, Inc., its sole member
By:
Name:
Title:
GREEN PLAINS GRAIN COMPANY TN LLC, as a Borrower
By:Green Plains Grain Company LLC, its sole member
By:
Name:
Title:
GREEN PLAINS ESSEX INC.,
as a Borrower
By:
Name:
Title:
BNP PARIBAS,
as Administrative Agent
By:
Name:
Title:
By:
Name:
Title:
EXISTING SEASONAL LINE LENDERS:
[NAME OF LENDER]
By:
Name:
Title:
[NAME OF LENDER]
By:
Name:
Title:
NEW SEASONAL LINE LENDERS:
[NAME OF LENDER]
By:
Name:
Title:
Schedule I to
Seasonal Line Agreement
EXISTING SEASONAL LINE LENDERS, NEW SEASONAL LINE LENDERS AND SEASONAL LINE COMMITMENTS
Seasonal Line Lender |
Lending Office |
Seasonal Line Commitment |
|
|
|
|
|
|
|
|
|
Exhibit 10.4
AMENDMENT
TO THE
MASTER LOAN AGREEMENT
THIS AMENDMENT is entered into as of October 15, 2013, between FARM CREDIT SERVICES OF AMERICA, FLCA (“Farm Credit”) and Green Plains Shenandoah LLC, Shenandoah, Iowa (the “Company”).
BACKGROUND
Farm Credit and the Company are parties to a Master Loan Agreement dated September 28, 2011 (such agreement, as previously amended, is hereinafter referred to as the “MLA”). Farm Credit and the Company now desire to amend the MLA. For that reason, and for valuable consideration (the receipt and sufficiency of which are hereby acknowledged), Farm Credit and the Company agree as follows:
1.Section 2 of the MLA is hereby amended and restated to read as follows:
SECTION 2.Sale of Participation Interests and Appointment of Administrative Agent. The Company acknowledges that concurrent with the execution of this Master Loan Agreement and related Supplement(s), Farm Credit is selling a participation interest in this Master Loan Agreement and Supplement(s) executed concurrently herewith to CoBank, FCB, an affiliate of CoBank, ACB (“CoBank”) (up to a 100% interest). Pursuant to an Administrative Agency Agreement dated of even date herewith, (the “Agency Agreement”), Farm Credit and CoBank appointed CoBank to act as Administrative Agent (“Agent”) to act in place of Farm Credit hereunder and under the Supplement(s) and any security documents to be executed thereunder. All funds to be advanced hereunder shall be made by Agent, all repayments by the Company hereunder shall be made to Agent, and all notices to be made to Farm Credit hereunder shall be made to Agent. Agent shall be solely responsible for the administration of this agreement, the Supplements and the security documents to be executed by the Company thereunder and the enforcement of all rights and remedies of Farm Credit hereunder and thereunder. Company acknowledges the appointment of the Agent and consents to such appointment.
2.Section 10(H) of the MLA shall be deleted in its entirety.
3.Section 10(K) of the MLA is hereby amended and restated to read as follows:
SECTION 10.Negative Covenants. Unless otherwise agreed to in writing by Agent (as that term is defined in the MLA), while this agreement is in effect the Company will not:
(K)Changes to Operating Agreements, Etc. Amend or otherwise make any material changes to the Company's Articles of Organization, Operating Agreement, Facility Lease Agreement, Ethanol Storage Lease, Ground Lease, management contracts and ethanol and/or distillers grain marketing contracts.
Exhibit 10.4
4.Section 11 of the MLA is hereby amended and restated to read as follows:
SECTION 11.Financial Covenants. Unless otherwise agreed to in writing, while this agreement is in effect:
(A)Working Capital. The Company will have at the end of each period for which financial statements are required to be furnished pursuant to Section 9(H) hereof an excess of current assets over current liabilities (both as determined in accordance with GAAP consistently applied) of not less than $6,000,000.00, except that in determining current assets, any amount available under the Revolving Term Loan Supplement (less the amount that would be considered a current liability under GAAP if fully advanced) hereto may be included.
(B)Net Worth. The Company will have at the end of each period for which financial statements are required to be furnished pursuant to Section 9(H) hereof an excess of total assets over total liabilities (both as determined in accordance with GAAP consistently applied) of not less than $65,000,000.00 increasing by 25% of net income (following receipt of the audit) beginning with the Company's fiscal year ending December 31, 2013 and each fiscal year end thereafter.
5.Except as set forth in this amendment, the MLA, including all amendments thereto, shall continue in full force and effect as written.
IN WITNESS WHEREOF, the parties have caused this amendment to be executed by their duly authorized officers as of the date shown above.
FARM CREDIT SERVICES OF AMERICA, FLCA |
|||||||
|
|
||||||
By: |
/s/ Kathryn J. Frahm |
By: |
/s/ Patrich Simpkins |
||||
|
|
||||||
Title: |
VP Commercial Lender |
Title: |
EVP, Finance and Treasurer |
Exhibit 10.5
AMENDMENT
TO THE
MASTER LOAN AGREEMENT
THIS AMENDMENT is entered into as of October 24, 2013, between FARM CREDIT SERVICES OF AMERICA, FLCA (“Farm Credit”) and GREEN PLAINS SUPERIOR LLC, Omaha, Nebraska (the “Company”).
BACKGROUND
Farm Credit and the Company are parties to a Master Loan Agreement dated June 20, 2011 (such agreement, as previously amended, is hereinafter referred to as the “MLA”). Farm Credit and the Company now desire to amend the MLA. For that reason, and for valuable consideration (the receipt and sufficiency of which are hereby acknowledged), Farm Credit and the Company agree as follows:
1. |
Section 2 of the MLA is hereby amended and restated to read as follows: |
SECTION 2.Sale of Participation Interests and Appointment of Administrative Agent. The Company acknowledges that concurrent with the execution of this Master Loan Agreement and related Supplements, Farm Credit is selling a participation interest in this Master Loan Agreement and Supplements executed concurrently herewith to CoBank, FCB, an affiliate of CoBank, ACB (“CoBank”) (up to a 100% interest). Pursuant to an Administrative Agency Agreement dated of even date herewith, as amended, (the “Agency Agreement”), Farm Credit and CoBank appointed CoBank to act as Administrative Agent (“Agent”) to act in place of Farm Credit hereunder and under the Supplements and any security documents to be executed thereunder. All funds to be advanced hereunder shall be made by Agent, all repayments by the Company hereunder shall be made to Agent, and all notices to be made to Farm Credit hereunder shall be made to Agent. Agent shall be solely responsible for the administration of this agreement, the Supplements and the security documents to be executed by the Company thereunder and the enforcement of all rights and remedies of Farm Credit hereunder and thereunder. Company acknowledges the appointment of the Agent and consents to such appointment.
2.Section 10(K) of the MLA is hereby amended and restated to read as follows:
SECTION 10.Negative Covenants. Unless otherwise agreed to in writing by Agent (as that term is defined in the MLA), while this agreement is in effect the Company will not:
(K)Changes to Operating Agreements, Etc. Amend or otherwise make any material changes to the Company's Articles of Organization, Operating Agreement, Lease Agreement, Ethanol Storage Lease, Ground Lease, management contracts and ethanol and/or distillers grain marketing contracts.
Exhibit 10.5
3.Except as set forth in this amendment, the MLA, including all amendments thereto, shall continue in full force and effect as written.
IN WITNESS WHEREOF, the parties have caused this amendment to be executed by their duly authorized officers as of the date shown above.
FARM CREDIT SERVICES OF AMERICA, FLCA |
|||||||
|
|
||||||
By: |
/s/ Kathryn J. Frahm |
By: |
/s/ Patrich Simpkins |
||||
|
|
||||||
Title: |
VP Commercial Lender |
Title: |
EVP Finance and Treasurer |
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a) AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Todd A. Becker, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Green Plains Renewable Energy, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: October 31, 2013 |
|
/s/ Todd A. Becker |
|
|
Todd A. Becker |
|
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President and Chief Executive Officer (Principal Executive Officer) |
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a) AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jerry L. Peters, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Green Plains Renewable Energy, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: October 31, 2013 |
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/s/ Jerry L. Peters |
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Jerry L. Peters |
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Chief Financial Officer (Principal Financial Officer) |
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES‑OXLEY ACT OF 2002
In connection with the Quarterly Report of Green Plains Renewable Energy, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended September 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Todd A. Becker, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1)The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: October 31, 2013 |
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/s/ Todd A. Becker |
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Todd A. Becker |
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President and Chief Executive Officer |
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES‑OXLEY ACT OF 2002
In connection with the Quarterly Report of Green Plains Renewable Energy, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended September 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jerry L. Peters, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1)The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: October 31, 2013 |
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/s/ Jerry L. Peters |
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Jerry L. Peters |
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Chief Financial Officer |
Stockholders Equity
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Stockholders Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders Equity | 10. STOCKHOLDERS’ EQUITY
Components of stockholders’ equity are as follows (in thousands):
On August 22, 2013, the Company announced that its Board of Directors approved the initiation of a quarterly cash dividend. An initial dividend of $0.04 per common share was paid on September 26, 2013 to all shareholders of record as of September 5, 2013.
Changes in accumulated other comprehensive income during the nine months ended September 30, 2013, net of tax, which related primarily to gains and losses on derivative financial instruments, are as follows (in thousands):
Amounts reclassified from accumulated other comprehensive income for the periods indicated are as follows (in thousands):
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Stock-Based Compensation (Schedule Of Non-Vested Stock Award And DSU Activity) (Details) (USD $)
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9 Months Ended |
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Sep. 30, 2013
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Stock-Based Compensation [Abstract] | |
Nonvested at December 31, 2012, Non-Vested Shares and Deferred Stock Units | 628,090 |
Nonvested at December 31, 2012, Weighted-Average Grant-Date Fair Value | $ 11.41 |
Granted, Non-Vested Shares and Deferred Stock Units | 565,651 |
Granted, Weighted-Average Grant-Date Fair Value | $ 9.60 |
Forfeited, Non-Vested Shares and Deferred Stock Units | (5,358) |
Forfeited, Weighted-Average Grant-Date Fair Value | $ 9.80 |
Vested, Non-Vested Shares and Deferred Stock Units | (455,683) |
Vested, Weighted-Average Grant-Date Fair Value | $ 10.88 |
Nonvested at September 30, 2013, Non-Vested Shares and Deferred Stock Units | 732,700 |
Nonvested at September 30, 2013, Weighted-Average Grant-Date Fair Value | $ 10.35 |
Nonvested at September 30, 2013, Weighted-Average Remaining Vesting Term (in years) | 1 year 9 months 18 days |
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