Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed by
the Registrant x
Filed by
a Party Other Than the Registrant ¨
Check the
appropriate box:
o
|
Preliminary
Proxy Statement
|
¨
|
Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|
x
|
Definitive
Proxy Statement
|
¨
|
Definitive
Additional Materials
|
¨
|
Soliciting
Material Pursuant to Section
240.14a-12
|
BIOFUEL ENERGY
CORP.
(Name of
Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
¨
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
|
|
(1)
|
Title
of each class of securities to which transaction
applies:
|
|
(2)
|
Aggregate
number of securities to which transaction
applies:
|
|
(3)
|
Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
|
|
(4)
|
Proposed
maximum aggregate value of
transaction:
|
¨
|
Fee
paid previously with preliminary
materials:
|
¨
|
Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its
filing.
|
|
(1)
|
Amount
previously paid:
|
|
(2)
|
Form,
Schedule or Registration Statement
No.:
|
BioFuel
Energy Corp.
1600
Broadway, Suite 2200
Denver,
Colorado 80202
Dear
Stockholder:
You are
invited to attend a Special Meeting of our stockholders scheduled to be held in
the Company’s executive offices located at 1600 Broadway, Suite 2200, Denver,
Colorado 80202 on February 2, 2011, at 10:00 a.m., Denver
time.
We have
filed a registration statement (the “Registration Statement”) with the
Securities and Exchange Commission for a rights offering (the “Rights
Offering”). The Registration Statement was declared effective on
December 17, 2010. Pursuant to the Rights Offering, we distributed at
no charge to record holders of our common stock as of 5:00 p.m., New York City
time, on December 27, 2010, non-transferable subscription rights to purchase
depositary shares representing shares of our Series A Non-Voting Convertible
Preferred Stock. Each subscription right will permit the holder of
such right to acquire, at a price equal to $0.56 per depositary share, one
depositary share under the basic subscription privilege and will also provide
the holder of such right with an over-subscription privilege. The
over-subscription privilege will entitle the holder of the subscription right to
subscribe for an additional amount of depositary shares equal to up to 100% of
the depositary shares for which the holder was otherwise entitled to
subscribe. Each depositary share will represent a fractional interest
in a share of Series A Non-Voting Convertible Preferred Stock. If our
stockholders approve the proposals contained in the accompanying proxy
statement, each share of Series A Non-Voting Convertible Preferred Stock will
automatically convert into a number of shares of our common stock equal to the
quotient obtained by dividing the total number of depositary shares actually
purchased in the Rights Offering and pursuant to the Backstop Commitment (as
defined below) by 2,000,000. Upon conversion of the Series A
Non-Voting Convertible Preferred Stock, each depositary share shall entitle the
holder thereof to receive one share of our common stock and, upon the
distribution of one share of our common stock to the holder of each such
depositary share, each such depositary share shall be automatically canceled and
have no further value. The Rights Offering expires at 5:00 p.m., New
York City time, on January 28, 2011.
Concurrent
with the Rights Offering, BioFuel Energy, LLC (the “LLC”) will be conducting a
private placement (the “LLC’s Concurrent Private Placement”). Pursuant to
the LLC’s Concurrent Private Placement, the LLC has granted purchase privileges
to all holders of membership interests in the LLC (other than BioFuel Energy
Corp.) as of the record date to purchase a new class of preferred membership
interests in the LLC. The preferred membership interests are convertible
into membership interests in the LLC on a one-for-one
basis. Concurrent with such conversion, the holders of the preferred
membership interests (other than BioFuel Energy Corp.) will also receive one
share of class B common stock for each membership interest received upon
conversion. The membership interests in the LLC received upon
conversion would then be exchangeable (together with the corresponding shares of
class B common stock) by the holder (other than BioFuel Energy Corp.) for shares
of our common stock. Each LLC purchase privilege will permit the
holder of such privilege to acquire, at a price equal to $0.56 per preferred
membership interest, one preferred membership interest in the LLC under the LLC
basic purchase privilege and will also provide the holder of such LLC basic
purchase privilege with an LLC additional purchase privilege. The LLC
additional purchase privilege will entitle the holder of the LLC purchase
privilege to purchase an additional amount of preferred membership interests
equal to up to 100% of the preferred membership interests that the holder was
otherwise entitled to purchase. The LLC’s Concurrent Private Placement has
been structured so as to provide the holders of membership interests in the LLC
(other than BioFuel Energy Corp.), whose interests are exchangeable on a
one-for-one basis for shares of our common stock, with a private placement that
is economically equivalent to the Rights Offering.
Subject
to certain terms and conditions, the lenders under our bridge loan agreement
(the “Backstop Parties”), have agreed to (i) purchase depositary shares in an
amount equal to their full basic subscription privileges and participate in the
LLC’s Concurrent Private Placement for their full LLC basic purchase privileges
(the “Basic Commitment”) and (ii) purchase immediately prior to expiration of
the Rights Offering and the LLC’s Concurrent Private Placement (x) all of the
available depositary shares not otherwise sold in the Rights Offering following
the exercise of all other holders’ basic subscription privileges and
over-subscription privileges and (y) all of the available preferred membership
interests in the LLC not otherwise sold in the LLC’s Concurrent Private
Placement following the exercise of all LLC basic purchase privileges and LLC
additional purchase privileges of all other holders of membership interests in
the LLC (other than BioFuel Energy Corp.) (the “Backstop
Commitment”). Notwithstanding the foregoing, the Backstop Parties
may, in certain circumstances, (i) reduce the number of depositary shares that
they would otherwise be obligated to purchase pursuant to the Basic Commitment
or Backstop Commitment or (ii) cause us to reduce the aggregate number of
depositary shares offered in the Rights Offering (a “Backstop
Reduction”). In such an event, the Rights Offering will proceed with
us and the Backstop Parties using commercially reasonable best efforts to
structure and consummate an alternative transaction to take the place of the
number of depositary shares subject to such reduction. In particular,
in the event of a Backstop Reduction that takes the form of a reduction of the
number of depositary shares that the Backstop Parties would otherwise be
obligated to purchase pursuant to the Backstop Commitment, the Backstop Parties
shall either (i) exercise their respective Backstop Commitments with respect to
all or a portion of the available depositary shares not otherwise sold in the
Rights Offering by purchasing a new class of class B preferred membership
interests in the LLC (instead of purchasing such available depositary shares) in
the event that such Backstop Parties determine, in their sole discretion, that
purchase of such available depositary shares would result in adverse tax, legal
or regulatory consequences to us or such Backstop Parties (an “LLC Backstop
Reallocation”) or (ii) not exercise their respective Backstop Commitments with
respect to all or a portion of the available depositary shares not otherwise
sold in the Rights Offering in the event that such Backstop Parties determine,
in their sole discretion, that purchase of such available depositary shares
would result in adverse tax, legal or regulatory consequences to us or such
Backstop Parties. The class B preferred membership interests, if
issued pursuant to an LLC Backstop Reallocation, would have the same terms as
the preferred membership interests, except that, upon conversion of such class B
preferred membership interests, holders of such class B preferred membership
interests would receive membership interests in the LLC that would not be
exchangeable for shares of our common stock.
If our
stockholders approve the proposals contained in the accompanying proxy
statement, all preferred membership interests and class B preferred membership
interests (if any) in the LLC will automatically convert into membership
interests in the LLC on a one-for-one basis and the holders of the preferred
membership interests (other than BioFuel Energy Corp.) will also receive one
share of our class B common stock for each membership interest received upon
conversion. The membership interests in the LLC received upon
conversion of the preferred membership interests (but not those received upon
conversion of the class B preferred membership interests) would then be
exchangeable (together with the corresponding shares of our class B common
stock) by the holder (other than BioFuel Energy Corp.) for shares of our common
stock.
On
September 24, 2010, we paid the Backstop Parties $743,795 in consideration of
the Backstop Commitment and a fee of $776,825 in consideration of the funding of
our bridge loan. If the aggregate amount of the Rights Offering plus
the LLC’s Concurrent Private Placement is greater than $40,000,000, an
additional fee of 4% of the excess will be payable to the Backstop Parties as
additional consideration for the Backstop Commitment (excluding for calculation
purposes any additional depositary shares or preferred membership interests
purchased by the Backstop Parties pursuant to their Basic Commitment or their
over-subscription privileges or LLC additional purchase
privileges).
We expect
that we will not have sufficient available authorized but unissued shares of our
common stock and class B common stock under our Amended and Restated Certificate
of Incorporation to allow for all potential issuances of common stock and class
B common stock upon conversion of all shares of Series A Non-Voting Convertible
Preferred Stock and upon conversion of all preferred membership interests and
class B preferred membership interests (if any) in the LLC that are issuable in
connection with the Rights Offering, the LLC’s Concurrent Private Placement and
the Cargill Stock Payment (as described in the accompanying proxy
statement). In addition, because our common stock is listed on The
NASDAQ Global Market, we are subject to the NASDAQ Listing
Rules. NASDAQ Rule 5635(d) requires stockholder approval prior to
certain issuances of securities, and the rule applies to such issuances in
connection with the Rights Offering, the LLC’s Concurrent Private Placement and
the Cargill Stock Payment.
As a
result, at the Special Meeting, you will be asked to consider and vote on the
following two proposals:
|
1.
|
To
consider and vote on a proposal to amend our Amended and Restated
Certificate of Incorporation to increase the number of authorized shares
of our common stock from 100,000,000 to 140,000,000 and our class B common
stock from 50,000,000 to
75,000,000.
|
|
2.
|
To
consider and vote on a proposal to authorize and approve, pursuant to
NASDAQ Rule 5635(d): (i) the issuance of all shares of our
common stock issuable upon the conversion of all shares of Series A
Non-Voting Convertible Preferred Stock underlying the depositary shares
purchased in connection with the Rights Offering (or pursuant to the
Backstop Commitment) and issued pursuant to the Cargill Stock Payment,
(ii)(A) the issuance of all shares of our class B common stock issuable
upon the conversion of all preferred membership interests and class B
preferred membership interests (if any) in the LLC that holders of
membership interests in the LLC (other than BioFuel Energy Corp.) purchase
in the LLC’s Concurrent Private Placement (or pursuant to the Backstop
Commitment) and (B) the issuance of all shares of our common stock
issuable upon the elective exchange of membership interests in the LLC
received by such persons following the conversion of all preferred
membership interests in the LLC and (iii) the issuance of the Warrants (as
described in the accompanying proxy statement) and of all shares of our
common stock issuable upon the exercise of the Warrants assuming that such
Warrants are issued.
|
Our board
of directors recommends that our stockholders vote “FOR” these
proposals.
Please
read the accompanying proxy statement for information about the matters to be
voted upon. Your vote is important. Whether or not you plan to attend the
Special Meeting in person, we urge you to submit your proxy as soon as possible
via the Internet, by telephone or by mail.
|
Sincerely,
|
|
|
|
Mark
W. Wong
|
|
Chairman
of the Board
|
BIOFUEL
ENERGY CORP.
1600
BROADWAY, SUITE 2200
DENVER,
COLORADO 80202
NOTICE
OF SPECIAL MEETING OF STOCKHOLDERS
To
Be Held February 2, 2011
To the
Stockholders of BioFuel Energy Corp.:
We will
hold a Special Meeting of Stockholders (the “Special Meeting”) of BioFuel Energy
Corp. (the “Company”) in the Company’s executive offices located at 1600
Broadway, Suite 2200, Denver, Colorado 80202, on February 2, 2011, at
10:00 a.m., Denver time, for the following purposes:
|
1.
|
To
consider and vote on a proposal to amend our Amended and Restated
Certificate of Incorporation to increase the number of authorized shares
of our common stock from 100,000,000 to 140,000,000 and our class B common
stock from 50,000,000 to
75,000,000.
|
|
2.
|
To
consider and vote on a proposal to authorize and approve, pursuant to
NASDAQ Rule 5635(d): (i) the issuance of all shares of our
common stock issuable upon the conversion of all shares of Series A
Non-Voting Convertible Preferred Stock underlying the depositary shares
purchased in connection with the Rights Offering (or pursuant to the
Backstop Commitment) and issued pursuant to the Cargill Stock Payment,
(ii)(A) the issuance of all shares of our class B common stock issuable
upon the conversion of all preferred membership interests and class B
preferred membership interests (if any) in the LLC that holders of
membership interests in the LLC (other than BioFuel Energy Corp.) purchase
in the LLC’s Concurrent Private Placement (or pursuant to the Backstop
Commitment) and (B) the issuance of all shares of our common stock
issuable upon the elective exchange of membership interests in the LLC
received by such persons following the conversion of all preferred
membership interests in the LLC and (iii) the issuance of the Warrants and
of all shares of our common stock issuable upon the exercise of the
Warrants assuming that such Warrants are
issued.
|
|
3.
|
To
transact such other business as may properly come before the Special
Meeting and any adjournments or postponements
thereof.
|
The
Company’s board of directors recommends that stockholders vote “FOR” each of
Proposals 1 and 2.
The board
of directors has fixed December 27, 2010 as the record date for the Special
Meeting. Only stockholders of record at the close of business on that
date are entitled to receive notice of and to vote at the Special Meeting or at
any adjournments or postponements thereof. Holders of both common
stock and class B common stock are entitled to vote. A complete list
of stockholders entitled to vote at the Special Meeting will be open to the
examination of any stockholder present at the Special Meeting and, for any
purpose relevant to the Special Meeting, during ordinary business hours for at
least 10 days prior to the Special Meeting, at the corporate offices of the
Company at the address indicated above.
Pursuant
to the rules promulgated by the Securities and Exchange Commission (“SEC”), we
have elected to provide access to our proxy materials both by sending you this
full set of proxy materials, including a proxy card, and by notifying you of the
availability of our proxy materials on the Internet. This proxy
statement is available free of charge at http://bnymellon.mobular.net/bnymellon/biof.
Whether
or not you plan to attend the Special Meeting in person, we urge you to ensure
your representation by submitting your proxy as promptly as
possible. You may do so by completing, signing, dating and returning
the enclosed proxy card by mail, or you may submit your proxy by telephone or
electronically through the Internet, as further described on the proxy
card. If you attend the Special Meeting and inform the Secretary of
the Company in writing that you wish to vote your shares in person, your proxy
will not be used. If you hold your shares through an account with a
brokerage firm, bank or other nominee, please follow the instructions you
receive from them to provide voting instructions for your shares.
|
By
Order of the Board of Directors,
|
|
|
|
MARK
L. ZOELLER
|
|
|
|
Corporate
Secretary
|
BIOFUEL
ENERGY CORP.
1600
BROADWAY, SUITE 2200
DENVER,
COLORADO 80202
PROXY
STATEMENT
TABLE OF
CONTENTS
PROXY
STATEMENT
|
1
|
|
|
BACKGROUND
|
4
|
|
|
PROPOSAL
1
|
11
|
|
|
PROPOSAL
2
|
13
|
|
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
18
|
|
|
DESCRIPTION
OF CAPITAL STOCK
|
21
|
Authorized
Capital
|
21
|
Common
Stock
|
21
|
Preferred
Stock
|
22
|
Series
A Non-Voting Convertible Preferred Stock
|
22
|
Description
of the Depositary Shares
|
25
|
LLC
Membership Interests
|
30
|
LLC
Preferred Membership Interests; Amended and Restated Limited Liability
Company Agreement
|
30
|
LLC
Class B Preferred Membership Interests
|
31
|
Anti-Takeover
Effects of Our Certificate of Incorporation and By-laws
|
32
|
Certain
Other Provisions of Our Certificate of Incorporation and By-laws and
Delaware Law
|
33
|
|
|
OTHER
MATTERS
|
33
|
|
|
SOLICITATION
OF PROXIES
|
33
|
|
|
WHERE
YOU CAN FIND MORE INFORMATION
|
34
|
PROXY
STATEMENT
The board
of directors of BioFuel Energy Corp. (the “Company”) is soliciting your proxy
for use at a Special Meeting of stockholders of BioFuel Energy Corp to be held
in the Company’s executive offices located at 1600 Broadway, Suite 2200, Denver,
Colorado 80202, on February 2, 2011, at 10 a.m., Denver time, and
any postponement or adjournments thereof for the purpose set forth in the
accompanying Notice of Special Meeting of Stockholders.
QUESTIONS
AND ANSWERS
Q: Why
am I receiving these materials?
A: The
Company is providing these proxy materials to you and soliciting your vote in
connection with a Special Meeting of stockholders, which will take place on
February 2, 2011. As a stockholder, you are invited to attend the Special
Meeting and may vote on the proposals described in this Proxy
Statement.
Q: What
information is contained in these materials?
A: The
information included in this Proxy Statement relates to the proposals to be
voted on at the Special Meeting, the voting process and certain other required
information.
Q: Who
may vote at the Special Meeting?
A: Only
stockholders of record at the close of business on December 27, 2010 may vote at
the Special Meeting. As of December 13, 2010, there were 25,465,728 shares of
common stock outstanding, and 7,111,985 shares of class B common stock
outstanding, which together constitute a total of 32,577,713 outstanding voting
shares of the Company. Each share of common stock and class B common stock is
entitled to one vote and they will vote together as a single
class.
Q: What is the difference
between holding shares as a stockholder of record and as a beneficial owner?
A: Most
stockholders hold shares through a stockbroker, bank or other nominee rather
than directly in their own name. There are some distinctions between shares held
of record and shares owned beneficially, which are summarized
below:
Stockholder of
Record. If your shares are registered directly in your name
with our transfer agent, BNY Mellon Shareowner Services, you are considered to
be the stockholder of record of those shares and these proxy materials are being
sent directly to you by the Company. As the stockholder of record, you have the
right to submit a proxy for your shares or to vote in person at the Special
Meeting. In that case, we have enclosed a proxy card for you to use. All holders of shares of class B
common stock are stockholders of record.
Beneficial Owner. If your
shares of common stock are held in a stock brokerage account or by a bank or
other nominee, you are considered the beneficial owner of shares held in street
name, and these proxy materials are being forwarded to you by your broker or
bank, which is considered to be the stockholder of record of those shares. As
the beneficial owner, you have the right to direct your broker how to vote and
are also invited to attend the Special Meeting. If you wish these shares to be
voted at the Special Meeting, you must contact your bank or broker for
instructions as to how to do so. Your broker or bank has enclosed a voting
instruction card for you to use in directing the broker or nominee how to vote
your shares for you.
Q: How
can I vote my shares?
A: You
may vote either in person at the Special Meeting or submit a proxy for your
shares, either telephonically, on the Internet or by signing and returning a
proxy card. Please refer to the instructions included on your proxy card to
submit a proxy. Proxies submitted by telephone or the Internet are
treated in the same manner as if the stockholder had signed, dated and returned
the proxy card by mail. Therefore, stockholders of record electing to
submit a proxy by telephone or the Internet should not return their proxy cards
by mail.
If you
hold your shares in street name through a bank, broker or other record holder,
then you may provide voting instructions for your shares by the methods your
bank or broker makes available using the instructions the bank or broker has
included with this Proxy Statement. These methods may include
providing voting instructions over the Internet, by telephone or by mailing a
voting instruction card. If you are a class B stockholder and choose not to
attend the Special Meeting, you must sign, date and return your proxy card in
order for your vote to be counted.
Q: What
is a “quorum” and why is it necessary?
A: In
order for us to conduct the Special Meeting, a majority of our outstanding
shares of common stock and class B common stock as of December 27, 2010 must be
present in person or by proxy at the Special Meeting. This is
referred to as a quorum.
Q: What
am I being asked to vote on?
A: You
are voting on two proposals. Proposal 1 would authorize the amendment
of our Amended and Restated Certificate of Incorporation to increase the number
of authorized shares of our common stock from 100,000,000 to 140,000,000 and our
class B common stock from 50,000,000 to 75,000,000. Delaware law
requires stockholder approval for these amendments to our Amended and Restated
Certificate of Incorporation.
Proposal
2 is required for the issuance of certain securities upon conversion to comply
with NASDAQ Rule 5635(d). Specifically, Proposal 2 would authorize
and approve, pursuant to NASDAQ Rule 5635(d): (i) the issuance of all
shares of our common stock issuable upon the conversion of all shares of Series
A Non-Voting Convertible Preferred Stock underlying the depositary shares
purchased in connection with the Rights Offering (or pursuant to the Backstop
Commitment) and issued pursuant to the Cargill Stock Payment, (ii)(A) the
issuance of all shares of our class B common stock issuable upon the conversion
of all preferred membership interests and class B preferred membership interests
(if any) in the LLC that holders of membership interests in the LLC (other than
BioFuel Energy Corp.) purchase in the LLC’s Concurrent Private Placement (or
pursuant to the Backstop Commitment) and (B) the issuance of all shares of our
common stock issuable upon the elective exchange of membership interests in the
LLC received by such persons following the conversion of all preferred
membership interests in the LLC and (iii) the issuance of the Warrants and of
all shares of our common stock issuable upon the exercise of the Warrants
assuming that such Warrants are issued.
The votes
required for each of the proposals is as described below.
Our board
of directors recommends that you vote your shares “FOR” both proposals. We are
not aware of any other business to come before the Special
Meeting.
Q: What
vote is required to approve each proposal, and how will votes be
counted?
A: In voting on Proposal 1,
the amendment to the Company’s Amended and Restated Certificate of
Incorporation, you may vote in favor of the proposal, vote against the proposal
or abstain from voting. Approval of Proposal 1 requires the
affirmative vote of a majority of the votes eligible to be cast at the Special
Meeting. Abstentions and broker non-votes will have the effect of
voting against Proposal 1. We reserve the right to take action on
Proposal 1, if it is approved, even if Proposal 2 is not approved or
implemented. We also reserve the right to take no action on Proposal
1, if it is approved, if Proposal 2 is not also approved.
In voting
on Proposal 2, you may vote in favor of the proposal, vote against the proposal
or abstain from voting. Approval of this proposal requires the
affirmative vote of a majority of the votes cast on the proposal at the Special
Meeting. Abstentions and broker non-votes will have no effect on the
outcome of the vote on Proposal 2.
Pursuant
to the Voting Agreements described under “Background—Voting Agreements,” the
Greenlight Parties and Third Point have agreed to vote their shares of common
stock and class B common stock to approve Proposal 1 and Proposal 2, and
together they own sufficient shares to approve Proposal 1 and Proposal
2.
Q: Can
I change my vote?
A: You
have the right to revoke your proxy at any time before the Special Meeting
by:
|
·
|
providing
written notice to the Company’s corporate secretary that you revoke your
proxy;
|
|
·
|
voting
in person at the Special Meeting;
or
|
|
·
|
signing
a later-dated proxy card and submitting it so that it is received before
the Special Meeting
begins.
|
Attending
the Special Meeting will not by itself revoke a proxy unless you specifically
revoke your proxy in writing.
Q: What
does it mean if I get more than one proxy card?
A: If your shares are
registered differently and are held in more than one account, then you will
receive more than one proxy card. Be sure to vote all of your accounts so that
all of your shares are voted. We encourage you to have all accounts registered
in the same name and address whenever possible.
Q: Who
may attend the Special Meeting?
A: All stockholders who
owned shares of our common stock and class B common stock on the record date may
attend the Special Meeting. You may indicate on the enclosed proxy card if you
plan to attend the Special Meeting.
Q: Where
and when will I be able to find the results of the voting?
A: The results of the
voting will be announced at the Special Meeting. We will also publish the final
results in a current report on Form 8-K, which we will file with the Securities
and Exchange Commission.
Q: When
are stockholder proposals for the 2011 annual meeting due?
A: In
order for an item of business proposed by a stockholder to be considered
properly brought before the 2011 annual meeting of stockholders as an agenda
item or to be eligible for inclusion in our 2011 proxy statement, our By-laws
require that the stockholder give written notice to our Corporate Secretary. The
notice must specify certain information concerning the stockholder and the item
of business proposed to be brought before the annual meeting. The notice must be
received by our Corporate Secretary not less than 90 nor more than 120 calendar
days before the first anniversary of the previous year’s annual meeting;
provided, however, that in the event that (1) no annual meeting was held in the
previous year or (2) the date of the annual meeting is more than 30 days earlier
or more than 60 days later than such anniversary, notice by the stockholder must
be received no earlier than the 120th day prior to such annual meeting and not
later than the close of business on the later of the 90th day prior to such
annual meeting and the 10th day following the day on which notice of the annual
meeting date was mailed or public disclosure of the annual meeting date was made
for such notice to be timely. Accordingly, assuming that the date of
the 2011 annual meeting does not change materially from the anniversary date of
the 2010 meeting, proper notice of a stockholder proposal for the 2011 annual
meeting must be received by us no earlier than January 19, 2011 and no later
than February 18, 2011.
Q: Who will bear the cost
of soliciting proxies for the Special Meeting, and how will these proxies be solicited?
A: We
will pay the cost of preparing, assembling, printing, posting, mailing and
distributing these proxy materials, including the charges and expenses of
brokers, banks, nominees and other fiduciaries who forward proxy materials to
their principals. Proxies may be solicited by mail, in person, by telephone or
by electronic communication by our officers and employees, who will not receive
any additional compensation for these solicitation activities.
BACKGROUND
This
background section briefly summarizes selected information in this Proxy
Statement and certain agreements that we entered into in connection with the
Rights Offering and the LLC’s Concurrent Private Placement. These
agreements include the Bridge Loan Agreement and the Cargill Letter Agreement
which are included as Exhibits 10.1 and 10.5, respectively, to our Current
Report on Form 8-K filed on September 27, 2010 and the Amended and Restated
Rights Offering Letter Agreement, the Amended and Restated Greenlight Parties’
Voting Agreement and the Amended and Restated Third Point Voting Agreement which
were filed as exhibits to Amendment No. 4 to the Registration Statement filed on
December 16, 2010. For more information about accessing the
information we file with the SEC, please see “Where You Can Find More
Information” below.
This
section does not contain a summary of all the information included in this Proxy
Statement or these agreements or that may otherwise be important to
you. You should carefully read this entire Proxy Statement and the
other documents that are incorporated by reference herein. We have
not authorized any persons to give any information or to make any
representations other than the information and statements included in or
incorporated by reference into this Proxy Statement. The information
contained in this Proxy Statement is correct only as of the date of this Proxy
Statement, regardless of the date it is delivered.
This
Proxy Statement is not an offer to sell or the solicitation of an offer to buy
our depositary shares, shares of our common stock, preferred membership
interests in the LLC or any other securities. Offers and sales of
depositary shares issuable upon exercise of the rights in the Rights Offering
will only be made by means of a prospectus meeting the requirements of the
Securities Act and applicable state securities laws, on the terms and subject to
the conditions set forth in such prospectus. In connection with the Rights
Offering, the Registration Statement was declared effective by the SEC on
December 17, 2010.
All
references in this Proxy Statement to the “Company,” “we,” “us,” “our” or
similar references mean BioFuel Energy Corp. and its successors, and include our
consolidated subsidiaries where the context so requires. References
to “Cargill” refer to Cargill, Incorporated and its subsidiaries or
affiliates.
The
Bridge Loan Agreement
On
September 24, 2010, we entered into a loan agreement (the “Bridge Loan
Agreement”) with Greenlight Capital, LP, Greenlight Capital Qualified, LP,
Greenlight Capital (Gold), LP, Greenlight Capital Offshore Partners, Greenlight
Capital Offshore Master (Gold), Ltd., Greenlight Reinsurance, Ltd. (the
“Greenlight Parties”) and Third Point Loan LLC (“Third Point” and, together with
the Greenlight Parties, the “Backstop Parties”) and Greenlight APE, LLC, as
administrative agent, pursuant to which we borrowed $19,420,620 (which we refer
to as the “Bridge Loan”). The proceeds of the Bridge Loan were used
to repay certain working capital loans under our senior credit agreement and to
pay certain related fees and expenses. The Bridge Loan matures on
March 24, 2011, and in the event the Bridge Loan is not paid in full on or
before that date, we will issue warrants (which we refer to as the “Warrants”)
to the Backstop Parties exercisable at an exercise price of $0.01 per share for
an aggregate of 15% of our common stock on a fully diluted basis as of the date
the Warrants are issued.
Cargill
Letter Agreement
On
September 23, 2010, we entered into a letter agreement with Cargill, Cargill
Commodity Services, Inc. and our operating subsidiaries BFE Operating Company,
LLC, Pioneer Trail Energy, LLC and Buffalo Lake Energy, LLC (which we refer to
as the “Cargill Letter”) pursuant to which we and Cargill agreed to adjustments
to certain commercial terms under our ethanol and distillers grains marketing
agreements, corn supply agreements and grain facility leases. We and
Cargill also agreed that upon completion of the Rights Offering, (i) we will pay
Cargill $2,800,828.57 (which we refer to as the “Cargill Cash Payment”) pursuant
to the terms of the agreement dated January 14, 2009 by and between us and
Cargill (which we refer to as the “Settlement Agreement”) and, as contemplated
by the Settlement Agreement, Cargill will forgive a like amount of the payable
under the Settlement Agreement and (ii) upon receipt of the Cargill Cash
Payment, Cargill will forgive the remaining payable under the Settlement
Agreement in exchange for depositary shares in an amount equal to approximately
$6,800,000 (which we refer to as the “Cargill Stock
Payment”).
The
depositary shares that will make up the Cargill Stock Payment will be issued to
Cargill on the 12th business day following the consummation of the Rights
Offering and will be valued at a per share price equal to the average of the
volume weighted averages of the trading prices of our common stock, as such
prices are reported on The NASDAQ Global Market, for the 10 consecutive trading
days ending on the second trading day immediately preceding the date such
depositary shares are issued to Cargill. In order to issue the
depositary shares that will make up the Cargill Stock Payment, we expect to
issue and deposit with the depositary a number of additional shares of Series A
Non-Voting Convertible Preferred Stock that corresponds to the aggregate
fractional interests in shares of Series A Non-Voting Convertible Preferred
Stock that the newly issued depositary shares represent. In the event
that an insufficient number of authorized shares of Series A Non-Voting
Convertible Preferred Stock are available for such issuance and deposit with the
depositary, we expect to establish an alternative method for satisfying the
Cargill Stock Payment that is satisfactory to us, Cargill and the Backstop
Parties.
Voting
Agreements
On
September 24, 2010, the Greenlight Parties entered into a voting agreement,
which was subsequently superseded in its entirety by the amended and restated
voting agreement entered into by the Greenlight Parties and dated as of December
14, 2010, which requires the Greenlight Parties, in connection with certain
stockholder votes, to cast their votes (i) in favor of at least two directors
who are not affiliated with, or employed by, and who are otherwise independent
of, the Greenlight Parties and (ii) in favor of the proposals described
herein. Also on September 24, 2010, Third Point entered into a voting
agreement, which was subsequently superseded in its entirety by the amended and
restated voting agreement entered into by Third Point and dated as of December
14, 2010, which requires Third Point, in connection with certain stockholder
votes, to cast its votes in favor of the proposals described
herein. We refer to these voting agreements, as subsequently amended,
collectively as the “Voting Agreements.” Pursuant to the Voting
Agreements, as subsequently amended, the Greenlight Parties and Third Point have
agreed to vote in favor of both Proposals 1 and 2 of this Proxy
Statement.
The
Greenlight Parties are affiliates of Greenlight Capital, Inc., which, as of
December 13, 2010, owned 7,542,104 shares of common stock and 4,311,396 shares
of class B common stock, which together represented 36.4% of our outstanding
total voting stock (composed of our common stock and class B common stock) on
that date. Third Point is an affiliate of Third Point Funds, which as of
December 13, 2010, owned 5,578,800 shares of common stock, which represented
17.1% of our outstanding total voting stock on that
date. Collectively, the Backstop Parties owned 53.5% of our
outstanding total voting stock on that date, an amount which would be sufficient
to approve both Proposals 1 and 2.
The
Rights Offering Letter Agreement
In
connection with the Bridge Loan Agreement, on September 24, 2010, we entered
into a Rights Offering Letter Agreement with the Backstop Parties, which was
subsequently amended and restated in its entirety by the Amendment and
Restatement to the Rights Offering Letter Agreement entered into with the
Backstop Parties and dated as of December 14, 2010. The Rights
Offering Letter Agreement, as subsequently amended, sets forth, among other
things, the terms and conditions of the Rights Offering and the LLC’s Concurrent
Private Placement, including the participation and backstop commitments of the
Backstop Parties.
The
Independent Committee
In
connection with the negotiation, execution and amendment of the Rights Offering
Letter Agreement, the Bridge Loan Agreement and the Voting Agreements, we
established an independent committee of our board of directors consisting only
of independent members of our board. David Einhorn is the principal of the
Greenlight Parties and a member of the board of directors; however, he was not
involved in any of the deliberations or negotiations of the independent
committee on our behalf as it relates to the terms of the Bridge Loan Agreement,
the Rights Offering Letter Agreement (or amendment thereto), the LLC’s
Concurrent Private Placement or the Voting Agreements. The terms of
the Rights Offering Letter Agreement and any amendment thereto and the Bridge
Loan Agreement were determined after arm’s-length negotiations between the
independent committee and the Backstop Parties. The independent committee
received financial advice from Piper Jaffray & Co., the independent
financial advisor to the committee, and was advised by independent legal
counsel.
The
Rights Offering
Pursuant
to the Rights Offering, we distributed at no charge to record holders of our
common stock as of 5:00 p.m., New York City time, on December 27, 2010,
non-transferable subscription rights to purchase depositary shares representing
shares of our Series A Non-Voting Convertible Preferred Stock. The
number of subscription rights distributed to record holders of our common stock
was 64,210,390. The subscription rights were distributed pro rata to
the holders of our common stock based on the number of shares of common stock
held on the record date. Each subscription right will permit the
holder of such right to acquire, at a price equal to $0.56 per depositary share,
one depositary share under the basic subscription privilege and will also
provide the holder of such right with an over-subscription
privilege. The over-subscription privilege will entitle the holder of
the subscription right to subscribe for an additional amount of depositary
shares equal to up to 100% of the depositary shares for which the holder was
otherwise entitled to subscribe. If and to the extent that the
Backstop Parties determine, after consultation with the Company, that the
exercise of the over-subscription privileges would result in adverse tax, legal
or regulatory consequences to the Company or any of the Backstop Parties, the
Company may reduce or eliminate, pro rata for all holders of subscription
rights, exercise of over-subscription privileges. The Rights Offering
expires at 5:00 p.m., New York City time, on January 28,
2011.
Each
depositary share will represent a fractional interest in a share of Series A
Non-Voting Convertible Preferred Stock. If our stockholders approve
the proposals contained in the accompanying proxy statement, each share of
Series A Non-Voting Convertible Preferred Stock will automatically convert into
a number of shares of our common stock equal to the quotient obtained by
dividing the total number of depositary shares actually purchased in the Rights
Offering and pursuant to the Backstop Commitment by 2,000,000. Upon
conversion of the Series A Non-Voting Convertible Preferred Stock, each
depositary share shall entitle the holder thereof to receive one share of our
common stock and, upon the distribution of one share of our common stock to the
holder of each such depositary share, each such depositary share shall be
automatically canceled and have no further value. As a result, the
depositary shares are effectively convertible on a one-for-one basis into shares
of common stock and will so convert if stockholders approve Proposals 1 and
2.
The
LLC’s Concurrent Private Placement
Concurrent
with the Rights Offering, the LLC will be conducting the LLC’s Concurrent
Private Placement. Pursuant to the LLC’s Concurrent Private
Placement, the LLC has granted at no charge purchase privileges to all holders
of membership interests in the LLC (other than BioFuel Energy Corp.) as of the
record date to purchase a new class of preferred membership interests in the
LLC. The preferred membership interests are convertible into membership
interests in the LLC on a one-for-one basis. Concurrent with such
conversion, the holders of the preferred membership interests (other than
BioFuel Energy Corp.) will also receive one share of class B common stock for
each membership interest received upon conversion. The membership
interests in the LLC received upon conversion would then be exchangeable
(together with the corresponding shares of class B common stock) by the holder
(other than BioFuel Energy Corp.) for shares of our common
stock. Each LLC purchase privilege will permit the holder of such
privilege to acquire, at a price equal to $0.56 per preferred membership
interest, one preferred membership interest in the LLC under the LLC basic
purchase privilege and will also provide the holder of such LLC basic purchase
privilege with an LLC additional purchase privilege. The LLC additional
purchase privilege will entitle the holder of the LLC purchase privilege to
purchase an additional amount of preferred membership interests equal to up to
100% of the preferred membership interests that the holder was otherwise
entitled to purchase. The LLC’s Concurrent Private Placement has been
structured so as to provide the holders of membership interests in the LLC
(other than BioFuel Energy Corp.), whose interests are exchangeable on a
one-for-one basis for shares of our common stock, with a private placement that
is economically equivalent to the Rights Offering. The record date, term
and expiration date of the LLC’s Concurrent Private Placement will be the same
as those for the Rights Offering.
Immediately
prior to the consummation of the Rights Offering and the LLC’s Concurrent
Private Placement, the LLC will amend and restate its limited liability company
agreement to add the preferred membership interests as a new class of LLC
membership interest. Immediately following the consummation of the LLC’s
Concurrent Private Placement, the holders of membership interests in the LLC
(other than BioFuel Energy Corp.) will be entitled to receive preferred
membership interests in amounts to be determined in accordance with their
exercise of LLC basic purchase privileges and LLC additional purchase privileges
(and, in the case of the Backstop Parties, determined in accordance with their
exercise of the Backstop Commitment for preferred membership interests).
Immediately following the consummation of the Rights Offering, BioFuel Energy
Corp. will contribute all proceeds of the Rights Offering to the LLC, and the
LLC will issue to BioFuel Energy Corp. a number of preferred membership
interests equal to the number of depositary shares that BioFuel Energy Corp.
issued in the Rights Offering.
If our
stockholders approve Proposals 1 and 2 of this Proxy Statement, all preferred
membership interests in the LLC will automatically convert into membership
interests on a one-for-one basis. Concurrent with such conversion,
the holders of the preferred membership interests (other than BioFuel Energy
Corp.) will also receive one share of class B common stock for each membership
interest received upon conversion. The membership interests in the
LLC received upon conversion would then be exchangeable (together with the
corresponding shares of class B common stock) by the holder (other than BioFuel
Energy Corp.) for shares of our common stock.
The
Backstop Commitment
The
Backstop Parties have agreed, subject to the terms and conditions set forth in
the Rights Offering Letter Agreement, as amended, to (i) purchase
depositary shares in an amount equal to their full basic subscription privileges
and participate in the LLC’s Concurrent Private Placement for their full LLC
basic purchase privileges (which we refer to as the “Basic Commitment”) and
(ii) purchase immediately prior to expiration of the Rights Offering and
the LLC’s Concurrent Private Placement (x) all of the available depositary
shares not otherwise sold in the Rights Offering following the exercise of all
other holders’ basic subscription privileges and over-subscription privileges
and (y) all of the available preferred membership interests in the LLC not
otherwise sold in the LLC’s Concurrent Private Placement following the exercise
of all LLC basic purchase privileges and LLC additional purchase privileges of
all other holders of membership interests in the LLC (other than BioFuel Energy
Corp.) (which we refer to as the “Backstop Commitment”).
Notwithstanding
the foregoing, the Rights Offering Letter Agreement provides that the Backstop
Parties may (i) reduce the number of depositary shares that they would otherwise
be obligated to purchase pursuant to the Basic Commitment or Backstop Commitment
or (ii) cause us to reduce the aggregate number of depositary shares offered in
the Rights Offering, in the event that the Backstop Parties determine, in their
sole discretion, that the consummation of the Rights Offering, the Basic
Commitment or the Backstop Commitment would result in adverse tax, legal or
regulatory consequences to us or any of the Backstop Parties. In the event
that the Backstop Parties cause us to reduce the aggregate number of depositary
shares offered in the Rights Offering or reduce the number of depositary shares
that they would otherwise be obligated to purchase pursuant to the Basic
Commitment or Backstop Commitment, the Rights Offering would proceed with us and
the Backstop Parties using commercially reasonable best efforts to structure and
consummate an alternative transaction to take the place of the issuance of the
depositary shares not purchased in the Rights Offering or pursuant to the Basic
Commitment or Backstop Commitment. The alternative transaction would be
structured so as to preserve the economic benefits to the parties to the Rights
Offering Letter Agreement as if the Rights Offering had been consummated in full
without giving effect to such reduction (provided that no Backstop Party shall
be obligated to fund an amount in excess of the amount represented by its
Backstop Commitment).
In
particular, in the event of a Backstop Reduction that takes the form of a
reduction of the number of depositary shares that the Backstop Parties would
otherwise be obligated to purchase pursuant to the Backstop Commitment, the
Backstop Parties shall either (i) exercise their respective Backstop Commitments
with respect to all or a portion of the available depositary shares not
otherwise sold in the Rights Offering following the exercise of all other
holders’ basic subscription privileges and over-subscription privileges by
purchasing a new class of class B preferred membership interests in the LLC
(instead of purchasing such available depositary shares) in the event that such
Backstop Parties determine, in their sole discretion, that the purchase of such
available depositary shares would result in adverse tax, legal or regulatory
consequences to us or such Backstop Parties (an “LLC Backstop Reallocation”) or
(ii) not exercise their respective Backstop Commitments with respect to all or a
portion of the available depositary shares not otherwise sold in the Rights
Offering following the exercise of all other holders’ basic subscription
privileges and over-subscription privileges in the event that such Backstop
Parties determine, in their sole discretion, that the purchase of such available
depositary shares would result in adverse tax, legal or regulatory consequences
to us or such Backstop Parties. In the event of an LLC Backstop
Reallocation, the LLC will issue such class B preferred membership interests to
the applicable Backstop Parties (in equal number to the number of available
depositary shares not purchased because of such LLC Backstop Reallocation) in
exchange for payment of $0.56 for each class B preferred membership interest
purchased. The class B preferred membership interests, if issued, would
have the same terms as the preferred membership interests (including as to
conversion, distribution, liquidation and other rights), except that, upon
conversion of such class B preferred membership interests, holders of such class
B preferred membership interests would receive membership interests in the LLC
that would not be exchangeable for shares of our common stock.
Fees
and Expenses Paid or Payable to the Backstop Parties
On
September 24, 2010, we paid the Backstop Parties $743,795 in consideration of
the Backstop Commitment and a fee of $776,825 in consideration of the funding of
the Bridge Loan. If the aggregate amount of the Rights Offering plus
the LLC’s Concurrent Private Placement is greater than $40,000,000, an
additional fee of 4% of the excess will be payable to the Backstop Parties as
additional consideration for the Backstop Commitment (excluding for calculation
purposes any additional depositary shares or preferred membership interests
purchased by the Backstop Parties pursuant to their Basic Commitment or their
over-subscription privileges or LLC additional purchase
privileges). No portion of the Backstop Commitment fee previously
paid to the Backstop Parties is refundable, even if the Backstop Parties elect
to reduce the number of depositary shares that they would otherwise be obligated
to purchase pursuant to the Basic Commitment or Backstop Commitment or cause us
to reduce the aggregate number of depositary shares offered in the Rights
Offering. As described under “—Substitute Transaction,” if we sign a
definitive agreement relating to a Substitute Transaction, we will also be
required to pay the Backstop Parties a break-up fee equal to $350,000. In
addition, we have agreed to pay the reasonable fees and expenses of the Backstop
Parties incurred in connection with the Rights Offering Letter Agreement and the
transactions contemplated hereby, including the Rights Offering (including the
reasonable fees and expenses of legal counsel to the Backstop
Parties).
Substitute
Transaction
The
provisions of the Rights Offering Letter Agreement permit us to solicit,
participate in, initiate or facilitate discussions or negotiations with, or
provide any information to, any person or group of persons concerning any
alternative equity financing or other transaction that would result in the
(a) repayment in full of all amounts outstanding under the Bridge Loan
Agreement, (b) repayment in full of all amounts under the Subordinated Debt
Agreement and (c) satisfaction of all obligations under the Cargill Letter
(which we refer to as a “Substitute Transaction”). If, as a result of such
activities, our board of directors (excluding any board member that is an
affiliate of the Greenlight Parties) determines in good faith after consultation
with outside legal counsel and independent financial advisors that (i) we have
the opportunity to enter into a Substitute Transaction that will be consummated
within a timeframe that is not materially longer than the anticipated timeframe
for the Rights Offering and the LLC’s Concurrent Private Placement but in no
event later than February 1, 2011 and (ii) such Substitute Transaction is more
favorable to the holders of our common stock (excluding benefits arising to the
Backstop Parties by virtue of the Backstop Commitment) than the Rights Offering
and the LLC’s Concurrent Private Placement (taking into account all the terms
and conditions of such Substitute Transaction that the board deems relevant
including, without limitation, any break-up fee provisions, expense
reimbursement provisions, conditions to closing and availability of necessary
financing) and is reasonably likely to be consummated prior to February 1, 2011,
then we shall deliver three business days’ prior notice to the Greenlight
Parties of our intention to enter into such Substitute Transaction, together
with reasonable details concerning the terms and conditions of such Substitute
Transaction. After such three business day period, (x) the board would be
permitted to approve the Substitute Transaction, (y) we would be permitted to
enter into such Substitute Transaction and (z) we would be permitted to
terminate the Rights Offering Letter Agreement, so long as in each case (A) the
Substitute Transaction continues to meet the requirements described in clause
(ii) above and (B) upon execution of definitive documentation relating to a
Substitute Transaction, we pay to the Backstop Parties an aggregate break-up fee
(to be allocated among the Backstop Parties in accordance with their relative
Backstop Commitments) in cash equal to $350,000. We will also be required
to repay all amounts owed under the Bridge Loan Agreement and the Subordinated
Debt Agreement and satisfy all of our obligations under the Cargill Letter on or
before the earlier of February 1, 2011 and the closing date of such
Substitute Transaction.
PROPOSAL
1 — APPROVAL OF AN AMENDMENT TO THE COMPANY’S AMENDED AND RESTATED CERTIFICATE
OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK AND CLASS B COMMON STOCK
The board
of directors has approved and recommends that the stockholders approve an
amendment (the “Amendment”) to the Company’s Amended and Restated Certificate of
Incorporation to increase the number of authorized shares of common stock, par
value $0.01 per share, from 100,000,000 shares to 140,000,000 shares and
class B common stock, par value $0.01 per share, from 50,000,000 shares to
75,000,000 shares. There will be no change in the number of
authorized shares of preferred stock of the Company, which will remain at
5,000,000. We are seeking the Amendment in order to allow for (i) the
issuance of all shares of our common stock issuable upon the conversion of all
shares of Series A Non-Voting Convertible Preferred Stock underlying the
depositary shares purchased in connection with the Rights Offering (or pursuant
to the Backstop Commitment) and issued pursuant to the Cargill Stock Payment,
(ii)(A) the issuance of all shares of our class B common stock issuable upon the
conversion of all preferred membership interests and class B preferred
membership interests (if any) in the LLC that holders of membership interests in
the LLC (other than BioFuel Energy Corp.) purchase in the LLC’s Concurrent
Private Placement (or pursuant to the Backstop Commitment) and (B) the issuance
of all shares of our common stock issuable upon the elective exchange of
membership interests in the LLC received by such persons following the
conversion of all preferred membership interests in the LLC and (iii) the issuance
of the Warrants and of all shares of our common stock issuable upon the exercise
of the Warrants assuming that such Warrants are issued.
As of
December 13, 2010, there were 25,465,728 shares of common stock outstanding, net
of 809,606 shares held in treasury, and 7,111,985 shares of class B common stock
outstanding, which together constitute a total of 32,577,713 shares of
outstanding voting shares of the Company. In addition, as of December
13, 2010, 7,111,985 shares of our authorized but unissued common stock are
reserved for issuance upon the exchange of currently outstanding membership
interests in the LLC (along with the corresponding shares of class B common
stock) and 3,000,000 shares of our authorized but unissued common stock are
reserved for issuance pursuant to awards granted under the Company’s 2007 Equity
Incentive Compensation Plan.
2,000,000
shares of Series A Non-Voting Convertible Preferred Stock will be issued upon
consummation of the Rights Offering. Assuming that neither the size
of the Rights Offering nor the size of the Basic Commitment or Backstop
Commitment is reduced by the Backstop Parties, assuming that there is no LLC
Backstop Reallocation and before giving effect to the Cargill Stock Payment, we
expect that these shares would be convertible into a total of 64,210,390 shares
of common stock. A summary of the material terms, including
conversion rights, of the Series A Non-Voting Convertible Preferred Stock and
the depositary shares can be found under “Description of Capital
Stock.” Twelve business days after the consummation of the Rights
Offering, we expect to issue additional depositary shares to Cargill in order to
make the Cargill Stock Payment. In order to issue the depositary
shares that will make up the Cargill Stock Payment, we expect to designate and
issue and deposit with the depositary a number of additional shares of Series A
Non-Voting Convertible Preferred Stock that corresponds to the aggregate
fractional interests in shares of Series A Non-Voting Convertible Preferred
Stock that the newly-issued depositary shares represent. The exact
number of depositary shares issuable to Cargill will not be known until after
the Rights Offering is consummated. Assuming a per share value of our
common stock used to determine the number of Series A Non-Voting Convertible
Preferred Shares representing depositary shares to be issued in satisfaction of
the Cargill Stock Payment equal to $1.64, which was the closing sales price of
our common stock on The NASDAQ Global Market on December 13, 2010, 129,024
shares of Series A Non-Voting Convertible Preferred Stock convertible into
4,142,339 shares of common stock would be issued in connection with the Cargill
Stock Payment. As of December 13, 2010, before giving effect to
the Amendment, we had 63,612,681 shares of authorized common stock available for
issuance.
In
addition, assuming that there is no Backstop Reduction or LLC Backstop
Reallocation, we expect that 82,142,858 preferred membership interests in the
LLC will be issued in the LLC’s Concurrent Private Placement (or pursuant to the
Backstop Commitment) with 64,210,390 being issued to BioFuel Energy Corp. and
17,932,468 being issued to the holders of membership interests in the LLC (other
than BioFuel Energy Corp.). These preferred membership interests will
be convertible into membership interests in the LLC on a one-for-one basis and
the holders of the preferred membership interests (other than BioFuel Energy
Corp.) will also receive one share of class B common stock for each membership
interest received upon conversion. Therefore, 17,932,468 shares of
class B common stock would be issuable upon conversion of the 17,932,468
preferred membership interests not held by BioFuel Energy Corp. In
the event of an LLC Backstop Reallocation, however, up to 31,126,774 additional
shares of class B common stock would be issuable upon conversion of the class B
preferred membership interests to be received by the Backstop Parties as a
result of such LLC Backstop Reallocation. A summary of the material
terms of the preferred membership interests and the class B preferred membership
interests can be found under “Description of Capital Stock.” For a
description of an LLC Backstop Reallocation, see “Background—The Rights
Offering—The Backstop Commitment.” As of December 13, 2010, before
giving effect to the Amendment, we had 42,888,015 shares of authorized class B
common stock available for issuance.
As a
result, before giving effect to the Amendment, we estimate that we do not have
sufficient authorized but unissued shares of common stock and may not have
sufficient authorized but unissued shares of class B common stock under our
Amended and Restated Certificate of Incorporation to allow for (i) the issuance
of all shares of our common stock issuable upon the conversion of all shares of
Series A Non-Voting Convertible Preferred Stock underlying the depositary shares
purchased in connection with the Rights Offering (or pursuant to the Backstop
Commitment) and issued pursuant to the Cargill Stock Payment, (ii)(A) the
issuance of all shares of our class B common stock issuable upon the conversion
of all preferred membership interests and class B preferred membership interests
(if any) in the LLC that holders of membership interests in the LLC (other than
BioFuel Energy Corp.) purchase in the LLC’s Concurrent Private Placement (or
pursuant to the Backstop Commitment) and (B) the issuance of all shares of our
common stock issuable upon the elective exchange of membership interests in the
LLC received by such persons following the conversion of all preferred
membership interests in the LLC and (iii) the issuance of the Warrants and of
all shares of our common stock issuable upon the exercise of the Warrants
assuming that such Warrants are issued. Pursuant to the terms of the
Series A Non-Voting Convertible Preferred Stock and the preferred membership
interests and class B preferred membership interests (if any), unless and until
stockholder approval for all such issuances is received, no shares of Series A
Non-Voting Convertible Preferred Stock will convert into shares of common stock
(and therefore no shares of common stock will be available for distribution by
the depositary to the holders of the depositary shares) and no preferred
membership interests or class B preferred membership interests (if any) in the
LLC will convert into membership interests and (in the case of holders other
than BioFuel Energy Corp.) the corresponding shares of class B common
stock.
Required
Vote
Adoption
of the Amendment contemplated by Proposal 1 requires the affirmative vote of the
holders of a majority of the shares of common stock and class B common stock,
voting together as a single class, entitled to vote thereon in order to be
approved. Abstentions and broker non-votes will have the effect of
voting against Proposal 1. We reserve the right to take action on
Proposal 1, if it is approved, even if Proposal 2 is not approved or
implemented. We also reserve the right to take no action on Proposal
1, if it is approved, if Proposal 2 is not also approved.
Pursuant
to the Voting Agreements, the Greenlight Parties and Third Point have agreed to
vote their shares of common stock and class B common stock to approve Proposal
1. Collectively, the Greenlight Parties and Third Point own 53.5% of
our outstanding common stock and class B common stock as of December 13, 2010,
which is sufficient to approve Proposal 1. See “Background—Voting
Agreements.”
Neither
the holders of shares of Series A Non-Voting Convertible Preferred Stock, nor
the holders of depositary shares (which will represent fractional interests in
shares of Series A Non-Voting Convertible Preferred Stock) nor the holders of
preferred membership interests or class B preferred membership interests (if
any) in the LLC will be entitled to a vote on Proposal 1 as a result of any such
holdings.
If
Proposal 1 is approved by the stockholders, the Amendment will become effective
upon the filing of a certificate of amendment with the Delaware Secretary of
State (or such later time as may be specified therein), which filing is expected
to occur promptly after the Special Meeting.
Recommendation
of the Board of Directors
The board
of directors of the Company recommends that the Company’s stockholders vote
“FOR” the Amendment contemplated by Proposal 1.
PROPOSAL
2 — APPROVAL OF (I) THE ISSUANCE OF ALL SHARES OF OUR COMMON STOCK ISSUABLE UPON
THE CONVERSION OF ALL SHARES OF SERIES A NON-VOTING CONVERTIBLE PREFERRED STOCK
UNDERLYING THE DEPOSITARY SHARES PURCHASED IN CONNECTION WITH THE RIGHTS
OFFERING (OR PURSUANT TO THE BACKSTOP COMMITMENT) AND ISSUED PURSUANT TO THE
CARGILL STOCK PAYMENT, (II)(A) THE ISSUANCE OF ALL SHARES OF OUR CLASS B COMMON
STOCK ISSUABLE UPON THE CONVERSION OF ALL PREFERRED MEMBERSHIP INTERESTS AND
CLASS B PREFERRED MEMBERSHIP INTERESTS (IF ANY) IN THE LLC THAT HOLDERS OF
MEMBERSHIP INTERESTS IN THE LLC (OTHER THAN BIOFUEL ENERGY CORP.) PURCHASE IN
THE LLC’S CONCURRENT PRIVATE PLACEMENT (OR PURSUANT TO THE BACKSTOP COMMITMENT)
AND (B) THE ISSUANCE OF ALL SHARES OF OUR COMMON STOCK ISSUABLE UPON THE
ELECTIVE EXCHANGE OF MEMBERSHIP INTERESTS IN THE LLC RECEIVED BY SUCH PERSONS
FOLLOWING THE CONVERSION OF ALL PREFERRED MEMBERSHIP INTERESTS IN THE LLC AND
(III) THE ISSUANCE OF THE WARRANTS AND OF ALL SHARES OF OUR COMMON STOCK
ISSUABLE UPON THE EXERCISE OF THE WARRANTS ASSUMING THAT SUCH WARRANTS ARE
ISSUED
Our
common stock is listed on The NASDAQ Global Market and therefore we are subject
to the NASDAQ Listing Rules. NASDAQ Rule 5635(d) requires stockholder
approval prior to the issuance of securities in connection with a transaction,
other than a public offering, involving the sale, issuance or potential issuance
by a company of common stock, or securities convertible into or exercisable for
common stock, equal to 20% or more of the common stock or 20% or more of the
voting power outstanding before the issuance for less than the greater of book
value or market value of the stock.
Because
we have agreed to pay a backstop fee to the Backstop Parties under the terms of
the Rights Offering Letter Agreement, NASDAQ has advised us that the Rights
Offering would not qualify under NASDAQ’s public offering
exception. In addition, the depositary shares issuable to Cargill in
connection with the Cargill Stock Payment and the preferred membership interests
and class B preferred membership interests (if any) in the LLC issuable in
connection with the LLC’s Concurrent Private Placement (or the Backstop
Commitment) will be issued in connection with private placements not eligible
for the public offering exception. We expect that the aggregate
number of shares of common stock and class B common stock issuable in connection
with the conversion of the Series A Non-Voting Convertible Preferred Stock and
the conversion of the preferred membership interests and class B preferred
membership interests (if any) in the LLC would exceed 20% of both our voting
power and number of shares of our common stock outstanding before
issuance. We also expect that such shares of common stock and class B
common stock will be issued at a price less than the per share book value or per
share market value on the date of the issuance.
Accordingly,
in order to comply with NASDAQ Rule 5635(d), we are seeking the approval of our
stockholders (the “NASDAQ Approval”) of (i) the issuance of all shares of our
common stock issuable upon the conversion of all shares of Series A Non-Voting
Convertible Preferred Stock underlying the depositary shares purchased in
connection with the Rights Offering (or pursuant to the Backstop Commitment) and
issued pursuant to the Cargill Stock Payment, (ii)(A) the issuance of all shares
of our class B common stock issuable upon the conversion of all preferred
membership interests and class B preferred membership interests (if any) in the
LLC that holders of membership interests in the LLC (other than BioFuel Energy
Corp.) purchase in the LLC’s Concurrent Private Placement (or pursuant to the
Backstop Commitment) and (B) the issuance of all shares of our common stock
issuable upon the elective exchange of membership interests in the LLC received
by such persons following the conversion of all preferred membership interests
in the LLC and (iii) the issuance of the Warrants and of all shares of our
common stock issuable upon the exercise of the Warrants assuming that such
Warrants are issued.
Required
Vote
NASDAQ
Approval contemplated by Proposal 2 requires the affirmative vote of a majority
of the votes cast by the holders of shares of common stock and class B common
stock, voting together as a single class, present in person or by proxy at the
Special Meeting and entitled to vote thereon in order to be
approved. Abstentions and broker non-votes will have no effect on the
outcome of the vote on Proposal 2.
Pursuant
to the Voting Agreements, the Greenlight Parties and Third Point have agreed to
vote their shares of common stock and class B common stock to approve Proposal
2. Collectively, the Greenlight Parties and Third Point own 53.5% of
our outstanding common stock and class B common stock as of December 13, 2010,
which is sufficient to approve Proposal 2. See “Background—Voting
Agreements.”
Neither
the holder of shares of Series A Non-Voting Convertible Preferred Stock, nor the
holders of depositary shares (which will represent fractional interests in
shares of Series A Non-Voting Convertible Preferred Stock) nor the holders of
preferred membership interests or class B preferred membership interests (if
any) in the LLC will be entitled to a vote on Proposal 2 as a result of any such
holdings.
If
Proposal 2 is approved by the stockholders, it will become effective
immediately.
Recommendation
of the Board
The board
of directors of the Company recommends that the Company’s stockholders vote
“FOR” the NASDAQ Approval contemplated by Proposal 2.
Consequences
of Approval of Proposals 1 and 2
Stockholder
approval of Proposals 1 and 2 will have the following consequences:
Conversion of Series A Non-Voting
Convertible Preferred Stock into Common Stock. If Proposals 1
and 2 are approved, then each share of Series A Non-Voting Convertible Preferred
Stock will automatically convert into a number of shares of common stock equal
to the Conversion Rate. Upon such conversion, all shares of Series A
Non-Voting Convertible Preferred Stock will cease to exist and will resume the
status of authorized and unissued shares of the Company’s preferred stock, and
all other rights of the holders of such Series A Non-Voting Convertible
Preferred Stock will terminate. Upon conversion of the Series A
Non-Voting Convertible Preferred Stock, each depositary share shall entitle the
holder thereof to receive one share of common stock and, upon the distribution
of one share of common stock to the holder of each such depositary share, each
such depositary share shall be automatically canceled and have no further
value.
Conversion of Preferred Membership
Interests. If Proposals 1 and 2 are approved, all preferred
membership interests and class B preferred membership interests (if any) in the
LLC will automatically convert into membership interests on a one-for-one basis
and the holders (other than BioFuel Energy Corp.) of the preferred membership
interests and class B preferred membership interests (if any) will receive one
share of class B common stock for each membership interest received upon
conversion. The membership interests in the LLC received upon
conversion of the preferred membership interests (but not those received upon
conversion of the class B preferred membership interests) would then be
exchangeable (together with the corresponding shares of our class B common
stock) by the holder (other than BioFuel Energy Corp.) for shares of our common
stock.
Elimination of Dividend, Liquidation
and Distribution Rights of Holders. The dividend rights and
liquidation preferences of the Series A Non-Voting Convertible Preferred Stock
and preferred membership interests and class B preferred membership interests
(if any) will be eliminated upon conversion thereof. For more
information regarding such dividend rights and liquidation preferences, see
“Description of Capital Stock.”
Rights of Investors. The
rights and privileges associated with the common stock issued upon conversion of
the Series A Non-Voting Convertible Preferred Stock and the class B common
stock issued upon conversion of the preferred membership interests and class B
preferred membership interests (if any) in the LLC will be identical to the
rights and privileges associated with the common stock and class B common stock
currently held by our existing stockholders, including as to voting
rights.
Market Effects. The issuance
of shares of our common stock upon conversion of the Series A
Non-Voting Convertible Preferred Stock, and the potential issuance of
shares of our common stock upon the elective exchange of the membership
interests (and corresponding shares of class B common stock) received upon
conversion of the preferred membership interests, may impact trading patterns
and adversely affect the market price of our common stock. If
significant quantities of our common stock that are issued upon conversion of
our Series A Non-Voting Convertible Preferred Stock or upon the elective
exchange of the membership interests (and corresponding shares of class B common
stock) received upon conversion of the preferred membership interests are sold
into the market, it could depress the trading price of our common
stock.
Voting Control by the Backstop
Parties. The Backstop Parties or their affiliates own a
significant number of shares of our common stock and class B common
stock. The Greenlight Parties are affiliates of Greenlight Capital,
Inc., which, as of December 13, 2010, owned 7,542,104 shares of common stock and
4,311,396 shares of class B common stock, which together represented 36.4% of
our outstanding total voting stock (composed of our common stock and class B
common stock) on that date. Third Point is an affiliate of Third
Point Funds, which as of December 13, 2010, owned 5,578,800 shares of common
stock, which represented 17.1% of our outstanding total voting stock on that
date. Collectively, the Backstop Parties owned 53.5% of our
outstanding total voting stock on that date. If the Backstop
Commitment is exercised, we expect that the Backstop Parties’ and their
affiliates’ aggregate proportional ownership of our outstanding equity will
increase as a result of, and in proportion to, the performance by the Backstop
Parties of their Backstop Commitment. Because the Series A Non-Voting
Convertible Preferred Stock generally has no voting rights and because the
preferred membership interests and class B preferred membership interests (if
any) in the LLC are not accompanied by shares of class B common stock until
conversion into membership interests, the increase, if any, in the voting
control of the Company held by the Backstop Parties will not occur until
conversion of the Series A Non-Voting Convertible Preferred Stock and of the
preferred membership interests and class B preferred membership interests (if
any) in the LLC following stockholder approval of Proposals 1 and
2.
No Subsequent Stockholder
Approval. The Amendment contemplated by Proposal 1 will result
in an increase in the number of authorized shares of common stock under our
Amended and Restated Certification of Incorporation from 100,000,000 to
140,000,000. We do not expect that all of these additional shares of
authorized common stock will be issued or issuable upon conversion of all Series
A Non-Voting Convertible Preferred Stock or upon the elective exchange of all
membership interests (and corresponding shares of class B common stock) in the
LLC received upon conversion of the preferred membership
interests. As a result, we expect to have additional authorized but
unissued shares of common stock available following the
Amendment. Subject to NASDAQ listing requirements, our board of
directors can determine whether, when and on what terms the issuance of
authorized but unissued shares of common stock may be warranted in connection
with any future actions without stockholder approval. These
authorized but unissued shares may be utilized for a variety of corporate
purposes, including future public offerings to raise additional capital,
corporate acquisitions and employee benefit plans. The existence of authorized
but unissued shares of common stock may also have the effect of deferring,
delaying or discouraging hostile takeovers, or changes in control or
management of our company.
Potential
Consequences of Failure to Approve Proposals 1 and 2
This
section describes several potential consequences if our stockholders do not
approve Proposals 1 and 2. However, pursuant to the Voting Agreement,
the Greenlight Parties and Third Point have agreed to vote their shares of
common stock and class B common stock to approve Proposals 1 and 2, and together
they own sufficient shares to approve Proposals 1 and 2. See
“Background—Voting Agreements.”
Series A Non-Voting Convertible
Preferred Stock and Preferred Membership Interests Will Remain
Outstanding. Unless the stockholder approval of Proposals 1
and 2 is received or unless our stockholders approve similar proposals at a
subsequent meeting, the Series A Non-Voting Convertible Preferred Stock and the
preferred membership interests and the class B preferred membership interests in
the LLC will not convert and will remain outstanding in accordance with their
terms.
Liquidation
Preference. For so long as the Series A Non-Voting Convertible
Preferred Stock remains outstanding, in the event of the liquidation,
dissolution or winding up of the affairs of the Company, holders of the Series A
Non-Voting Convertible Preferred Stock are entitled to receive, before any
payment or distribution is made to holders of the common stock, a liquidation
preference in an amount equal to $0.56 multiplied by the quotient obtained by
dividing the total number of depositary shares actually purchased in the Rights
Offering and pursuant to the Backstop Commitment by 2,000,000. In
addition, for so long as the preferred membership interests or class B preferred
membership interests (if any) in the LLC remain outstanding, in the event of the
liquidation, dissolution or winding up of the LLC, the holder of each preferred
membership interest or class B preferred membership interest (if any) in the LLC
will be entitled to receive and to be paid out of the assets available for
distribution to the members of the LLC, before any payment or distribution is
made to holders of the membership interests, a liquidation preference per
preferred membership interest or class B preferred membership interest in an
amount equal to $0.56.
Continued Dividend Payment on Series
A Non-Voting Convertible Preferred Stock and Distributions on the Preferred
Membership Interests. For so long as the
Series A Non-Voting Convertible Preferred Stock remains outstanding, the holders
of the Series A Non-Voting Convertible Preferred Stock will be entitled to
receive dividends or distributions when, as and if such dividends or
distributions are paid to the holders of our common stock. In
addition, for so long as the preferred membership interests or class B preferred
membership interests (if any) in the LLC remain outstanding, holders of the
preferred membership interests or class B preferred membership interests (if
any) in the LLC will be entitled to pro rata distributions from the LLC,
including the right to receive authorized distributions, including distributions
to fund tax liabilities. The holders of Series A Non-Voting
Convertible Preferred Stock and preferred membership interests or class B
preferred membership interests (if any) in the LLC are also entitled to certain
other rights, and such entitlements will continue as long as the Series A
Non-Voting Convertible Preferred Stock or preferred membership interests or
class B preferred membership interests (if any), as applicable, remain
outstanding.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following tables set forth information with respect to the beneficial ownership
of our common stock and class B common stock as of November 12, 2010,
by:
|
·
|
each
person who is known by us to beneficially own 5% or more of any class of
our outstanding shares of common
stock;
|
|
·
|
each
member of our board of directors who beneficially owns any class of shares
of our common stock;
|
|
·
|
each
of our executive officers; and
|
|
·
|
all
members of our board of directors and our executive officers as a
group.
|
Beneficial
ownership is determined in accordance with the SEC rules and includes voting or
investment power with respect to the securities. Unless otherwise indicated and
subject to applicable community property laws, to our knowledge, each
stockholder named in the following table possesses sole voting and investment
power over the shares listed, except for those jointly owned with that person’s
spouse.
Unless
otherwise indicated, the address for all beneficial owners is c/o BioFuel Energy
Corp., 1600 Broadway, Suite 2200, Denver, Colorado 80202. At the close of
business on November 12, 2010, there were 25,465,728 shares of common stock
outstanding, net of 809,606 shares held in treasury, and 7,111,985 shares of
class B common stock outstanding, which together constitute a total of
32,577,713 shares of outstanding voting shares of the Company. Each share of
common stock and class B common stock is entitled to one vote. The percentage of
common stock outstanding was determined based on 32,577,713 shares outstanding
at November 12, 2010. This table does not give effect to any changes
that may result from the Rights Offering or the LLC’s Concurrent Private
Placement. It is possible that the beneficial ownership of Greenlight
Capital, Inc. and its affiliates and the Third Point Funds will increase as a
result of the Rights Offering and the LLC’s Concurrent Private
Placement.
The
persons listed below will be entitled to participate in the Rights Offering, the
LLC’s Concurrent Private Placement or both (depending on whether they own shares
of common stock, membership interests in the LLC (and corresponding shares of
class B common stock) or both), and as a result may acquire depositary shares,
preferred membership interests in the LLC or both. As a result, they
may have an interest in the success of Proposals 1 and 2.
Beneficial Owner
|
|
Number of
Shares of
Common Stock
|
|
Number of
Shares of
Class B
Common Stock
|
|
Options
Exercisable
|
|
Total Number of
Shares
Beneficially
Owned
|
|
Percentage of
Common
Stock
Outstanding
|
|
Greenlight
Capital, Inc. and its
affiliates
2
Grand Central Tower
140
East 45th Street, 24th floor
New York, NY 10017
(1)
|
|
|
7,542,104
|
|
|
4,311,396
|
|
|
—
|
|
|
11,853,500
|
|
|
36.4
|
%
|
Third
Point Funds
390
Park Avenue, 18th floor
New York, NY 10022
(2)
|
|
|
5,803,284
|
|
|
—
|
|
|
—
|
|
|
5,803,284
|
|
|
17.8
|
%
|
Cargill,
Incorporated
P.O.
Box 9300
Minneapolis,
MN 55440
|
|
|
1,675,596
|
|
|
—
|
|
|
—
|
|
|
1,675,596
|
|
|
5.1
|
%
|
Beneficial Owner
|
|
Number of
Shares of
Common Stock
|
|
|
Number of
Shares of
Class B
Common Stock
|
|
|
Options
Exercisable
|
|
|
Total Number of
Shares
Beneficially
Owned
|
|
|
Percentage of
Common
Stock
Outstanding
|
|
Thomas
J. Edelman(3)
|
|
|
2,090,093 |
|
|
|
1,352,811 |
|
|
|
— |
|
|
|
3,442,904 |
|
|
|
10.6 |
% |
Scott
H. Pearce(4)
|
|
|
465,416 |
|
|
|
478,837 |
|
|
|
45,000 |
|
|
|
989,253 |
|
|
|
3.0 |
% |
Kelly
G. Maguire(5)
|
|
|
42,000 |
|
|
|
— |
|
|
|
70,500 |
|
|
|
112,500 |
|
|
|
* |
|
Mark
L. Zoeller(6)
|
|
|
— |
|
|
|
— |
|
|
|
21,000 |
|
|
|
21,000 |
|
|
|
* |
|
Elizabeth
K. Blake(7)
|
|
|
7,500 |
|
|
|
— |
|
|
|
15,000 |
|
|
|
22,500 |
|
|
|
* |
|
David
Einhorn(8)
|
|
|
12,500 |
|
|
|
— |
|
|
|
15,000 |
|
|
|
27,500 |
|
|
|
* |
|
Richard
I. Jaffee(9)
|
|
|
7,500 |
|
|
|
— |
|
|
|
15,000 |
|
|
|
22,500 |
|
|
|
* |
|
John
D. March(10)
|
|
|
7,500 |
|
|
|
— |
|
|
|
15,000 |
|
|
|
22,500 |
|
|
|
* |
|
Mark
W. Wong(11)
|
|
|
7,500 |
|
|
|
— |
|
|
|
135,000 |
|
|
|
142,500 |
|
|
|
* |
|
All
Directors and Executive Officers as a group, 8 persons(12)
|
|
|
8,092,020 |
|
|
|
4,790,233 |
|
|
|
331,500 |
|
|
|
13,213,753 |
|
|
|
42.2 |
% |
(1)
|
Greenlight
Capital, Inc. (“Greenlight Inc.”) is the investment manager for Greenlight
Capital Offshore Partners, and as such has voting and dispositive power
over 5,221,530 shares of common stock held by Greenlight Capital Offshore
Partners. Greenlight Capital, L.L.C. (“Greenlight L.L.C.”) is
the sole general partner of Greenlight Capital, L.P. and Greenlight
Capital Qualified, L.P., and as such has voting and dispositive power over
574,226 shares of common stock and 3,885,970 shares of class B common
stock held by Greenlight Capital, L.P. and Greenlight Capital Qualified,
L.P. DME Advisors, LP (“DME Advisors”) is the investment
manager for Greenlight Reinsurance, Ltd., and as such has voting and
dispositive power over 1,447,443 shares of common stock held by Greenlight
Reinsurance, Ltd. DME Management GP, LLC (“DME Management GP”)
is the sole general partner of Greenlight Capital (Gold), LP, and as such
has voting and dispositive power over 61,450 shares of common stock and
425,426 shares of class B common stock held by Greenlight Capital (Gold),
LP. DME Capital Management, LP (“DME Management”) is the
investment manager for Greenlight Capital (Gold), LP, and Greenlight
Capital Offshore Master (Gold), Ltd., and as such has voting and
dispositive power over 298,905 shares of common stock and 425,426 shares
of class B common stock held by Greenlight Capital (Gold), LP and
Greenlight Capital Offshore Master (Gold), Ltd. DME Advisors
GP, LLC (“DME GP”) is the general partner of DME Advisors and DME
Management, and as such has voting and dispositive power over 1,746,348
shares of common stock and 425,426 shares of class B common stock. David
Einhorn, one of our directors, is the principal of Greenlight Inc.,
Greenlight L.L.C., DME Advisors, DME Management GP, DME Management and DME
GP, and as such has sole voting and sole dispositive power over 7,542,104
shares of common stock and 4,311,396 shares of class B common stock held
by these affiliates of Greenlight, Inc. Mr. Einhorn disclaims beneficial
ownership of these shares, except to the extent of any pecuniary interest
therein.
|
(2)
|
Includes
shares held of record by Third Point Offshore Master Fund, L.P., Third
Point Partners LP, Third Point Partners Qualified LP and Third Point Ultra
Master Fund L.P., which are investment funds managed by Third Point LLC,
and 224,484 shares held by an individual we believe to be affiliated with
Third Point LLC.
|
(3)
|
Includes
1,156,834 shares of class B common stock subject to forfeiture under the
True-Up Agreement described in our Definitive Proxy Statement on Schedule
14A filed with the SEC on April 6, 2010, and 93,534 shares of common stock
owned of record by Mr. Edelman’s wife, Ingrid O. Edelman, and trusts for
the benefit of Mr. Edelman’s family members, of which he is a trustee. Mr.
Edelman disclaims beneficial ownership of these shares of common stock,
except to the extent of any pecuniary interest
therein.
|
(4)
|
Includes
338,434 shares of class B common stock held in escrow and subject to
forfeiture under the True-Up Agreement described in our Definitive Proxy
Statement on Schedule 14A filed with the SEC on April 6,
2010. Includes options to purchase 45,000 shares of common
stock granted to Mr. Pearce under our compensation plan for
employees.
|
(5)
|
Includes
options to purchase 70,500 shares of common stock granted to Mr. Maguire
under our compensation program for
employees.
|
(6)
|
Includes
options to purchase 21,000 shares of common stock granted to Mr. Zoeller
under our compensation program for
employees.
|
(7)
|
Includes
7,500 shares of restricted common stock and options to purchase 15,000
shares of common stock granted to Ms. Blake under our compensation program
for non-employee directors.
|
(8)
|
Includes
12,500 shares of restricted common stock and options to purchase 15,000
shares of common stock granted to Mr. Einhorn under our compensation
program for non-employee directors. Includes only shares of common stock
held directly by Mr. Einhorn. See note
1.
|
(9)
|
Includes
7,500 shares of restricted common stock and options to purchase 15,000
shares of common stock granted to Mr. Jaffee under our compensation
program for non-employee directors.
|
(10)
|
Includes
7,500 shares of restricted common stock and options to purchase 15,000
shares of common stock granted to Mr. March under our compensation program
for non-employee directors.
|
(11)
|
Includes
7,500 shares of restricted common stock and options to purchase 135,000
shares of common stock granted to Mr. Wong under our compensation program
for non-employee directors.
|
(12)
|
Includes
shares held by Greenlight Capital, Inc., which is controlled by our
director, Mr. Einhorn.
|
DESCRIPTION
OF CAPITAL STOCK
The
following description is a summary of the material terms of our
common stock, class B common stock, preferred stock, Series A Non-Voting
Convertible Preferred Stock, depositary shares, LLC membership interests, LLC
preferred membership interests, certificate of incorporation and
by-laws.
Authorized
Capital
Our
authorized capital stock consists of 100 million shares of common stock, par
value $0.01 per share, 50 million shares of class B common stock, par value
$0.01 per share, and 5 million shares of preferred stock, par value $0.01 per
share.
Common
Stock
Common
Stock
Holders
of our common stock are entitled to one vote for each share held of record on
all matters on which stockholders generally are entitled to
vote. Holders of our common stock and class B common stock vote
together as a single class on all matters presented to our stockholders for
their vote or approval, except as otherwise required by applicable
law.
Holders
of our common stock are entitled to receive dividends when and if declared by
our board of directors out of funds legally available therefor, subject to any
statutory or contractual restrictions on the payment of dividends and to any
restrictions on the payment of dividends imposed by the terms of any outstanding
preferred stock. We do not intend to pay cash dividends on our common
stock for the foreseeable future. However, to ensure that our public
stockholders are treated fairly with the holders of membership interests in the
LLC (other than BioFuel Energy Corp.), it is intended that all distributions
received from the LLC, other than distributions to cover tax obligations and
other corporate expenses, will be dividended to holders of our common
stock.
In the
event of our dissolution, liquidation or winding up, after payment in full of
all amounts required to be paid to creditors and to the holders of preferred
stock having liquidation preferences, if any, the holders of our common stock
will be entitled to receive pro rata our remaining assets available for
distribution.
The
holders of our common stock have no conversion, preemptive or other subscription
rights. There are no redemption or sinking fund provisions applicable
to our common stock.
Class
B Common Stock
Holders
of membership interests in the LLC (other than BioFuel Energy Corp.) also hold
one share of class B common stock for each membership interest
held. Shares of our class B common stock entitle the holder to one
vote for each share held of record on all matters on which stockholders
generally are entitled to vote. If a holder of our class B common
stock exchanges any of its membership interests in the LLC for shares of our
common stock, the shares of our class B common stock held by such holder and
attributable to the exchanged LLC membership interests will automatically be
transferred to BioFuel Energy Corp. and be retired without further
action.
Holders
of our common stock and class B common stock vote together as a single class on
all matters presented to our stockholders for their vote or approval, except as
otherwise required by applicable law.
Holders
of our class B common stock do not have any right to receive dividends or to
receive a distribution upon dissolution, liquidation or winding up of
BioFuel Energy Corp.
Preferred
Stock
Our board
of directors has the authority, subject to any limitations imposed by law or
NASDAQ rules, without further action by the stockholders, to issue up to 5
million shares of preferred stock in one or more series and to fix the rights,
preferences, privileges and restrictions of each series of such preferred
stock. These rights, preferences and privileges include dividend
rights, conversion rights, voting rights, terms of redemption, liquidation
preferences, sinking fund terms and the number of shares constituting any series
or the designation of that series, any or all of which may be greater than the
rights of common stock. Upon consummation of the Rights Offering, our
board of directors will designate and issue 2 million shares of Series A
Non-Voting Convertible Preferred Stock.
Series
A Non-Voting Convertible Preferred Stock
The
following description is a summary of the material terms of the certificate of
designations for the Series A Non-Voting Convertible Preferred Stock, par value
$0.01 per share. The certificate of designations and the specimen
certificate for shares of the Series A Non-Voting Convertible Preferred Stock
were filed as exhibits to Amendment No. 1 to the Registration Statement filed on
November 17, 2010.
General
Shares of
the Series A Non-Voting Convertible Preferred Stock represent a single series of
our authorized preferred stock. In the Rights Offering, we are
offering depositary shares representing fractional interests in shares of the
Series A Non-Voting Convertible Preferred Stock. The depositary will
be the sole holder of shares of the Series A Non-Voting Convertible Preferred
Stock. The holders of depositary shares will be required to exercise
their proportional rights in the Series A Non-Voting Convertible Preferred Stock
through the depositary as described under “—Description of the Depositary
Shares.”
Twelve
business days after the consummation of the Rights Offering, we expect to issue
additional depositary shares to Cargill in order to make the Cargill Stock
Payment. The depositary shares to be issued to Cargill will be issued
after the depositary shares that will be issued upon expiration of the Rights
Offering but will have the same rights and preferences as the depositary shares
that will be issued upon expiration of the Rights Offering. In order
to issue the depositary shares that will make up the Cargill Stock Payment, we
expect to designate and issue and deposit with the depositary a number of
additional shares of Series A Non-Voting Convertible Preferred Stock that
corresponds to the aggregate fractional interests in shares of Series A
Non-Voting Convertible Preferred Stock that the newly-issued depositary shares
represent. In the event that an insufficient number of authorized
shares of Series A Non-Voting Convertible Preferred Stock are available for such
issuance and deposit with the depositary, we expect to establish an alternative
method for satisfying the Cargill Stock Payment that is satisfactory to us,
Cargill and the Backstop Parties.
When
issued against the consideration therefor, the Series A Non-Voting Convertible
Preferred Stock and any shares of our common stock issued upon the conversion of
the Series A Non-Voting Convertible Preferred Stock will be fully paid and
non-assessable. The holders of the Series A Non-Voting Convertible
Preferred Stock will have no preemptive or preferential right to purchase or
subscribe for stock, obligations, warrants or other securities of the Company of
any class.
The
Series A Non-Voting Convertible Preferred Stock is automatically convertible, if
certain conditions are met, into shares of common stock as described below under
“—Automatic Conversion.”
Dividends
and Other Distributions
The
holders of shares of Series A Non-Voting Convertible Preferred Stock will be
entitled to receive dividends or distributions (as applicable), when, as and if
such dividends or distributions (as applicable) are paid to the holders of our
common stock; provided that each share of Series A Non-Voting Convertible
Preferred Stock shall entitle the holder to receive any such dividends or
distributions (as applicable) in an amount equal to the aggregate dividends or
distributions that would be entitled to be received by holders of a number of
shares of common stock equal to the quotient obtained by dividing the total
number of depositary shares actually purchased in the Rights Offering and
pursuant to the Backstop Commitment by 2,000,000.
We are
only obligated to pay a dividend on the Series A Non-Voting Convertible
Preferred Stock if our board of directors or an authorized committee of our
board declares the dividend payable and we have assets that legally can be used
to pay the dividend.
Automatic
Conversion
If our
stockholders approve Proposals 1 and 2 of this Proxy Statement, each share of
Series A Non-Voting Convertible Preferred Stock will automatically convert into
a number of shares of common stock equal to the quotient obtained by dividing
the total number of depositary shares actually purchased in the Rights Offering
and pursuant to the Backstop Commitment by 2,000,000 (which we refer to as the
“Conversion Rate”).
Anti-dilution;
Mergers
The
Conversion Rate shall be subject to certain customary anti-dilution adjustments
in the event of any dividend or other distribution payable in stock, stock
split, reverse split, certain other recapitalizations or similar transactions or
sales of common stock at a price below $0.56 occurring after the date of
issuance of the Series A Non-Voting Convertible Preferred Stock. The
Conversion Rate will not be adjusted as a result of the Cargill Stock
Payment.
In
addition, in the event of any consolidation, merger, combination or other
transaction in which our common stock is exchanged for or changed into other
stock or securities, cash or any other property, then in any such case the then
outstanding shares of Series A Non-Voting Convertible Preferred Stock shall at
the same time be similarly exchanged or changed.
Redemption
The
Series A Non-Voting Convertible Preferred Stock will not be
redeemable.
Liquidation
Preference
In the
event of our voluntary or involuntary liquidation, dissolution or winding up,
each share of Series A Non-Voting Convertible Preferred Stock will be entitled
to receive and to be paid out of our assets available for distribution to our
stockholders, before any payment or distribution is made to holders of common
stock or any other class of capital stock or series of preferred stock
established after the original issue date of the Series A Non-Voting Convertible
Preferred Stock the terms of which do not expressly provide that such class or
series will rank senior to or on a parity with the Series A Non-Voting
Convertible Preferred Stock as to rights upon our liquidation, dissolution or
winding up, but after any distribution on any class of our capital stock or
series of preferred stock established after the issue date the terms of which
expressly provide that such class or series will rank senior to the Series A
Non-Voting Convertible Preferred Stock as to rights upon our liquidation,
dissolution or winding up, a liquidation preference in an amount equal to $0.56
multiplied by the quotient obtained by dividing the total number of depositary
shares actually purchased in the Rights Offering and pursuant to the Backstop
Commitment by 2,000,000, plus declared but unpaid dividends, if
any. If, upon our voluntary or involuntary liquidation, winding up or
dissolution, the amounts payable with respect to the liquidation preference of
the Series A Non-Voting Convertible Preferred Stock and any class of capital
stock or series of preferred stock established after the issue date, the terms
of which expressly provide that such class or series will rank on a parity with
the Series A Non-Voting Convertible Preferred Stock as to rights upon our
liquidation, dissolution or winding up (which we refer to collectively as
“parity stock”) are not paid in full, the holders of the Series A Non-Voting
Convertible Preferred Stock and the parity stock will share equally and ratably
in any distribution of our assets in proportion to the full liquidation
preference to which they are entitled. After payment of the full
amount of the liquidation preference to which they are entitled, the holders of
the Series A Non-Voting Convertible Preferred Stock will have no right or claim
to any of our remaining assets in the event of our liquidation, dissolution or
winding up.
Neither
the sale, conveyance or other transfer of all or substantially all of our assets
or business (other than in connection with our liquidation, dissolution or
winding up), nor our merger or consolidation into or with any other person, will
be deemed to be our voluntary or involuntary liquidation, dissolution or winding
up.
The
certificate of designations for the Series A Non-Voting Convertible Preferred
Stock will not contain any provision requiring funds to be set aside to protect
the liquidation preference of the Series A Non-Voting Convertible Preferred
Stock even though it is substantially in excess of the par value
thereof.
Voting
Rights
The
Series A Non-Voting Convertible Preferred Stock will have no voting rights
except as set forth below or as otherwise required by Delaware law from time to
time.
We will
not, without the approval of at least a majority of the shares of the Series A
Non-Voting Convertible Preferred Stock then outstanding (in the aggregate,
voting together as a class):
|
·
|
authorize
or issue additional shares of Series A Non-Voting Convertible Preferred
Stock of the same series (provided that no such approval shall be required
in respect of any shares of Series A Non-Voting Convertible Preferred
Stock to be authorized and issued in connection with the Cargill Stock
Payment);
|
|
·
|
authorize
or issue any other series of preferred equity securities which are senior
or on parity with respect to liquidation or dividend payments to the
Series A Non-Voting Convertible Preferred Stock;
or
|
|
·
|
amend
our certificate of incorporation and by-laws if the amendment would
adversely affect the rights, preferences or privileges of the holders of
the Series A Non-Voting Convertible Preferred
Stock.
|
Holders
of the Series A Non-Voting Convertible Preferred Stock will not be entitled to
vote on Proposals 1 and 2 of this Proxy Statement.
Listing
There
will not be any trading market for the shares of the Series A Non-Voting
Convertible Preferred Stock.
Description
of the Depositary Shares
The
following description is a summary of the material terms of the depositary
shares. The deposit agreement which was filed as an exhibit to
Amendment No. 3 to the Registration Statement filed on December 15,
2010.
General
Each
depositary share will represent a fractional interest in a share of Series A
Non-Voting Convertible Preferred Stock equal to the fraction determined by
dividing 2,000,000 by the total number of depositary shares actually purchased
in the Rights Offering and pursuant to the Backstop Commitment and will
initially be evidenced by a global security, as defined in and described under
“—Book-entry, Settlement and Clearance.” Subject to the terms of the
deposit agreement, each depositary share will be entitled to all rights and
preferences of the Series A Non-Voting Convertible Preferred Stock, including
rights upon conversion, in proportion to the fraction of a share of the Series A
Non-Voting Convertible Preferred Stock such depositary share
represents.
In this
section, references to “holders” of depositary shares mean those who have
depositary shares registered in their own names on the books maintained by the
depositary and not indirect holders who will own beneficial interests in
depositary shares registered in the street name of, or issued in book-entry form
through, DTC prior to the conversion of the Series A Non-Voting Convertible
Preferred Stock. You should review the special considerations that apply to
indirect holders as described under “—Book-entry, Settlement and
Clearance.”
Dividends
and Other Distributions
The
depositary will deliver any cash it receives in respect of dividends or other
distributions on the Series A Non-Voting Convertible Preferred Stock to the
holders of the depositary shares in proportion to the number of outstanding
depositary shares held by such holders, on the date of receipt or as soon as
practicable thereafter.
Record
dates for the payment of dividends on the depositary shares will be the same as
the corresponding record dates for the payment of dividends on the Series A
Non-Voting Convertible Preferred Stock.
If the
depositary determines that any dividend or other distribution of property other
than cash is subject to tax or other governmental charge that the depositary is
obligated by law to withhold, the depositary may dispose of all or any portion
of such property, at a public or private sale, as the depositary deems necessary
and practicable to pay such tax or charge, and the depositary will distribute
the net proceeds of such sale or the balance of any such property, after
deduction of such tax or charge, to holders of the depositary shares in
proportion to the number of outstanding depositary shares that they
hold. If the depositary determines, however, that any distribution of
cash or other property to certain holders (but not all holders) is subject to
withholding tax, the depositary will reduce the amount of such cash distribution
to such holders or use its best efforts to sell only the non-cash property
distributable to such holders, as the case may be.
Conversion
of Series A Non-Voting Convertible Preferred Stock
If our
stockholders approve Proposals 1 and 2 of this Proxy Statement, each share of
Series A Non-Voting Convertible Preferred Stock will automatically convert into
a number of shares of common stock equal to the Conversion Rate. Upon
conversion of the Series A Non-Voting Convertible Preferred Stock, each
depositary share shall entitle the holder thereof to receive one share of common
stock and, upon the distribution of one share of common stock to the holder of
each such depositary share, each such depositary share shall be automatically
canceled and have no further value. The depositary will distribute the shares of
common stock it receives upon conversion of the Series A Non-Voting Convertible
Preferred Stock to the holders of the depositary shares entitled to receive such
distribution in proportion to the number of outstanding depositary shares held
by each such holder, on the date of receipt or as soon as practicable
thereafter. No fractional shares of our common stock or securities
representing fractional shares of our common stock will be delivered to holders
of depositary shares. Any fractional interest in a share of our
common stock resulting from the proportional distribution of common stock
following the conversion of any shares of Series A Non-Voting Convertible
Preferred Stock will be paid in cash based on the per share closing price (as
defined in the following sentence) of our common stock at the close of business
on the trading day next preceding the date of conversion. The “per
share closing price” of our common stock on any date means the closing sale
price per share (or if no closing price is reported, the average of the closing
bid and ask prices or, if more than one in either case, the average of the
average closing bid and the average closing ask prices) on such date as reported
on The NASDAQ Global Market (or such other principal national securities
exchange on which our common stock is then listed or authorized for quotation
or, if not so listed or authorized for quotation, the average of the midpoint of
the last bid and ask prices for our common stock on the relevant date from each
of at least three nationally recognized independent investment banking firms
selected by us for this purpose).
The
Conversion Rate shall be subject to certain customary anti-dilution adjustments
in the event of any dividend or other distribution payable in stock, stock
split, reverse split, certain other recapitalizations or similar transactions or
sales of common stock at a price below $0.56 occurring after the date of
issuance of the Series A Non-Voting Convertible Preferred Stock. In
the event that the Conversion Rate of the Series A Non-Voting Convertible
Preferred Stock is adjusted, the one-for-one effective conversion ratio of
depositary shares for common stock shall be correspondingly
adjusted. For example, if the Conversion Rate were to double as a
result of a two-for-one stock split of our common stock, holders of depositary
shares would then be entitled to receive two shares of common stock (rather than
one) for each depositary share held.
In the
event of any consolidation, merger, combination or other transaction in which
our common stock is exchanged for or changed into other stock or securities,
cash or any other property, then in any such case the then outstanding shares of
Series A Non-Voting Convertible Preferred Stock shall at the same time be
similarly exchanged or changed, and the holders of the depositary shares shall
then be entitled to receive such other stock or securities, cash or any other
property in exchange for their depositary shares.
Voting
the Series A Non-Voting Convertible Preferred Stock
When the
depositary receives notice of any meeting at which the holders of the Series A
Non-Voting Convertible Preferred Stock are entitled to vote, the depositary
will, as soon as practicable after receiving such notice, mail the information
contained in the notice to the holders of the depositary shares. Each
holder of depositary shares on the record date, which will be the same date as
the record date for the voting of the Series A Non-Voting Convertible Preferred
Stock, may instruct the depositary to vote the amount of the Series A Non-Voting
Convertible Preferred Stock represented by such holder’s depositary
shares. To the extent practicable, the depositary will vote the
amount of the Series A Non-Voting Convertible Preferred Stock represented by any
depositary shares in accordance with the voting instructions it receives (if
any) from holders of such depositary shares. If any holder of
depositary shares instructs the depositary to vote a fractional interest of a
share of the Series A Non-Voting Convertible Preferred Stock, the depositary
will aggregate such interest with all other fractional interests with the same
voting instruction and will submit the number of whole votes resulting from such
aggregation. We will take all reasonable action that the depositary
determines is necessary to enable the depositary to vote as
instructed. If the depositary does not receive specific instructions
from the holders of any depositary shares representing the Series A Non-Voting
Convertible Preferred Stock, it will not vote such amount of Series A Non-Voting
Convertible Preferred Stock represented by such depositary shares.
Holders
of the Series A Non-Voting Convertible Preferred Stock will not be entitled to
vote on Proposals 1 and 2 of this Proxy Statement and, therefore, the holders of
the depositary shares will not be entitled to instruct the depositary to vote
any shares of Series A Non-Voting Convertible Preferred Stock on Proposals 1 and
2.
Withdrawal
Rights
The
holders of depositary shares will not have any rights to withdraw the shares of
the Series A Non-Voting Convertible Preferred Stock represented by such
depositary shares.
Redemption
The
depositary shares will not be redeemable.
Form
and Notices
The
Series A Non-Voting Convertible Preferred Stock will initially be issued in
registered form to the depositary, and the depositary shares will be issued in
book-entry only form through DTC, as described under “—Book-entry, Settlement
and Clearance.” The depositary will forward to the holders of
depositary shares all reports, notices and communications from us that are
delivered to the depositary and that we are required to furnish to the holders
of the Series A Non-Voting Convertible Preferred Stock.
Amendment
and Termination of the Deposit Agreement
We and
the depositary may amend the form of depositary receipt evidencing the
depositary shares and any provision of the deposit agreement at any
time. However, any amendment which materially and adversely alters
the rights of the holders of the depositary shares will not be effective unless
the amendment has been approved by the holders of at least a majority of the
depositary shares then outstanding.
The
deposit agreement will terminate if there has been a final distribution in
respect of the Series A Non-Voting Convertible Preferred Stock, including in
connection with the final conversion of all Series A Non-Voting Convertible
Preferred Stock for common stock or with our liquidation, dissolution or winding
up, and the conversion, repayment, redemption or distribution proceeds, as the
case may be, have been distributed to the holders of the depositary
shares.
Resignation
and Removal of the Depositary
The
depositary may resign at any time by delivering to us notice of its election to
do so. We also may, at any time, remove the
depositary. Any resignation or removal will take effect upon the
appointment of a successor depositary and its acceptance of such
appointment. We must appoint the successor depositary within 60 days
after delivery of the notice of resignation or removal.
Charges
of the Depositary
We will
pay all transfer and other taxes and governmental charges arising solely from
the existence of the depositary arrangements. We will pay charges of
the depositary in connection with the initial deposit of the Series A Non-Voting
Convertible Preferred Stock, the issuance of depositary shares, the conversion
of the Series A Non-Voting Convertible Preferred Stock and the delivery of the
common stock received upon such conversion. You will pay transfer and
other taxes and governmental charges, as well as the other charges that are
expressly provided in the deposit agreement to be for your account.
Depositary
The
depositary for the depositary shares will be BNY Mellon Shareowner
Services.
Transfer
Agent and Registrar
The
transfer agent and registrar for the common stock and the depositary shares is
BNY Mellon Shareowner Services.
Listing
The
depositary shares will not be listed for trading on any stock
exchange. Accordingly, no assurance can be given as to the
development or liquidity of any market for the depositary shares.
Book-entry,
Settlement and Clearance
The
Global Security
The
depositary shares will be initially issued in the form of a single registered
security in global form (the “global security”). Upon issuance, the
global security will be deposited with the depositary as custodian for DTC and
registered in the name of Cede & Co., as nominee of DTC.
Ownership
of beneficial interests in the global security will be limited to persons who
have accounts with DTC (“DTC participants”) or persons who hold interests
through DTC participants. We expect that under procedures established by
DTC:
|
·
|
upon
deposit of the global security with the depositary as DTC’s custodian, DTC
will credit portions of the global security to the accounts of the DTC
participants designated by the subscription agent;
and
|
|
·
|
ownership
of beneficial interests in the global security will be shown on, and
transfer of ownership of those interests will be effected only through,
records maintained by DTC (with respect to interests of DTC participants)
and the records of DTC participants (with respect to other owners of
beneficial interests in the global
security).
|
Beneficial
interests in the global security may not be exchanged for securities in
physical, certificated form except in the limited circumstances described
below.
Book-entry
Procedures for the Global Security
All
interests in the global security will be subject to the operations and
procedures of DTC. We provide the following summary of those
operations and procedures solely for the convenience of
investors. The operations and procedures of DTC are controlled by
that settlement system and may be changed at any time. We are not
responsible for those operations or procedures.
DTC has
advised us that it is:
|
·
|
a
limited purpose trust company organized under the laws of the State of New
York;
|
|
·
|
a
“banking organization” within the meaning of the New York State Banking
Law;
|
|
·
|
a
member of the Federal Reserve
System;
|
|
·
|
a
“clearing corporation” within the meaning of the Uniform Commercial Code;
and
|
|
·
|
a
“clearing agency” registered under Section 17A of the Exchange
Act.
|
DTC was
created to hold securities for its participants and to facilitate the clearance
and settlement of securities transactions between its participants through
electronic book-entry changes to the accounts of its
participants. DTC’s participants include securities brokers and
dealers, banks and trust companies, clearing corporations and other
organizations. Investors who are not DTC participants may
beneficially own securities held by or on behalf of DTC only through DTC
participants or indirect participants in DTC.
So long
as DTC’s nominee is the registered owner of the global security, that nominee
will be considered the sole owner or holder of the depositary shares represented
by the global security for all purposes under the deposit
agreement. Except as provided below, owners of beneficial interests
in the global security:
|
·
|
will
not be entitled to have securities represented by the global security
registered in their names;
|
|
·
|
will
not receive or be entitled to receive physical, certificated securities;
and
|
|
·
|
will
not be considered the owners or holders of the securities under the
deposit agreement for any purpose, including with respect to the giving of
any direction, instruction or approval to the depositary under the deposit
agreement.
|
As a
result, each investor who owns a beneficial interest in the global security must
rely on the procedures of DTC to exercise any rights of a holder of securities
under the deposit agreement (and, if the investor is not a participant or an
indirect participant in DTC, on the procedures of the DTC participant through
which the investor owns its interest).
Payments
of dividends with respect to the depositary shares represented by the global
security will be made by the depositary to DTC’s nominee as the registered
holder of the global security. Neither we nor the depositary will
have any responsibility or liability for the payment of amounts to owners of
beneficial interests in the global security, for any aspect of the records
relating to or payments made on account of those interests by DTC or for
maintaining, supervising or reviewing any records of DTC relating to those
beneficial interests.
Payments
by participants and indirect participants in DTC to the owners of beneficial
interests in the global security will be governed by standing instructions and
customary industry practice and will be the responsibility of those DTC
participants or indirect participants and DTC.
Depositary
shares in physical, certificated form will be issued and delivered to each
person that DTC identifies as a beneficial owner of the depositary shares only
if:
|
·
|
DTC
notifies us at any time that it is unwilling or unable to continue as
depositary for the global security and a successor depositary is not
appointed within 90 days; or
|
|
·
|
DTC
ceases to be registered as a clearing agency under the Exchange Act and a
successor depositary is not appointed within 90
days.
|
LLC
Membership Interests
Holders
of membership interests in the LLC do not have any voting rights in the
LLC. They are, however, entitled to pro rata economic benefits in the
LLC, including the right to receive authorized distributions, including
distributions to fund tax liabilities. Upon dissolution, liquidation
or winding up of the LLC, after payment in full of all amounts required to be
paid to creditors, holders of membership interests will be entitled to share in
the remaining assets of the LLC available for distribution. Holders
of membership interests in the LLC (other than BioFuel Energy Corp.) may
exchange their membership interests for shares of our common stock on a
one-for-one basis, subject to customary conversion rate adjustments for stock
splits, stock dividends and reclassifications. Holders of membership
interests (other than BioFuel Energy Corp.) also hold one share of class B
common stock for each membership interest held that entitles the holder to the
rights described under “—Common Stock—Class B Common Stock.”
LLC
Preferred Membership Interests; Amended and Restated Limited Liability Company
Agreement
Immediately
prior to the consummation of the Rights Offering and the LLC’s Concurrent
Private Placement, the LLC will amend and restate its limited liability company
agreement to add the preferred membership interests as a new class of LLC
membership interest. Immediately following the consummation of the
LLC’s Concurrent Private Placement, the holders of membership interests in the
LLC (other than BioFuel Energy Corp.) will be entitled to receive preferred
membership interests in amounts to be determined in accordance with their
exercise of LLC basic purchase privileges and LLC additional purchase privileges
(and, in the case of the Backstop Parties, determined in accordance with their
exercise of the Backstop Commitment for preferred membership
interests). Immediately following the consummation of the Rights
Offering, BioFuel Energy Corp. will contribute all proceeds of the Rights
Offering to the LLC, and the LLC will issue to BioFuel Energy Corp. a number of
preferred membership interests equal to the number of depositary shares that
BioFuel Energy Corp. issued in the Rights Offering.
The
number of preferred membership interests in the LLC held by BioFuel Energy Corp.
shall at all times equal the number of depositary shares
outstanding. As a result, concurrent with the making of the Cargill
Stock Payment, the LLC will issue to BioFuel Energy Corp. a number of preferred
membership interests equal to the number of depositary shares issued to Cargill
in the Cargill Stock Payment.
Distributions
The
preferred membership interests will be entitled to pro rata distributions from
the LLC on an equivalent one-to-one basis with the membership interests,
including the right to receive authorized distributions, including distributions
to fund tax liabilities.
Automatic
Conversion
If our
stockholders approve Proposals 1 and 2 of this Proxy Statement, all preferred
membership interests in the LLC will automatically convert into membership
interests on a one-for-one basis and the holders (other than BioFuel Energy
Corp.) of the preferred membership interests will receive one share of class B
common stock for each membership interest received upon
conversion. The membership interests in the LLC received upon
conversion of the preferred membership interests would then be exchangeable
(together with the corresponding shares of our class B common stock) by the
holder (other than BioFuel Energy Corp.) for shares of our common
stock.
Liquidation
Preference
In the
event of the voluntary or involuntary liquidation, dissolution or winding up of
the LLC, the holder of each preferred membership interest will be entitled to
receive and to be paid out of the assets available for distribution to the
members of the LLC, before any payment or distribution is made to holders of the
membership interests, a liquidation preference per preferred membership interest
in an amount equal to $0.56. After payment of the full amount of the
liquidation preference to which they are entitled, the holders of the preferred
membership interests will have no right or claim to any of the LLC’s remaining
assets in the event of the LLC’s liquidation, dissolution or winding
up.
Voting
Rights
Holders
of preferred membership interests will generally not have any voting rights in
the LLC. However, the LLC will not, without the approval of the
holders of at least a majority of the preferred membership interests, (i)
authorize or issue additional preferred membership interests (provided that no
such approval shall be required in respect of any preferred membership interests
to be authorized and issued in connection with the Cargill Stock Payment) or
(ii) authorize or issue any other series of preferred interests which are senior
or on parity with respect to liquidation or dividend payments to the preferred
membership interests (provided that no such approval shall be required in
respect of any class B preferred membership interests to be authorized and
issued in connection with a LLC Backstop Reallocation).
Transfer
A holder
of preferred membership interests will not be permitted to transfer its
preferred membership interests except (i) in the case of an individual, to
immediate family members or to trusts or other entities in which all the
beneficial interests are held by the individual or immediate family members and
(ii) in the case of entities, to affiliates.
LLC
Class B Preferred Membership Interests
In
certain circumstances in connection with an LLC Backstop Reallocation, the LLC
will issue class B preferred membership interests to one or more of the Backstop
Parties. The class B preferred membership interests, if issued, would
have the same terms as the preferred membership interests (including as to
conversion, distribution, liquidation and other rights), except that, upon
conversion of such class B preferred membership interests, holders of such class
B preferred membership interests would receive membership interests in the LLC
that would not be exchangeable for shares of our common stock.
If any
class B preferred membership interests are issued, the LLC will amend and
restate its limited liability company agreement to add the class B preferred
membership interests as a new class of LLC membership interest and to provide
for the restriction on exchangeability of the membership interests in the LLC
that such holders of class B preferred membership interests would receive upon
conversion. Although the membership interests issuable upon
conversion of the class B preferred membership interests will not be
exchangeable for shares of our common stock, our board of directors and the
holders thereof may, in the future, agree to any such exchange.
Anti-Takeover
Effects of Our Certificate of Incorporation and By-laws
Our
certificate of incorporation and by-laws contain certain provisions that are
intended to enhance the likelihood of continuity and stability in the
composition of our board of directors. These provisions may have the
effect of delaying, deferring or preventing a future takeover or change in
control of our company, even in those cases where such a transaction may be at a
premium to the current market price of our common stock.
These
provisions include:
Action
by Written Consent; Special Meetings of Stockholders
Our
certificate of incorporation provides that stockholder action (other than
actions by holders of preferred stock, if any) can be taken only at an annual or
special meeting of stockholders and cannot be taken by written consent in lieu
of a meeting. Our by-laws provide that, except as otherwise required
by law, special meetings of the stockholders can be called only by the chairman
of the board, the chief executive officer or the president, or pursuant to a
resolution adopted by a majority of the board of
directors. Stockholders are not permitted to call a special meeting
or to require the board of directors to call a special meeting.
Advance
Notice Procedures
Our
by-laws establish an advance notice procedure for stockholder proposals to be
brought before an annual meeting of our stockholders, including proposed
nominations of candidates for election to the board of
directors. Stockholders at an annual meeting will be able to consider
only proposals or nominations specified in the notice of meeting or brought
before the meeting by or at the direction of the board of directors or by a
stockholder who was a stockholder of record on the record date for the meeting,
who is entitled to vote at the meeting and who has given our secretary timely
written notice, in proper form, of the stockholder’s intention to bring that
business before the meeting. Although the by-laws do not give the
board of directors the power to approve or disapprove stockholder nominations of
candidates or proposals regarding other business to be conducted at a special or
annual meeting, the by-laws may have the effect of precluding the conduct of
certain business at a meeting if the proper procedures are not followed or may
discourage or deter a potential acquirer from conducting a solicitation of
proxies to elect its own slate of directors or otherwise attempting to obtain
control of BioFuel Energy Corp.
Authorized
but Unissued Shares
Subject
to NASDAQ listing requirements, our authorized but unissued shares of common
stock and preferred stock will be available for future issuance without
stockholder approval. These additional shares may be utilized for a
variety of corporate purposes, including future public offerings to raise
additional capital, corporate acquisitions and employee benefit
plans. The existence of authorized but unissued shares of common
stock and preferred stock may also have the effect of deferring, delaying or
discouraging hostile takeovers or changes in control or management of our
company.
Certain
Other Provisions of Our Certificate of Incorporation and By-laws and Delaware
Law
Board
of Directors
Our
certificate of incorporation provides that the number of directors will be fixed
in the manner provided in our by-laws. Our by-laws provide that the
number of directors will be fixed from time to time solely pursuant to a
resolution adopted by the board. Our board of directors currently has
seven members.
Section
203 of Delaware Law
Our
certificate of incorporation expressly states that we have elected not to be
subject to the provisions of Section 203 of the Delaware General Corporation
Law. Subject to exceptions specified therein, Section 203 of the
Delaware General Corporation Law prohibits a publicly held Delaware corporation
from engaging in a “business combination” with an “interested stockholder,”
including general mergers or consolidations or acquisitions of additional shares
of the corporation, for a three-year period following the time that such
stockholder became an interested stockholder.
Except as
otherwise specified in Section 203, an “interested stockholder” is defined to
include:
|
·
|
any
person that is the owner of 15% or more of the outstanding voting stock of
the corporation, or is an affiliate or associate of the corporation and
was the owner of 15% or more of the outstanding voting stock of the
corporation at any time within the three years immediately prior to the
date of determination; and
|
|
·
|
the
affiliates and associates of any such
person.
|
The
statute is intended to prohibit or delay mergers or other takeover or
change-in-control attempts. Although we have elected to opt out of
the statute’s provisions, we could elect to be subject to Section 203 in the
future.
OTHER
MATTERS
No
business other than that set forth in the attached Notice of Special Meeting is
expected to come before the Special Meeting. However, should any
other matters requiring a vote of stockholders properly arise, the persons named
in the accompanying proxy will vote thereon according to their best judgment in
the interest of the Company.
SOLICITATION
OF PROXIES
It is
expected that the solicitation of proxies will be primarily by
mail. Proxies may also be solicited personally by regular employees
of the Company, by telephone or by other means of communication at nominal
cost. The Company will bear the cost of such
solicitation. It will reimburse banks, brokers and trustees, or their
nominees, for reasonable expenses incurred by them in forwarding proxy material
to beneficial owners of stock in accordance with the NASDAQ schedule of
charges.
WHERE
YOU CAN FIND MORE INFORMATION
We file
reports and other information with the SEC under the Exchange Act. You may read
and copy any document we file at the SEC’s public reference room at 100 F
Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the operation of the SEC’s public reference room. Our SEC
filings also are available on the SEC’s website at
http://www.sec.gov.
The SEC
allows us to “incorporate by reference” into this Proxy Statement documents we
file with the SEC. This means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered to be a part of this Proxy Statement. We incorporate by reference
the following filings:
|
·
|
Current
reports on Form 8-K filed with the SEC on September 27, 2010, November 24,
2010 and December 17, 2010;
|
|
·
|
Specimen
Certificate for Shares of Series A Non-Voting Convertible Preferred Stock
filed as Exhibit 4.2 to Amendment No. 1 to the Registration Statement
filed with the SEC on November 17,
2010;
|
|
·
|
Certificate
of Designations of Series A Non-Voting Convertible Preferred Stock filed
as Exhibit 4.3 to Amendment No. 1 to the Registration Statement filed with
the SEC on November 17, 2010;
|
|
·
|
Form
of Deposit Agreement filed as Exhibit 4.6 to Amendment No. 3 to the
Registration Statement filed with the SEC on December 15,
2010;
|
|
·
|
Amended
and Restated Rights Offering Letter Agreement filed as Exhibit 10.30 to
Amendment No. 4 to the Registration Statement filed with the SEC on
December 16, 2010;
|
|
·
|
Amended
and Restated Greenlight Parties’ Voting Agreement filed as Exhibit 10.33
to Amendment No. 4 to the Registration Statement filed with the SEC on
December 16, 2010; and
|
|
·
|
Amended
and Restated Third Point Voting Agreement filed as Exhibit 10.34 to
Amendment No. 4 to the Registration Statement filed with the SEC on
December 16, 2010.
|
You may
obtain a copy of any or all of the reports or documents that have been
incorporated by reference into this Proxy Statement but not delivered with this
Proxy Statement at no cost by writing or telephoning us at the following
address:
BioFuel
Energy Corp.
Attention: Corporate
Secretary
1600
Broadway, Suite 2200
Denver,
Colorado 80202
Telephone:
(303) 640-6500
Any
statements contained in a document incorporated by reference into this Proxy
Statement shall be deemed to be modified or superseded for purposes of this
Proxy Statement to the extent that a statement contained in this Proxy Statement
modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed to constitute a part of this Proxy Statement
except as so modified or superseded.
This
proxy statement or information incorporated by reference herein contains
summaries of certain agreements that we have filed as exhibits to our various
SEC filings. The descriptions of these agreements contained in this
Proxy Statement or information incorporated by reference herein are summaries of
the material terms of the definitive agreements. Copies of the
definitive agreements will be made available without charge to you by making a
written or oral request to us in the manner specified above.
|
By
Order of the Board of Directors,
|
|
|
|
MARK
L. ZOELLER
|
|
Corporate
Secretary
|