GRANITE FALLS ENERGY, LLC: entering into a material definitive agreement, terminating a material definitive agreement, entering into the acquisition or disposal of assets, creating a direct financial obligation or obligation under ” an off-balance sheet arrangement of a registrant, financial statements and exposures (Form 8-K)

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ITEM 1.01. ACCESS TO A MATERIAL DEFINITIVE AGREEMENT

At September 27, 2021, Granite Falls Energy, LLC (“GFE”) has finalized the loan documents for an Amended Credit Facility (the “Amended Credit Facility”) with AgCountry Farm Credit Services, PCA, AgCountry Farm Credit Services, FLCA (“AgCountry”). CoBank FCB (“CoBank”) serves as AgCountry’s administrative agent for the Amended Credit Facility. The Amended Credit Facility is intended to finance the acquisition by GFE of Heron Lake BioEnergy, LLC (“HLBE”) and consolidate certain existing debts of GFE and HLBE. The loan documents include an amended and restated credit agreement (the “Credit Agreement”), which amends and replaces the Company’s credit agreement with AgCountry dated September 27, 2018. The Amended Credit Facility comprises the following agreements:


Credit Agreement


The credit facility contains customary financial and positive covenants and negative covenants for loans of this type and size to ethanol companies. Each loan from AgCountry to GFE is subject to the terms of the credit agreement.

In accordance with the Credit Agreement, all agreements between GFE and AgCountry and / or CoBank are secured by a first lien on all equity or personal property held or acquired by GFE. The financial commitments under the modified Credit Facility include (i) maintaining a working capital of at least $ 20.0 million, and (ii) maintaining a debt service coverage ratio of at least 1.75 to 1.00 at the end of each fiscal year, beginning October 31, 2022.

The Credit Facility provides for customary events of default which include (subject in some cases to customary grace and redress periods), among others, the following: non-payment of principal or interest; breach of covenants or other agreements of the modified credit facility; defaults on certain other debts; and certain bankruptcy or insolvency events. If an Event of Default occurs, the Remaining Principal Balance and accrued interest on all Loans subject to the Amended Credit Facility will become due and payable immediately.

The previous credit agreement with AgCountry to date September 27, 2018 included a
$ 10.0 million a working capital requirement and a debt service coverage ratio of at least 1.50 to 1.00, and also included substantially the same financial terms and conditions as the new credit agreement.

$ 20 million Revolving credit note

Under the terms of the revolving credit promissory note, GFE may borrow, repay and re-borrow up to the full amount of the principal obligation of $ 20.0 million.

Final payment of the amounts borrowed under the revolving credit promissory note is due
October 1, 2022. Interest on the modified revolving term promissory note accrues at a variable weekly rate equal to the London One-Month Interbank Offered Rate Index (“LIBOR”) rate plus 3.25% and is payable monthly in term. expired. The revolving credit promissory note is also subject to a commission of 0.30% on the unused commitment. The purpose of the revolving credit promissory note is to provide for the operating needs of GFE and to consolidate a dated revolving credit promissory note.
February 4, 2021, between AgCountry and HLBE. The revolving credit promissory note February 4, 2021, allowed HLBE to borrow, repay and re-borrow up to the total amount of the principal commitment of $ 5 million up to June 1, 2021, subject to renewal for one year.

$ 500,000 Amended and updated letter of credit Promissory note

Under the Amended and Restated Letter of Credit, GFE may borrow, repay and re-borrow up to the full amount of the principal commitment of $ 500,000 for the purpose of opening letters of credit on its behalf. Final payment of the amounts borrowed under the revolving credit promissory note is due
December 1, 2023. The sums borrowed bear interest at the rate of the LIBOR index plus 3.25%. The Amended and Restated Promissory Note Letter of Credit replaces the Amended and Restated Promissory Note Letter of Credit dated September 30, 2020, between GFE and AgCountry. The new amended and restated letter of credit note provides for the same commitment limit and serves the same purpose as the amended and restated letter of credit note dated September 30, 2020. However, the amounts borrowed under the amended and restated letter of credit of the dated promissory note September 30, 2020 bore interest at the LIBOR index rate plus 3.00%.

$ 20 million Amended and updated renewable term note

Under the Amended and Restated Revolving Promissory Note, GFE may borrow, repay and re-borrow up to the full amount of the principal obligation of $ 20.0 million. The final payment of the sums borrowed under the ticket is due
October 1, 2026. Subject to GFE’s selection, interest on the note accrues either at a variable weekly rate of the LIBOR index rate plus 3.50% or at an annual fixed rate determined by CoBank. The ticket is subject to an upfront charge, a change charge and an unused commitment charge of 0.50%. The objectives of the note are to provide working capital to GFE, to finance the acquisition of HLBE by GFE and to consolidate an amended and updated revolving promissory note dated June 11, 2020, between HLBE and AgCountry. The amended and updated revolving promissory note dated June 11 allowed HLBE to borrow, repay and re-borrow up to the total amount of the principal commitment of $ 13.0 million up to December 1, 2022, bearing interest at the LIBOR index rate plus 3.35%.

$ 25 million Single term promissory note

According to the $ 25.0 million One-time advance promissory note, AgCountry agrees to make a single advance loan to GFE in the amount of $ 25.0 million for the purpose of financing the acquisition of HLBE by GFE and its refinancing. . .

ITEM 1.02. TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT

Reference is made to section 1.01, the disclosure of which is incorporated herein by reference.

ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSAL OF ASSETS

On or about March 24, 2021, Granite Falls Energy, LLC, a Minnesota limited liability company (“GFE”), and Heron Lake BioEnergy, LLC, a Minnesota limited liability company (“HLBE”), signed a merger agreement, under which GFE would acquire the minority stake in HLBE (the “merger”). The structure of the contemplated transaction included a merger in which a wholly owned subsidiary of GFE (the “merger sub-entity”) will merge with and into HLBE, HLBE surviving the transaction as a wholly owned subsidiary of GFE. A copy of the Merger Agreement is provided as Exhibit 10.1 of this report, and the proposed transaction is further detailed in the Merger Plan provided as Exhibit 2.1 of this report.

Prior to the merger, GFE held approximately 50.7% of the issued and outstanding units of HLBE. Excluding the units held by GFE, as of the recording date of the extraordinary meeting held by HLBE for the purpose of voting on the proposed transaction, there were 38,456,283 HLBE units issued and outstanding (the “ Minority interest ”). The purchase price of all minority interests was $ 14.0 million in cash payable on closing of the Merger. Each issued and outstanding share of the minority stake will be canceled and converted into a right to receive $ 0.36405 per unit. (the “Merger Consideration”).

At September 28, 2021, the Merger has been completed. HLBE is the surviving entity of the Merger. Upon completion of the Merger, 100% of the stake in Merger Sub was converted to become 100% of the stake in HLBE, as a surviving entity of the Merger. Following the Merger, HLBE became a 100% subsidiary of GFE. The Merger was completed in accordance with the Merger Agreement and the Merger Plan,

which have been deposited with the SECOND to March 25, 2021, and which are incorporated herein by reference. In accordance with the Merger Agreement and the Merger Plan, GFE transferred $ 14.0 million to a stockbroker, who will hold the $ 14.0 million in trust to be distributed pro rata to the unitholders of the minority stake in HLBE. At September 29, 2021, HLBE and Merger Sub have filed articles of merger with the Minnesota Secretary of State.

ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A HOLDER.

Reference is made to section 1.01, the disclosure of which is incorporated herein by reference.

ITEM 9.01 – FINANCIAL STATEMENTS AND DOCUMENTS


(a)None.



(b)None.



(c)None.



(d)Exhibits.




Exhibit No.    Description
2.1              Plan of Merger between Granite Heron Merger Sub, LLC, and Heron Lake
               BioEnergy, LLC, dated March 24, 2021 (incorporated by reference to the
               Granite Falls Energy, LLC Form 8-K filed March 25, 2021)

10.1             Merger Agreement between Granite Falls Energy, LLC, and Heron Lake
               BioEnergy, LLC dated March 24, 2021  (incorporated by reference to the
               Granite Falls Energy, LLC Form 8-K filed March 25, 2021)

104            Cover Page Interactive Data File (embedded within the Inline XBRL
               document).

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