$20 million Amended and Restated Revolving Term Promissory Note
Under the terms of the Amended and Restated Revolving Term Promissory Note, GFE may borrow, repay, and reborrow up to the aggregate principal commitment amount of $20.0 million. Final payment of amounts borrowed under the note is due October 1, 2026. Subject to GFE’s selection, interest on the note accrues at either a variable weekly rate of the LIBOR Index rate plus 3.50%, or an annual fixed rate determined by CoBank. The note is subject to an overadvance fee, an amendment fee, and a 0.50% unused commitment fee. The purposes of the note are to providing working capital to GFE, to finance GFE’s acquisition of HLBE, and to consolidate an amended and restated revolving term promissory note dated June 11, 2020, between HLBE and AgCountry. The amended and restated revolving term promissory note dated June 11 allowed HLBE to borrow, repay, and reborrow up to the aggregate principal commitment amount of $13.0 million until December 1, 2022, bearing an interest rate of the LIBOR Index Rate plus 3.35%.
$25 million Single Advance Term Promissory Note
Under the terms of the $25.0 million Single Advance Term Promissory Note, AgCountry agrees to make a single advance loan to GFE in the amount of $25.0 million for the purpose of financing GFE’s acquisition of HLBE and refinancing existing indebtedness. GFE agrees to repay the note in eighteen quarterly installments of $1.125 million plus a final installment of any unpaid balance. Subject to GFE’s selection, the amounts borrowed bear interest at either a variable weekly rate equal to the LIBOR Index Rate plus 3.50%, or an annual fixed rate set by CoBank, with a minimum period of one year and minimum amount of $100,000.
$2.4 million Single Advance Term Promissory Note
Under the terms of the $2.4 million Single Advance Term Promissory Note, AgCountry agrees to make a single advance loan to GFE in the amount of $2.4 million loan for the purpose of financing GFE’s acquisition of HLBE and consolidating GFE’s existing indebtedness pursuant to a HLBE’s single advance term promissory note dated June 19, 2020. Amounts borrowed under the note bear interest at a fixed rate of 3.80%. The note is to be repaid in semi-annual installments of $300,000. HLBE’s single advance term promissory note dated June 19, 2020 provided a commitment of $3.0 million to HLBE for the purpose of constructing a new grain bin and reducing a revolving term promissory note. Amounts borrowed under that single advance term promissory note dated June 19, 2020 bore interest at LIBOR plus 3.35% or at a fixed rate of 3.80%.
ITEM 1.02. TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT
Reference is made to Item 1.01, which disclosure is herein incorporated by reference.
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION 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”), executed a Merger Agreement, pursuant to which GFE would acquire the minority interest of HLBE (the “Merger”). The structure of the contemplated transaction included a merger in which a wholly owned subsidiary of GFE (the “Merger Sub”) will merge with and into HLBE, with HLBE surviving the transaction as a wholly owned subsidiary of GFE. A copy of the Merger Agreement is furnished as Exhibit 10.1 to this report, and the proposed transaction is further detailed in the Plan of Merger furnished as Exhibit 2.1 to this report. Prior to the Merger, GFE owned approximately 50.7 percent of the issued and outstanding units of HLBE. Excluding the units owned by GFE, as of the record date of the special meeting held by HLBE for the purpose of voting on the proposed transaction, there were 38,456,283 units of HLBE issued and outstanding (the “Minority Interest”). The purchase price for the entire Minority Interest was $14.0 million in cash payable at the closing of the Merger. Each issued and outstanding unit of the Minority Interest will be canceled and converted into the right to receive $0.36405 per Unit. (the “Merger Consideration”).
On September 28, 2021, the Merger was completed. HLBE is the surviving entity of the Merger. Upon completion of the Merger, 100% of the membership interest in Merger Sub was converted into and became 100% of the membership interest in HLBE, as the surviving entity in the Merger. As a result of the Merger, HLBE became a wholly owned subsidiary of GFE. The Merger was completed pursuant to the Merger Agreement and Plan of Merger,
