SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
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February 6, 2006
GREEN PLAINS RENEWABLE ENERGY, INC.
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(Exact name of registrant as specified in its charter)
Iowa
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(State or other jurisdiction of incorporation)
333-121321 84-1652107
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(Commission file number) (IRS employer identification no.)
9635 Irvine Bay Court, Las Vegas, Nevada 89147
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(Address of principal executive offices) (Zip code)
(702) 524-8928
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(Registrant's telephone number, including area code)
This document contains a total of 54 pages.
Item 1.01 Entry Into a Material Definitive Agreement
Loan Agreements
General Terms
On February 6, 2006, we entered into a Master Loan Agreement,
Construction and Term Loan Supplement, Construction and Revolving Term Loan
Supplement, Security Agreement and Real Estate Mortgage with Farm Credit
Services of America, FLCA (individually and collectively, the "Loan
Agreements"). A participating interest under the Loan Documents was transferred
to CoBank, ACB. Under the Loan Agreements, the lenders will loan up to
$47,000,000. The loan proceeds are to partially finance construction of a
50,000,000 gallon (minimum) annual capacity dry-mill ethanol production facility
near Shenandoah, Iowa (the "Plant"), and to provide funding for working capital
purposes. The Plant is to be in production by no later than May 1, 2007 and
construction costs are not to exceed an aggregate of $71,000,000, net of
refundable sales taxes.
Loan Commitments and Repayment Terms
The loan is comprised of a $30,000,000 amortizing term loan and a
$17,000,000 revolving term facility.
o Term Loan - This loan is available for advances until July 1,
2007. Principal payments are to commence with $1,200,000 due
November 20, 2007, and each quarter thereafter with a final
maturity on November 20, 2013 at the latest. In addition, for
fiscal years ending in 2007 and thereafter, we are also
required to make a special payment equal to 65% of the
available (if any) free cash flow from operations, not to
exceed $2,000,000 per year, and provided, however, that if
such payments would result in a covenant default under the
Loan Agreements, the amount of the payments shall be reduced
to an amount which would not result in a covenant default. The
free cash flow payments are discontinued when the aggregate
total received from such payments exceeds $8,000,000.
o Revolving Term - This loan is available for advances
throughout the life of the commitment. This loan requires
semi-annual $2,400,000 payments on/step-downs of the
commitment to commence on the first day of the month beginning
approximately six months after repayment of the term loan, by
May 1, 2014 at the latest with a final maturity no later than
November 1, 2017.
Availability of Advances, Interest Rates and Fees
Advances are subject to satisfaction of specified lending conditions.
Advances correlate to budget and construction timeline projections, with
verification of progress by a third-party engineer. The loans will bear interest
at the rate of LIBOR plus 3.35%. We paid a loan origination fee in the amount of
$352,500, there is an annual administration fee in the amount of $25,000,
beginning November 1, 2007, and there is an unused commitment fee equal to 1/2%
of the unused revolving term. Appraisal, inspecting engineer, and title company
insurance and disbursing fees are also at the Company's expense.
Security
As security for the loan, the lenders received a first-position lien on
all personal property and real estate owned by us, including an assignment of
all contracts and rights pertinent to construction and on-going operation of the
Plant.
Representations, Warranties and Covenants
The Loan Agreements contain representations, warranties, conditions
precedent, affirmative covenants (including financial covenants) and negative
covenants. One of these covenants requires that dividends or other distributions
to stockholders be limited to 40% of the profit net of income taxes for such
each fiscal year and may be paid only where we are expected to remain in
compliance with all loan covenants, terms and conditions. Furthermore, with
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respect to the fiscal years ending in 2008 and thereafter, an additional
distribution may be made to stockholders in excess of the 40% limit for such
fiscal year if we have made the required free cash flow payment for/based on
such fiscal year, and will thereafter remain in compliance with all loan
covenants, terms and conditions on a pro forma basis net of said potential
additional payment.
Hiring of a General Manager
On February 7, 2006, we appointed Allen H. Sievertsen as our general
manager. We are in the process of putting together an employment agreement with
Mr. Sievertsen. In the interim, Mr. Sievertsen is working for us on an "at will"
basis under the terms of a letter of understanding ("LOU"). Under the LOU, Mr.
Sievertsen is receiving an annual salary is $150,000. He is also entitled to (i)
a $50,000 bonus when the Plant first begins producing ethanol, (ii) such other
bonuses and compensation as the our board of directors may award, (iii)
reimbursement of moving expenses, (iv) severance if Mr. Sievertsen's employment
is terminated for any reason, other than for cause, for a period of two months
if Mr. Sievertsen was employed by us for less than two years and for six months
if he was employed by us for more than two years, and (iv) other insurance,
vacation, and retirement plan benefits.
From August 2001 through December 2005, Mr. Sievertsen was employed as
the general manager/construction manager over an ethanol plant owned by Husker
AG, LLC in Plainview, Nebraska. From June 2000 to August 2001, Mr. Sievertsen
was a supervisor at Eaton Corp. where he directed the integration of a new line
of pumps into the Eaton Hydraulics Plant in Spencer, Iowa. He has a B.S. in
general science (chemistry emphasis) from the University of Iowa.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
Reference is made to Item 1.01, which disclosure is herein incorporated
by reference.
Item 5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers
Reference is made to Item 1.01, which disclosure relating to our hiring
of Mr. Sievertsen as our general manager is herein incorporated by reference.
Item 9.01 Financial Statements and Exhibits
a. Financial statements of businesses acquired
Not Applicable
b. Pro forma financial information
Not applicable
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c. Exhibits
Number Description
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10.1 Master Loan Agreement, dated January 30, 2006, by and
between the Company and Farm Credit Services of
America, FLCA.
10.2 Construction and Term Loan Supplement, dated January
30, 2006, by and between the Company and Farm Credit
Services of America, FLCA.
10.3 Construction and Revolving Term Loan Supplement,
dated January 30, 2006, by and between the Company
and Farm Credit Services of America, FLCA.
10.4 Security Agreement, dated January 30, 2006, by and
between the Company and Farm Credit Services of
America, FLCA.
10.5 Administrative Agency Agreement, dated January 30,
2006, by and between the Company, Farm Credit
Services of America, FLCA and CoBank, ACB.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GREEN PLAINS RENEWABLE ENERGY, INC.
Date: February 7, 2006 By /s/ Barry A. Ellsworth
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Barry A. Ellsworth
President
(Principal Executive Officer)
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