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Item
1.01.Entry
Into a Material Definitive Agreement.
Amendment
No. 1 to Construction and Term Loan Agreement and Agreement as to Future
Financing Transactions dated September 29, 2006 by and among Pacific Ethanol
Madera LLC, TD Banknorth, N.A., Comerica Bank and Pacific Ethanol,
Inc.
On
October 2, 2006, Pacific Ethanol Madera, LLC (“Borrower”), a wholly-owned
subsidiary of Pacific Ethanol, Inc.(the “Company”), and the Company, entered
into an Amendment No. 1 to Construction and Term Loan Agreement and Agreement
as
to Future Financing Transactions dated September 29, 2006 with TD Banknorth,
N.A. and Comerica Bank (the “Amendment”). The Amendment amends a certain
Construction and Term Loan Agreement dated April 10, 2006 by and among Borrower,
Comerica Bank and Hudson United Capital, a division of TD Banknorth, N.A. (the
“Agreement”). The Amendment is described immediately below and is filed herewith
as Exhibit 10.2. The Agreement is described below and is filed herewith as
Exhibit 10.1.
The
Amendment provides that Borrower has no obligation to borrow under the Agreement
at any time. The Amendment further provides that proceeds of the term loans
under the Agreement may be used to finance a distribution or dividend to the
Company, but only up to the amount of capital contributions made by the Company
to Borrower after April 13, 2006 in connection with or related to the
development, construction, installation, start-up or testing of the ethanol
production facility in Madera County, California (the “Project”); provided, that
payment in full is first made by Borrower for (i) the refinancing of the
principal of and accrued and unpaid interest on all construction loans
outstanding on the term loan conversion date, if any, and (ii) interest, fees
and other expenses payable under the Agreement.
The
Amendment also provides that an optional prepayment may occur at any time
following the term loan conversion date and following 10 days’ prior notice. The
Agreement previously required that an optional prepayment not occur until after
the first anniversary of the term loan conversion date.
In
addition, the Amendment provides rights and obligations in the event of an
early
termination and failure to borrow under the Agreement. If the term loan
conversion date has not occurred by December 15, 2006, Borrower may, at its
option, terminate the Agreement and the other related loan documents by
rendering notice and paying a nonrefundable fee in the amount of approximately
$1.0 million, together will all other amounts then due and payable under the
Agreement and the other loan documents. If Borrower has not borrowed amounts
in
the aggregate initial principal amount of at least $34.0 million on or prior
to
December 15, 2006, and Borrower has not exercised its right of termination,
then
Borrower is required to pay a nonrefundable fee in the amount of the product
of
(i) $1.0 million, and (ii) a fraction, the numerator of which is the aggregate
initial principal amounts borrowed on or prior to December 15, 2006 and the
denominator of which is $34.0 million, together with all other amounts then
due
and payable under the Agreement.
2
The
Amendment also provides that the lenders who are parties to the Agreement shall
have the pro rata right to participate as a lender in any refinancing or
multi-plant financing involving the Project that closes on or before December31, 2006; provided, that the lenders will only have the right to provide up
to
an aggregate of $34.0 million with respect to such refinancing or financing.
In
the event a lender agrees to participate in such refinancing or financing,
any
early termination fee due to that lender will be reduced by a fraction the
numerator of which is the aggregate amount of such lender’s commitment to
participate in such refinancing or financing and the denominator of which is
the
product of (i) such lender’s pro rata share of the aggregate term loan
commitment under the Agreement, and (ii) $34.0 million; or if such lender has
previously received a prepayment fee or early termination fee under the
Agreement, as amended by the Amendment, then such lender will refund to the
Borrow, on the date of such refinancing or financing, the difference between
the
fee received by it and the amount that would otherwise be payable to such
lender, as calculated above.
Construction
and Term Loan Agreement dated April 10, 2006 by and among Pacific Ethanol Madera
LLC, Comerica Bank and Hudson United Capital, a division of TD Banknorth,
N.A.
On
April 13, 2006, Borrower entered into the Agreement with Hudson United
Capital, a division of TD Banknorth, N.A. (“Hudson”) and Comerica Bank
(“Comerica”). This debt financing (“Debt Financing”) is in the aggregate amount
of up to approximately $34.0 million and will provide a portion of the total
financing necessary for the completion of the Company’s ethanol production
facility in Madera County (the “Project”). The Project cost is not to exceed
approximately $65.1 million (the “Project Cost”).
Subject
to the terms and conditions of the Agreement and related documents, Hudson
will
fund up to $22.1 million and Comerica will fund up to $11.9 million of the
Debt
Financing. The Debt Financing includes customary representations, warranties,
covenants, default and other provisions.
Substantial
completion of the Project is to occur within 425 days of the final notice to
proceed. The final completion date is the date that the Project (a) has
successfully been constructed and completed; (b) has passed all performance
and
acceptance tests reasonably acceptable to Hudson and Comerica and their
engineer; and (c) the engineer has provided an acceptable completion certificate
(the “Final Completion Date”). The Final Completion Date is to occur within 545
days from the notice to proceed.
The
Debt
Financing will initially be in the form of a construction loan (the
“Construction Loan”), that will mature on or before the Final Completion Date,
after which the Debt Financing will be converted to a term loan (the “Term
Loan”), that will mature on the seventh anniversary of the closing of the Term
Loan. The closing of the Term Loan is expected to be the Final Completion Date.
The Construction Loan interest rate will float at a rate equal to the 30-day
London Inter Bank Offered Rate (“LIBOR”), plus 3.75%. PEI Madera will be
required to pay the Construction Loan interest monthly during the term of the
Construction Loan. The Term Loan interest rate will float at a rate equal to
the
90-day LIBOR plus 4.00%. PEI Madera will be required to purchase interest rate
protection in the form of a LIBOR rate cap of no more than 5.50% from a provider
on terms and conditions reasonably acceptable to Hudson, and in an amount
covering no less than 70% of the principal outstanding on any loan payment
date
commencing on the first draw down date through the fifth anniversary of the
Term
Loan. Loan repayments on the Term Loan are to be due quarterly in arrears for
a
total of 28 payments beginning on the closing of the Term Loan and ending on
its
maturity date. The loan amortization for the Project will be established on
the
closing of the Term Loan based upon the operating cash projected to be available
to PEI Madera from the Project as determined by closing pro forma projections.
The Debt Financing will be senior to all obligations of the Project and PEI
Madera other than direct Project operating expenses and expenses incurred in
the
ordinary course of business. All direct and out-of-pocket expenses of the
Company or its direct and indirect subsidiaries will be reimbursed only after
the repayment of the Debt Financing obligations.
3
The
Term
Loan amount is to be the lesser of (i) $34.0 Million, (ii) 52.25% of
the total Project cost as of the Term Loan conversion date, and (iii) an amount
equal to the present value (discounted at an interest rate of 9.5% per annum)
of
43.67% of the operating cash distributable to and received by PEI Madera
supported by the closing pro forma projections, from the closing of Term Loan
through the seventh anniversary of such closing.
Item
9.01.Financial
Statements and Exhibits.
(a)Financial
Statements of Businesses Acquired.
None.
(b)Pro
Forma Financial Information.
None.
(c)Exhibits.
Number
Description
10.1
Construction
and Term Loan Agreement dated April 10, 2006 by and among Pacific
Ethanol
Madera LLC, Comerica Bank and Hudson United Capital, a division of
TD
Banknorth, N.A. (*)
10.2
Amendment
No. 1 to Construction and Term Loan Agreement and Agreement as to
Future
Financing Transactions dated September 29, 2006 by and among Pacific
Ethanol Madera LLC, TD Banknorth, N.A., Comerica Bank and Pacific
Ethanol,
Inc.
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.
Amendment
No. 1 to Construction and Term Loan Agreement and Agreement as to
Future
Financing Transactions dated September 29, 2006 by and among Pacific
Ethanol Madera LLC, TD Banknorth, N.A., Comerica Bank and Pacific
Ethanol,
Inc.
6
Dates Referenced Herein and Documents Incorporated by Reference
