GLOBAL CLEAN ENERGY HOLDINGS, INC. (OTCMKTS:GCEH) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01.
In connection with the Acquisition, the financings and the conversion of the Refinery, the Company has entered into the following material agreements:
1. On May 7, 2020, we acquired the Refinery through the purchase of all of the outstanding equity interests of Bakersfield Renewable Fuels from Alon Paramount Holdings, Inc. (“Alon Paramount”) to a Share Purchase Agreement dated April 29, 2019. The purchase was effected through GCE’s indirect subsidiary BKRF Senior Borrower.
2. GCEH granted a call option to Alon Paramount to purchase up to a 33 1/3% interest in GCE Acquisitions to a Call Option Agreement dated May 7, 2020 among GCEH, GCE Acquisitions and Alon Paramount.
3. We obtained a $300 million credit facility from a group of lenders (the “Senior Lenders”), for whom Orion Energy Partners TP Agent, LLC acts as administrative agent, to a Credit Agreement dated May 4, 2020 among BKRF Senior Pledgor (as pledgor), BKRF Senior Borrower and the Senior Lenders. The credit facility was provided to BKRF Senior Borrower (as borrower) in order to fund the Acquisition and to retool and repurpose the Refinery.
4. We obtained a $65 million credit facility from a group of lenders for whom Orion Energy Partners TP Agent, LLC acts as administrative agent (the “Mezzanine Lenders”). The $65 million credit facility was provided for the retooling of the Refinery to a Credit Agreement dated May 4, 2020 among BKRF Mezz Pledgor (as pledgor), BKRF Mezz Borrower (as borrower) and the Mezzanine Lenders.
5. GCE Acquisitions, BKRF Mezz Borrower, the Senior Lenders and the Mezzanine Lenders entered into an Amended and Restated Limited Liability Company Agreement for BKRF Mezz Borrower dated May 4, 2020 (the “BKRF Mezz Borrower LLC Agreement”). As more fully described below, that agreement provides the Senior Lenders and the Mezzanine Lenders with rights to participate in certain future cash distributions made by BKRF Mezz Borrower.
6. BKRF Senior Borrower engaged ARB, Inc. (“ARB”), a subsidiary of Primoris Services Corporation, to provide services for the engineering, procurement, construction, commissioning, start-up and testing of the Refinery to an Engineering, Procurement and Construction Agreement dated April 30, 2020 between GCE Acquisitions and ARB.
7. BKRF Senior Borrower is a party to a product offtake agreement with a major multinational oil and gas company under which, subject to the various conditions specified in that agreement, the offtake partner has committed to purchase renewable diesel fuel produced at the Refinery.
Share Purchase Agreement and Call Option Agreement
to that certain Share Purchase Agreement dated April 29, 2019, as amended September 27, 2019, October 4, 2019, October 11, 2019, October 28, 2019, March 23, 2020 and May 4, 2020, between Alon Paramount and GCE Acquisitions, Alon Paramount agreed to sell all of the shares of capital stock of Alon Bakersfield Property, Inc. to GCE Acquisitions for $40,000,000. Alon Bakersfield Property, Inc. owns an existing refinery. Prior to the closing of the purchase and sale, Alon Bakersfield Property, Inc. converted its organizational form as a Delaware corporation to a Delaware limited liability company and changed its name to “Bakersfield Renewable Fuels, LLC.” On May 4, 2020, GCE Acquisitions assigned its rights under the Share Purchase Agreement to BKRF Senior Borrower. On May 7, 2020 BKRF Senior Borrower purchased (the “Acquisition”) all of the outstanding equity interests of Bakersfield Renewable Fuels, LLC for $40,000,000. As a result, BKRF Senior Borrower now owns Bakersfield Renewable Fuels which owns the refinery. In connection with the Acquisition, BKRF Senior Borrower agreed to undertake certain cleanup activities at the refinery.
Concurrently with the closing of the Acquisition, GCEH and GCE Acquisitions entered into a Call Option Agreement with Alon Paramount to which GCEH granted to Alon Paramount an option to purchase from GCEH up to 33 1/3% of the membership interests of GCE Acquisitions. The option will expire on the 90th day following the date that GCE Acquisitions certifies in writing to Alon Paramount that the refinery has been recommissioned and has commercially operated for 90 continuous days at certain target production rates. Under the Call Option Agreement, GCEH has agreed that without Alon Paramount’s prior written consent, prior to the expiration of the option, it will not permit any lien on the membership interests subject to the option, and GCE Acquisitions has agreed that without Alon Paramount’s written consent, prior to the expiration of the option, it will not, and it will not permit any of the above listed subsidiaries, to issue or transfer any equity securities other than those contemplated by the Credit Agreements entered into with the Senior Lenders and the Mezzanine Lenders, or modify or amend the certain material terms of such Credit Agreements.
Senior Credit Agreement
BKRF Senior Borrower and its direct parent, BKRF Senior Pledgor, entered into that certain Credit Agreement dated May 4, 2020 with the Senior Lenders to which the Senior Lenders agreed to provide a $300 million senior secured term loan facility that may be used by BKRF Senior Pledgor to acquire the equity interests of Bakersfield Renewable Fuels and to pay the costs of the retooling of the Refinery. Orion Energy Partners TP Agent, LLC is the administrative agent under the Credit Agreement.
On May 7, 2020, BKRF Senior Borrower borrowed $68,800,000 million under the credit facility to pay the purchase price for the Acquisition, to pay various acquisition related expenses, and to fund initial construction obligations.
The senior loan bears interest at the rate of 12.5% per annum, payable quarterly, provided that the borrower may defer 2.5% per annum of the interest for the first six quarters and 1.67% per annum of the interest for the 7th quarter, such deferred interest being added to principal. In addition, as additional consideration for the senior loans, the Senior Lenders have been issued Class B Units in BKRF Mezz Borrower (see “BKRF Mezz Borrower LLC Agreement,” below).
The principal of the senior loans is due at maturity, provided that the borrower must offer to prepay the senior loans with any proceeds of such asset dispositions, borrowings other than permitted borrowings, proceeds from losses, and excess net cash flow. The borrower may also prepay the senior loan in whole or in part with the payment of a prepayment premium.
The senior loans are secured by all of the assets of BKRF Senior Borrower (including its membership interests in Bakersfield Renewable Fuels) BKRF Senior Pledgor’s membership interest in BKRF Senior Borrower, and all of the assets of Bakersfield Renewable Fuels (BKRF Senior Pledgor, BKRF Senior Borrower and Bakersfield Renewable Fuels, collectively, “loan parties”).
The senior loans mature on November 4, 2026. The Senior Lenders have a right to accelerate the maturity date of the senior loans upon the occurrence of an event of default. Events of default include, in addition to customary events of default, the change of control of a loan party, the breach of any material Refinery-related agreement, the bankruptcy of any party to a material Refinery-related agreement, the failure to substantially complete the retooling of the Refinery by March 31, 2022, and the failure to meet certain project milestones by dates specified dates in the Credit Agreement.
Under the Credit Agreement, the loan parties have made a number of affirmative and negative covenants. These include, among others, limitations and restrictions on incurring other indebtedness, encumbering their assets, making distributions and other payments to affiliates, entering into transactions with their affiliates, and modifying material project agreements, in each case without the Senior Lenders’ prior consent. Notwithstanding the foregoing, the loan parties may obtain a working capital credit facility or facilities of up to $25 million without the consent of the Senior Lenders.
Mezzanine Credit Facility
BKRF Mezz Borrower and its direct parent, BKRF Mezz Pledgor, entered into that certain Credit Agreement dated May 4, 2020 with the Mezzanine Lenders to which the Mezzanine Lenders have agreed to provide a $65 million secured term loan facility to be used to pay the costs of repurposing and starting up the Refinery. Orion Energy Partners TP Agent, LLC is the administrative agent under the Credit Agreement. BKRF Mezz Borrower has not drawn down on the credit facility as of the date of this Current Report.
The mezzanine loans bear interest at the rate of 15.0% per annum on amounts borrowed, payable quarterly, provided that the borrower may defer interest to the extent it does not have sufficient cash to pay the interest, such deferred interest being added to principal. In addition, as additional consideration for the mezzanine loans, the Mezzanine Lenders will be issued Class C Units in BKRF Mezz Pledgor (see “BKRF Mezz Borrower LLC Agreement,” below).
Principal of the mezzanine loans is due at maturity provided that the borrower must offer to prepay the loan with any excess net cash flow. The borrower may also prepay the loan in whole or in part with the payment of a prepayment premium.
The mezzanine loans are secured by all of the assets of BKRF Mezz Borrower and BKRF Mezz Pledgor, including BKRF Mezz Pledgor’s membership interest in BKRF Mezz Borrower.
The mezzanine loans mature in November 2027. The Mezzanine Lenders have a right to accelerate the maturity date of the mezzanine loans upon the occurrence of an event of default. Events of default include, in addition to customary events of default, the change of control of a loan party and any default under the Credit Agreement with the Senior Lenders.
The loan parties are subject to certain affirmative and negative covenants with the lenders. These include, among others, limitations and restrictions on the loan parties and their subsidiaries incurring other indebtedness, encumbering their assets, making distributions and other payments to affiliates, entering into transactions with their affiliates, and modifying material project agreements, in each case without the Mezzanine Lenders’ prior consent.
BKRF Mezz Borrower LLC Agreement
GCEH Acquisitions and BKRF Mezz Borrower entered into the BKRF Mezz Borrower LLC Agreement on May 4, 2020. There are three classes of membership interests (Units) under the LLC Agreement: (i) Class A Units, all of which are held by GCE Acquisitions; (ii) Class B Units, all of which are reserved for the issuance to the Senior Lenders, and (iii) Class C Units, all of which are reserved for the issuance to the Mezzanine Lenders.
On May 7, 2020, concurrently with the initial funding by the Senior Lenders under the Credit Agreement, BKRF Mezz Borrower issued Class B Units to the Senior Lenders. At such time as the Mezzanine Lender advances funds under the Mezzanine Lender Credit Agreement, BKRF Mezz Borrower will issue Class C Units to the Mezzanine Lenders.
Under the BKRF Mezz Borrower LLC Agreement, the Senior Lenders, as holders of the Class B Units, are entitled to receive, until the Termination Date, quarterly distributions of 25% of the free cash flow until the Senior Lenders have received (collectively, from these cash distributions plus principal and interest on the senior loans) an amount equal to a 2X multiple of invested capital (“MOIC”), or two times the amount of the senior loans, for a total of up to $600 million, and, if the Termination Date has not occurred, thereafter quarterly distributions of 5% of the free cash flow until the Termination Date. The “Termination Date” is the later to occur of (i) five years from the commercial operations date of the Refinery and (ii) the date the Senior Lenders have received two times the loan amount under the credit facility.
Under the BKRF Mezz Borrower LLC Agreement, the Mezzanine Lenders, as holders of the Class C Units, are entitled to receive out of the distributions by BKRF Mezz Borrower not paid to the Class B Members, the following:
Reference is made to the information under the heading “Share Purchase Agreement and Call Option Agreement” under Item 1.01, which information is incorporated herein by this reference.
Reference is made to the information under the headings “Senior Credit Facility,” “Mezzanine Credit Facility” and “BKRF Mezz Borrower LLC Agreement” under Item 1.01, which information is incorporated herein by this reference.
(d) Exhibits.
| 99.1 | Press release issued on May 8, 2020 |
Global Clean Energy Holdings, Inc. Exhibit
EX-99.1 2 ea121551ex99-1_global.htm PRESS RELEASE ISSUED ON MAY 8,…
To view the full exhibit click here
About GLOBAL CLEAN ENERGY HOLDINGS, INC. (OTCMKTS:GCEH)
Global Clean Energy Holdings, Inc. is engaged in energy agri-business focused on the development of ultra-low carbon non-food based feedstocks for renewable fuels and chemicals in the United States, Mexico and the Caribbean. The Company’s principal business activities include the plant science, planting, cultivation, harvesting and processing of non-food based plants to generate seed oils and biomass for use in the biofuels industry, including the production of ultra-low carbon renewable-jet, biodiesel, renewable diesel and renewable chemicals. The Company has in-house development and operations capabilities that supports its own biofuel energy farms and provides advisory services to third parties. It is focused on the commercialization of non-food based oilseed plants and biomass. It is engaged in the development of farms growing Jatropha curcas (Jatropha) and the cultivation of Camelina sativa (Camelina).