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Item 1.01.
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Entry into a Material Definitive Agreement.
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Credit Agreement
On September 15, 2017,
Pacific Ethanol, Inc.’s subsidiary, Illinois Corn Processing, LLC (“ICP”), Compeer Financial, PCA (“Lender”),
and CoBank, ACB (“Agent”) entered into a Credit Agreement dated September 15, 2017 (“Credit Agreement”).
Pursuant to the Credit
Agreement, the Lender agreed to extend to ICP a term loan in the amount of $24,000,000 and a revolving loan in an amount of up
to $18,000,000.
Interest on the unpaid
principal amounts of the loans is payable monthly and accrues, at ICP’s election, at either the LIBOR Index Option or the
Quoted Rate Option. Interest accrues under the LIBOR Index Option at a rate equal to the rate in the applicable loan note plus
the higher of (i) 0.000%, or (ii) the rate reported at 11:00 a.m. London time for the offering of one-month U.S. dollar deposits
by Bloomberg Information Services (“LIBOR Index Rate”). Interest accrues under the Quoted Rate Option at a rate equal
to a fixed rate per annum quoted to ICP by the Agent (“Quoted Rate”). ICP has not received a Quoted Rate and has elected
the LIBOR Index Option. In the event of default the applicable rate will increase by an additional 4% per annum.
The Credit Agreement
also contains numerous customary representations and warranties, affirmative and negative covenants, including limitations on
ICP’s right to make or pay dividends, and events of default and applicable remedies.
The description of the Credit Agreement
does not purport to be complete and is qualified in its entirety by reference to the Credit Agreement, which is filed as Exhibit
10.1 to this report and is incorporated herein by this reference.
Term Note
On September 15, 2017,
ICP executed a Term Note dated September 15, 2017 in favor of the Lender in the principal amount of $24,000,000.
Pursuant to the Term
Note, ICP is to use the proceeds of the Term Note to refinance ICP’s existing indebtedness. ICP is to make amortizing principal
payments in sixteen equal consecutive quarterly installments of $1,500,000 each until September 20, 2021, at which time the entire
remaining indebtedness is due and payable.
Interest on the unpaid
principal amount of the term loan accrues, pursuant to ICP’s election of the LIBOR Index Option, at a rate equal to 3.75%
plus the LIBOR Index Rate.
The description of the Term Note does not purport to be complete and is qualified in its entirety by
reference to the Term Note, which is filed as Exhibit 10.2 to this report and is incorporated herein by this reference.
Revolving Term
Note
On September 15, 2017,
ICP executed a Revolving Term Note dated September 15, 2017 in favor of the Lender in the principal amount of up to $18,000,000.
The Revolving Term Note matures on September 1, 2022.
Pursuant to the Revolving
Term Note, ICP is to use the proceeds of the revolving term facility to refinance ICP’s existing indebtedness and for working
capital.
The Revolving Term
Note gives ICP the right, in ICP’s sole discretion, to permanently reduce from time to time the revolving term commitment
in increments of $500,000 by giving the Agent ten days prior written notice.
The Revolving Term
Note requires ICP to pay the Agent a nonrefundable commitment fee equal to 0.75% per annum multiplied by the average daily positive
difference between the amount of (i) the revolving term commitment, minus (ii) the aggregate principal amount of all loans outstanding
under the Revolving Term Note.
Interest on the unpaid
principal amount of the loan accrues, pursuant to ICP’s election of the LIBOR Index Option, at a rate equal to 3.75% plus
the LIBOR Index Rate.
The description of the Revolving Term Note does not purport to be complete and is qualified in its entirety
by reference to the Revolving Term Note, which is filed as Exhibit 10.3 to this report and is incorporated herein by this reference.
Illinois Future
Advance Real Estate Mortgage
On September 15, 2017,
ICP entered into an Illinois Future Advance Real Estate Mortgage (“Real Estate Mortgage”), dated September 15, 2017
in favor of the Agent.
The Real Estate Mortgage
secures all of ICP’s obligations to the Lender and the Agent, including under the Credit Agreement, Term Note and Revolving
Term Note, and grants the Lender and Agent a mortgage on ICP’s real property.
The Real Estate Mortgage
contains numerous customary representations, warranties, and covenants of ICP.
The description of the Real Estate Mortgage does
not purport to be complete and is qualified in its entirety by reference to the Real Estate Mortgage, which is filed as Exhibit
10.4 to this report and is incorporated herein by this reference.
Security Agreement
On September 15, 2017,
ICP entered into a Security Agreement dated September 15, 2017 in favor of the Agent. The Security Agreement grants the Agent
a security interest in all of ICP’s personal property. The security interest secures all of ICP’s obligations to the
Lender and Agent, including under the Credit Agreement, Term Note and Revolving Term Note.
The Security Agreement
also contains numerous customary representations, warranties, covenants and other customary terms and conditions.
The description
of the Security Agreement does not purport to be complete and is qualified in its entirety by reference to the Security Agreement,
which is filed as Exhibit 10.5 to this report and is incorporated herein by this reference.