SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
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Date
of Report (Date of earliest event reported)
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February 13, 2009
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PACIFIC ETHANOL, INC.
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(Exact
name of registrant as specified in its charter)
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Delaware
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000-21467
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41-2170618
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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400
Capitol Mall, Suite 2060
Sacramento,
California
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95814
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code:
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(916)
403-2123
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(Former
name or former address, if changed since last
report)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General
Instruction A.2. below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01. Entry
into a Material Definitive Agreement.
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(1)
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Wachovia
Credit Facility
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Amendment
and Forbearance Agreement dated February 13, 2009 by and among Pacific Ethanol,
Inc., Kinergy Marketing LLC and Wachovia Capital Finance Corporation
(Western)
On
February 13, 2009, Kinergy Marketing, LLC (“Kinergy”), a
wholly-owned subsidiary of Pacific Ethanol, Inc. (the “Company”), and the
Company, entered into an Amendment and Forbearance Agreement (the “Amendment and Forbearance
Agreement”) with Wachovia Capital Finance Corporation (Western) (“Wachovia”). The
Amendment and Forbearance Agreement relates to a $40.0 million credit facility
for Kinergy under a Loan and Security Agreement dated July 28, 2008 by and among
Kinergy, the parties thereto from time to time as the Lenders, Wachovia and
Wachovia Bank, National Association (the “Loan Agreement,” and
together with all other related loan documents, the “Loan
Documents”). Kinergy’s credit facility is described in more
detail under the heading “Wachovia Loan Transaction” below.
The
Amendment and Forbearance Agreement identifies certain existing defaults under
the Loan Agreement. The Amendment and Forbearance Agreement provides
that Wachovia will forbear from exercising its rights and remedies under the
Loan Documents and applicable law, on the terms and conditions set forth in the
Amendment and Forbearance Agreement, for a period of time (the “Forbearance Period”)
commencing on February 13, 2009 and ending on the earlier to occur of (i)
February 28, 2009, and (ii) the date that any new default occurs under the Loan
Agreement or a default occurs under the Amendment and Forbearance Agreement.
Upon Kinergy’s request, Wachovia may, in its sole and absolute discretion,
extend the date the Forbearance Period terminates to March 31,
2009.
The
Amendment and Forbearance Agreement increased the interest rates applicable to
the credit facility to the default rates under the Loan Agreement, which is (i)
for eurodollar rate loans, a rate equal to (a) the London Interbank Offered Rate
(LIBOR), divided by 0.90 (subject change based upon the reserve percentage in
effect from time to time under Regulation D of the Board of Governors of the
Federal Reserve System), plus (b) 4.50%, or
(ii) for prime rate loans, a rate equal to (a) the greater of the prime rate
published by Wachovia Bank from time to time, or the federal funds rate then in
effect plus 0.50%, plus (b)
2.25%. The foregoing rate increases are effective as of January 1,
2009 and are to continue for the duration of the Forbearance
Period. In addition, under the Amendment and Forbearance Agreement,
all loans, letters of credit and other financial accommodations provided by
Wachovia to Kinergy during the Forbearance Period are to be made and provided in
the sole and absolute discretion of Wachovia.
The
Amendment and Forbearance Agreement requires Kinergy to provide Wachovia with
certain budgets and projections on a weekly basis during the Forbearance Period.
The Amendment and Forbearance Agreement also requires Kinergy to provide
Wachovia, on or prior to February 28, 2009, with an agreement, in form and
substance satisfactory to Wachovia, under which WestLB AG and other lenders have
agreed to forbear from exercising their rights against the Company and certain
of its subsidiaries for such forbearance period and on such terms and conditions
as shall be acceptable to Wachovia; provided, that if the Forbearance Period is
extended by Wachovia then the required date of delivery of such agreement shall
be extended to March 31, 2009.
The
Amendment and Forbearance Agreement also amended the Loan Agreement in various
respects, including by (i) reducing by $500,000 amounts available for borrowing
based on Kinergy’s eligible accounts receivable and inventory levels, subject to
any reserves established by Wachovia, (ii) reducing the inventory loan limit
from $20,000,000 to $5,000,000, thereby reducing the available borrowing base
related to inventory levels by $15,000,000, (iii) reducing the letter of credit
limit from $10,000,000 to $500,000, and (iv) reducing the aggregate principal
amount of the loans outstanding at any time against eligible in-transit
inventory from $10,000,000 to $2,500,000 and against eligible inventory
consisting of biodiesel from $3,000,000 to $200,000. In addition, the
maximum available credit was reduced from $40,000,000 to $10,000,000,
representing a reduction in available credit which is not currently being
utilized by Kinergy. The Amendment and Forbearance Agreement also
amended the definition of “Material Adverse Effect” in the Loan Agreement to
include material adverse effects occurring with respect to the Company or any of
its subsidiaries, rather than only Kinergy, and included as an event of default
under the Loan Agreement any Material Adverse Effect with respect to Kinergy,
the Company or any of their respective subsidiaries.
The
Amendment and Forbearance Agreement also includes a general release in favor of
Wachovia of any claims, whether known or unknown, that Kinergy or the Company
may have had against Wachovia. Kinergy was required to pay Wachovia a
forbearance fee of $50,000, in addition to any other fees, charges, interest and
expenses payable under the Loan Documents. If the Forbearance Period
is extended to March 31, 2009, Kinergy is required to pay an additional
forbearance fee of $50,000. The Amendment and Forbearance Agreement
also includes customary representations and warranties and other customary terms
and conditions.
The
description of the Amendment and Forbearance Agreement does not purport to be
complete and is qualified in its entirety by reference to the Amendment and
Forbearance Agreement, which is filed as Exhibit 10.1 to this report and
incorporated herein by reference.
Wachovia
Loan Transaction
Loan
and Security Agreement dated July 28, 2008 by and among Kinergy Marketing
LLC, the parties thereto from time to time as the Lenders, Wachovia Capital
Finance Corporation (Western) and Wachovia Bank, National
Association
Guarantee
dated July 28, 2008 by Pacific Ethanol, Inc. in favor of Wachovia Capital
Finance Corporation (Western)
Descriptions
of the Loan and Security Agreement and the Guarantee are set forth in the
Company’s Current Report on Form 8-K for July 28, 2008 filed with the Securities
and Exchange Commission on August 1, 2008 and such descriptions are incorporated
herein by this reference. Such descriptions do not purport to be complete and
are qualified in their entireties by reference to the Loan and Security
Agreement and Guarantee, which are filed as Exhibits 10.3 and 10.4,
respectively, to this report and incorporated herein by
reference.
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(2)
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WestLB
Credit Agreement
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Limited
Waiver and Forbearance Agreement dated as of February 17, 2009 by and among
Pacific Ethanol Holding Co. LLC, Pacific Ethanol Madera LLC, Pacific Ethanol
Columbia, LLC, Pacific Ethanol Stockton, LLC, Pacific Ethanol Magic Valley, LLC,
WestLB AG, New York Branch, Amarillo National Bank and the Lenders identified
therein
On
February 17, 2009, Pacific Ethanol Holding Co. LLC, Pacific Ethanol Madera LLC,
Pacific Ethanol Columbia, LLC, Pacific Ethanol Stockton, LLC and Pacific Ethanol
Magic Valley, LLC, each indirect wholly-owned subsidiaries of the Company
(collectively, “Borrowers”), and
WestLB AG, New York Branch, Amarillo National Bank and the senior secured
lenders identified therein entered into a Limited Waiver and Forbearance
Agreement (the “Waiver
and Forbearance Agreement”). The Waiver and Forbearance
Agreement relates to loans under a Credit Agreement dated as of February 27,
2007 by and among the foregoing parties (the “Credit
Agreement”). The Credit Agreement is described in more detail
under the heading “WestLB Loan Transaction” below.
The
Waiver and Forbearance Agreement identifies certain existing defaults and
certain anticipated defaults under the Credit Agreement. The Waiver
and Forbearance Agreement provides that WestLB and the senior secured lenders
will forbear from exercising their rights and remedies under the Credit
Agreement and related documents and applicable law, on the terms and conditions
set forth in the Waiver and Forbearance Agreement, for a period of time (the
“Forbearance
Period”) commencing on February 17, 2009 and ending on the earlier to
occur of (i) February 27, 2009, (ii) the date that any new default occurs under
the Credit Agreement or a default occurs under the Waiver and Forbearance
Agreement, and (iii) the date on which all obligations have been paid in full
and the Credit Agreement has been terminated.
The
Waiver and Forbearance Agreement provides that Borrowers may withdraw funds
otherwise required to be reserved in an account designated solely for the
Company’s Stockton, California plant and use such funds in accordance with an
agreed-upon 13-week cash flow forecast. The amount of such funds is
approximately $2.0 million.
The
Amendment and Forbearance Agreement requires Kinergy to provide WestLB with
certain budgets and projections on an weekly basis.
The
Waiver and Forbearance Agreement also includes a general release in favor of
WestLB and the senior secured lenders of any claims, whether known or unknown,
that any Borrower may have had against them. Borrowers are required
to reimburse WestLB for all fees and expenses, including reasonable and
documented legal fees and other expenses of counsel and other
advisors. The Waiver and Forbearance Agreement also includes
customary representations and warranties and other customary terms and
conditions.
The
description of the Waiver and Forbearance Agreement does not purport to be
complete and is qualified in its entirety by reference to the Waiver and
Forbearance Agreement, which is filed as Exhibit 10.2 to this report and
incorporated herein by reference.
Credit
Agreement, dated as of February 27, 2007, by and among Pacific Ethanol Holding
Co. LLC, Pacific Ethanol Madera LLC, Pacific Ethanol Columbia, LLC, Pacific
Ethanol Stockton, LLC, Pacific Ethanol Imperial, LLC, and Pacific Ethanol Magic
Valley, LLC, as borrowers, the lenders party thereto, WestLB AG, New York
Branch, as administrative agent, lead arranger and sole book runner, WestLB AG,
New York Branch, as collateral agent, Union Bank of California, N.A., as
accounts bank, Mizuho Corporate Bank, Ltd., as lead arranger and co-syndication
agent, CIT Capital Securities LLC , as lead arranger and co-syndication agent,
Cooperative Centrale Raiffeisen-Boerenleenbank BA., Rabobank Nederland, New York
Branch, and Banco Santander Central Hispano S.A., New York Branch (as amended by
that certain Successor Accounts Bank and Amendment Agreement dated as of August
27, 2007, as further amended by that certain Waiver and Third Amendment to
Credit Agreement dated as of March 25, 2008, as further amended by that certain
Fourth Amendment to Credit Agreement dated as of April 24, 2008, as further
amended by that certain Fifth Amendment to Credit Agreement dated as of October
24, 2008 and as further amended by that certain Sixth Amendment to Credit
Agreement dated as of December 30, 2008)
A
description of the Credit Agreement is set forth in the Company’s Current Report
on Form 8-K for February 27, 2007 filed with the Securities and Exchange
Commission on March 2, 2007; and a description of the Waiver and Third Amendment
to Credit Agreement is set forth in the Company’s Current Report on Form 8-K for
March 26, 2008 filed with the Securities and Exchange Commission on March 27,
2008 and such descriptions are incorporated herein by reference. Such
descriptions do not purport to be complete and are qualified in their entireties
by reference to the Credit Agreement and the Waiver and Third Amendment to
Credit Agreement, which are filed as Exhibits 10.5 and 10.6 to this report and
incorporated herein by reference.
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Item
9.01.
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Financial
Statements and Exhibits.
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(a)
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Financial statements
of businesses acquired. Not
applicable.
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(b)
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Pro forma financial
information. Not
applicable.
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(c)
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Shell company
transactions. Not
applicable.
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10.1
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Amendment
and Forbearance Agreement dated February 13, 2009 by and among Pacific
Ethanol, Inc., Kinergy Marketing LLC and Wachovia Capital Finance
Corporation (Western) (1)
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10.2
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Limited
Waiver and Forbearance Agreement dated as of February 17, 2009 by and
among Pacific Ethanol Holding Co. LLC, Pacific Ethanol Madera LLC, Pacific
Ethanol Columbia, LLC, Pacific Ethanol Stockton, LLC, Pacific Ethanol
Magic Valley, LLC, WestLB AG, New York Branch, Amarillo National Bank and
the Lenders identified therein
(1)
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10.3
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Loan
and Security Agreement dated July 28, 2008 by and among Kinergy Marketing
LLC, the parties thereto from time to time as Lenders, Wachovia Capital
Finance Corporation (Western) and Wachovia Bank, National Association
(2)
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10.4
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Guarantee
dated July 28, 2008 by and between Pacific Ethanol, Inc. in favor of
Wachovia Capital Finance Corporation
(Western) (2)
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10.5
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Credit
Agreement, dated as of February 27, 2007, by and among Pacific Ethanol
Holding Co. LLC, Pacific Ethanol Madera LLC, Pacific Ethanol Columbia,
LLC, Pacific Ethanol Stockton, LLC, Pacific Ethanol Imperial, LLC, and
Pacific Ethanol Magic Valley, LLC, as borrowers, the lenders party
thereto, WestLB AG, New York Branch, as administrative agent, lead
arranger and sole book runner, WestLB AG, New York Branch, as collateral
agent, Union Bank of California, N.A., as accounts bank, Mizuho Corporate
Bank, Ltd., as lead arranger and co-syndication agent, CIT Capital
Securities LLC , as lead arranger and co-syndication agent, Cooperative
Centrale Raiffeisen-Boerenleenbank BA., Rabobank Nederland, New York
Branch, and Banco Santander Central Hispano S.A., New York Branch
(3)
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10.6
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Waiver
and Third Amendment to Credit Agreement dated as of March 25, 2008 by and
among by and among Amarillo National Bank, WestLB AG, New York Branch,
Pacific Ethanol Holding Co. LLC, Pacific Ethanol Madera LLC, Pacific
Ethanol Columbia, LLC, Pacific Ethanol Stockton, LLC, Pacific Ethanol
Magic Valley, LLC, Pacific Ethanol, Inc. and the Lenders party
thereto (4)
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(2)
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Filed
as an exhibit to the Registrant’s Form 8-K for July 28, 2008 filed with
the Securities and Exchange Commission on August 1,
2008.
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(3)
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Filed
as an exhibit to the Registrant’s Form 8-K for February 27, 2007 filed
with the Securities and Exchange Commission on March 2,
2007.
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(4)
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Filed
as an exhibit to the Registrant’s Form 8-K for March 26, 2008 filed with
the Securities and Exchange Commission on March 27,
2008.
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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.
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Date: February
20, 2009
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PACIFIC
ETHANOL, INC.
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By:
/S/ CHRISTOPHER
W.
WRIGHT
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Christopher
W. Wright
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Vice
President, General Counsel &
Secretary
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EXHIBITS
FILED WITH THIS REPORT
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Number
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Description
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10.1
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Amendment
and Forbearance Agreement dated February 13, 2009 by and among Pacific
Ethanol, Inc., Kinergy Marketing LLC and Wachovia Capital Finance
Corporation (Western)
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10.2
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Limited
Waiver and Forbearance Agreement dated as of February 17, 2009 by and
among Pacific Ethanol Holding Co. LLC, Pacific Ethanol Madera LLC, Pacific
Ethanol Columbia, LLC, Pacific Ethanol Stockton, LLC, Pacific Ethanol
Magic Valley, LLC, WestLB AG, New York Branch, Amarillo National Bank and
the Lenders identified therein
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8