Quarterly report pursuant to sections 13 or 15(d)

5. DEBT

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5. DEBT
 3 Months Ended
Mar. 31, 2014
Debt Disclosure [Abstract]  
5. DEBT

Long-term borrowings are summarized as follows (in thousands):

 

    March 31, 2014     December 31, 2013  
Kinergy operating line of credit   $ 23,107     $ 19,042  
Senior unsecured notes     977       13,984  
Plant Owners’ term debt and accrued interest     58,766       58,766  
Plant Owners’ lines of credit and accrued interest     16,000       35,378  
Note payable to related party     –       750  
      98,850       127,920  
Less: Parent purchased Plant Owners’ term debt     (27,088 )     (27,088 )
Total Consolidated Debt     71,762       100,832  
Less: Unamortized discount on senior unsecured notes     (117 )     (1,674 )
      71,645       99,158  
Less short-term portion     –       (750 )
Long-term debt   $ 71,645     $ 98,408  

 

Kinergy Operating Line of Credit – For the three months ended March 31, 2014, Kinergy borrowed net $4,065,000 on its working capital line of credit. As of March 31, 2014, Kinergy had an available borrowing base under the credit facility of $6,893,000.

 

Senior Unsecured Notes – For the three months ended March 31, 2014, the Company paid in cash $13,007,000 on its senior unsecured notes. In April 2014, the Company fully retired the outstanding senior unsecured notes.

 

Plant Owners’ Term Debt and Operating Lines of Credit – The Plant Owners’ debt as of March 31, 2014 consisted of a $32,487,000 tranche A-1 term loan and a $26,279,000 tranche A-2 term loan. Pacific Ethanol, Inc., holds a combined $27,088,000 of these term loans, which are eliminated in consolidation. The Plant Owners’ availability under their revolving lines of credit was $50,378,000, which was subsequently reduced to $35,000,000, as discussed below. The term debt requires monthly interest payments at a floating rate equal to the three-month LIBOR or the Prime Rate of interest, at the Plant Owners’ election, plus 10.0%. The revolving credit facilities require monthly interest payments at a floating rate equal to the three-month LIBOR or the Prime Rate of interest, at the Plant Owners’ election, plus 10.0% and 4.5% for the $20,000,000 and $15,000,000 facilities, respectively. At March 31, 2014, the average interest rate was approximately 11%. Repayments of principal are based on available free cash flow of the Plant Owners, until maturity, when all principal amounts are due.

 

For the three months ended March 31, 2014, the Company paid in cash $19,378,000 on its revolving credit facilities. As of April 25, 2014, the outstanding principal balance on these revolving credit facilities was fully repaid, with an aggregate of $35,000,000 of availability.

  

Debt Modifications – On April 1, 2014, the Company entered into amendments to its credit facilities and term loan arrangements to achieve the following changes:

 

· Adjust the terms of the credit agreements to take into account a restart of the Company’s Madera, California facility;

 

· Reduce the Company’s revolving credit facility from $35,000,000 to $20,000,000 while increasing the maximum amount of the term loan outstanding to $65,766,000, allowing the Company to immediately borrow an additional $7,000,000. The additional $7,000,000 in borrowings was subject to an original issue discount of 6.25%, representing loan fees payable to the lenders, resulting in net proceeds from the additional borrowings of approximately $6,600,000. The Company intends to use the net proceeds of the additional loan for transaction expenses and expenses associated with restarting operations at the Company’s Madera, California facility;

 

· Increase to $24,000,000 from $14,000,000 the level of permitted indebtedness, including capital lease liabilities that may be incurred for yield enhancing equipment or processing and separation equipment for corn oil and corn syrup at the Company’s ethanol production facilities; and

 

· Maintain the Company’s new revolving credit facility at $15,000,000 but allow the Company to terminate in whole or permanently reduce in part in $1,000,000 increments the lenders’ aggregate commitment.

 

Note Payable to Related Party – The Company repaid in cash its note payable to its Chief Executive Officer totaling $750,000 on March 31, 2014.