Quarterly report pursuant to Section 13 or 15(d)

DEBT

v3.24.3
DEBT
 9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
DEBT
NOTE 7 - DEBT
The table below summarizes our notes payable and long-term debt at September 30, 2024 and at December 31, 2023:
(in thousands) September 30, 2024 December 31, 2023 Maturity Date Contractual Interest Rate
Senior Credit Agreement $ 920,883  $ 640,492  December 2025
15.0%
Revolving credit facility 15,300  — 
(1)
 12.5%
Fixed payment obligation 30,750  26,400  December 2024 —%
Other notes
 3,851  3,816 
December 2024 through June 2050
0.0% to 6.0%
Subtotal 970,784  670,708 
Less: current portion of long-term debt (583,877) (199,192)
Less: unamortized debt discount and issuance costs (177,261) (49,615)
Total $ 209,646  $ 421,901 
Notes payable including current portion of long-term debt 583,877  199,192 
Less: current portion of unamortized debt issuance costs (1,328) (960)
Notes payable including current portion of long-term debt, net $ 582,549  $ 198,232 

(1) The revolving credit facility matures three years from the Supply and Offtake Agreement Start Date.
Senior Credit Agreement
On May 4, 2020, BKRF OCB, LLC, a wholly-owned subsidiary of GCEH, entered into the Senior Credit Agreement with a group of lenders (the “Senior Lenders”) pursuant to which the Senior Lenders agreed to initially provide a $300.0 million senior secured term loan facility to BKRF OCB to pay the costs of retooling the Facility. Through various amendments, the commitments under the Senior Credit Agreement have been increased to $714.2 million as of September 30, 2024. As of September 30, 2024, we have borrowed $689.2 million under the Senior Credit Agreement, and have borrowed an additional $15.3 million through November 14, 2024. The Company deferred interest payments of $85.8 million during the nine months ending September 30, 2024 for a total deferred amount of $203.5 million as of September 30, 2024. See Note 2 - Liquidity regarding Senior Credit Agreement debt covenants.
On April 9, 2024, the Company entered into Amendment No. 14 to the Senior Credit Agreement that provided for, among other things, an increase to the Tranche D loan facility up to $165.0 million, providing $25.0 million of new funding.

On May 6, 2024, the Company entered into Amendment No. 15 to the Senior Credit Agreement that provided for, among other things, an increase to the Tranche D loan facility up to $180.0 million, providing $15.0 million of new funding.

On June 25, 2024, the Company entered into Amendment No. 16 to the Senior Credit Agreement that provided for, among other things, an upsize of the Tranche D facility to $272.2 million of commitments by the Tranche D Senior Lenders, which may be increased by an additional $20.4 million of Tranche D commitments by the Administrative Agent if determined such increase is required to reach Substantial Completion. In consideration for the upsizing of the Tranche D facility, Amendment No. 16 provided that an aggregate of $132.4 million of Tranche B loans to be recharacterized as Tranche C+ loans, which provide for a minimum return of 1.35x. Following the execution of Amendment No. 16, for each $1.00 of Tranche D commitments provided by Lenders (as defined in Amendment No. 16) affiliated with Orion
Infrastructure Capital, $1.40 of additional Tranche B Loans will be automatically recharacterized as Tranche C+ at the time such Tranche D commitments are provided (up to a maximum of $35.0 million).

In addition, all outstanding shares of Series C Preferred Stock held by the Senior Lenders were converted into approximately $28.2 million in Tranche B loans. The fair value of the Tranche B Loans issued in exchange for the Series C Preferred Stock held by the Senior Lenders was approximately $17.9 million as of the Effective Date, as such, we recorded a debt discount of $10.3 million.

The Company evaluated Amendment No. 16 in accordance with ASC 470-50, Debt - Modifications and Extinguishments, on a lender-by-lender basis and determined that the net present value of the cash flows associated with the Senior Credit Agreement after Amendment No. 16 exceeded 10% over the previous 12-month period immediately preceding Amendment No. 16. As a result, the Company accounted for this transaction as an extinguishment and derecognized the existing debt and recorded the new debt at fair value. Based on the difference between the reacquisition price and carrying amount of debt, the Company recognized a $163.6 million gain on extinguishment of debt during the nine months ended September 30, 2024, which in addition to debt issuance costs of $48.9 million resulted in total debt discount of $212.5 million.
On August 29, 2024, the Company entered into Amendment No. 17 to the Senior Credit Agreement that provided for, among other things, an increase to the Tranche D loan commitment to $294.6 million by the Tranche D Senior Lenders, which may be increased by an additional $5.0 million of Tranche D commitments by the Administrative Agent if determined such increase is required to reach substantial completion (as defined in the Senior Credit Agreement with respect to the Facility). With Amendment No. 17, $28.0 million of Tranche B loans were recharacterized as Tranche C+ loans. Also with Amendment No. 17, the Company agreed to convert $7.0 million of deferred payments owed to a service provider into Tranche D to the Senior Credit Agreement (see Note 13 - Commitments and Contingencies - Professional Services Agreement for further information).
As of November 14, 2024, we have borrowed a total of $704.5 million under the Senior Credit Agreement. Consequently, the Company is operating with $9.7 million of committed borrowing capacity under the Senior Credit Agreement. The availability period for which the Tranche D facility can be drawn may be extended from time to time by the Administrative Agent is currently extended until December 31, 2024. The Senior Credit Agreement is secured by all the assets of our Facility, including a pledge of the member’s interest and indirectly substantially all the assets of our camelina business and a pledge of member's interests of CCE and SusOils.
As of September 30, 2024, the Company recognized the following debt discount related to warrants issued (See Note 11 - Stock Options and Warrants).
(in thousands, except share amounts) Warrants issued Debt discount
Tranche D 8,518,235 $ 7,805 
As of December 31, 2023, the Company recognized the following debt discount related to warrants issued (See Note 11 - Stock Options and Warrants).

(in thousands, except share amounts) Warrants issued Debt discount
Tranche C 8,250,000  $ 8,607 
Tranche D 24,422,941  $ 23,958 
Revolving Credit Facility

On June 25, 2024, the Company entered into the RCF with Vitol, providing for a $75.0 million working capital facility subject to borrowing base limitations with an advance rate of 90% against the RCF collateral primarily consisting of accounts receivable, feedstock and product inventory owned by the Facility and all Renewable Attributes financed under the RCF. The RCF matures 36 months from the SOA Start Date, which is defined as the Facility receiving feedstock and producing an average of at least 5,000 barrels per day of renewable diesel over a consecutive 5-day period (see Note 13 - Commitments and Contingencies - Supply and Offtake Agreement for further details of the SOA). The RCF provides for an unused commitment fee of 5.0%, and outstanding loans under the RCF will bear interest at 12.5% per annum.
The RCF contains customary representations and warranties for transactions of this type, in addition to certain financial and non-financial covenants. These covenants include restrictions with respect to: incurrence of indebtedness; grants of liens; engaging in certain mergers, consolidations, liquidations and dissolutions; engaging in certain sales of assets; making distributions and dividends; making certain acquisitions and investments; entering into transactions that would limit the ability to make payments on the RCF loans; amendments or terminations of certain material and Facility related contracts; entering into any guarantee of indebtedness; restrictions on use of proceeds; and entering into hedging arrangements (other than permitted arrangements consistent with the Senior Credit Agreement), among other restrictions.

The RCF provides for optional prepayments, as well as mandatory prepayments in the event (i) the outstanding loans exceed the permitted borrowing base, (ii) upon the incurrence of any indebtedness (other than permitted indebtedness), or (iii) upon the receipt of proceeds of any judgment, settlement or other action involving the Loan Parties.

The RCF includes customary events of default for: non-payment of amounts owed under the RCF; breaches of representations, warranties or covenants; certain insolvency proceedings, incurrence of any final judgments in excess of $15.0 million (to the extent not covered by insurance) or a non-monetary judgment that would result in a material adverse effect; changes of control; breaches of material Facility related agreements; and failure of the start-up of the Facility by October 31, 2024 (subject to extensions for certain force majeure events), subsequently amended to December 15, 2024 (see Note 14 - Subsequent Events). The RCF also provides for cross-defaults upon events of default under the Senior Credit Agreement and the SOA. Upon an event of default under the RCF, all commitments under the RCF would terminate, and the lenders may accelerate the payment of all outstanding principal and interest.

Loans under the RCF are secured by all of the assets of the Loan Parties pursuant to that certain pledge and security agreement, dated as of June 25, 2024, by and among the Loan Parties and Vitol, as collateral agent (the “Security Agreement”). In connection with the closing of the transactions contemplated by the RCF and the Security Agreement, the Loan Parties, Vitol, as RCF Collateral Agent, and the Collateral Agent under the Senior Credit Agreement entered into an intercreditor agreement, dated as of June 25, 2024 (the “Intercreditor Agreement”), which will govern the relative priorities (and certain other rights) of the Senior Lenders and the RCF secured parties pursuant to the respective security agreements that each entered into with the Loan Parties and their respective affiliates.
As of September 30, 2024, the outstanding balance was $15.3 million and we have $59.7 million of borrowing capacity under the RCF, subject to the borrowing base limitations. As of November 14, 2024, the outstanding balance was $27.5 million and we have $47.5 million of borrowing capacity under the RCF, subject to the borrowing base limitations. The Company was in compliance with covenants as of September 30, 2024.
Fixed Payment Obligation
The Company amended a derivative forward contract with the counterparty which terminated the derivative forward contract and replaced it with a fixed payment obligation. Effective January 22, 2024, we amended our fixed payment obligation to begin one month after the Facility commences its commercial operations and produces on-spec renewable diesel with the final payment due no later than December 31, 2024. In exchange, the total fixed payment obligation was increased to a total of $30.8 million.
Other Notes Payable

Included in “Other notes” are loans and notes payable facilities for miscellaneous financings, such as working capital loans in our Spanish subsidiary CCE and financing of our insurance policies. At various times the Company enters into new insurance policies to replace certain policies that are expiring and to insure for additional identified risks. As of December 31, 2023, the Company had two insurance policies financed at a rate of 8.8% to 9.0%. The Company had two insurance policies financed at a rate of 0.0% to 8.0% at September 30, 2024. The Company expects that it will continue to finance certain policy premiums.
Future scheduled maturities of the Company’s outstanding debt obligations were as follows as of September 30, 2024:
(in thousands)
Year Required
Minimum Payments
2024 $ 32,642 
2025 922,591 
2026 40 
2027 15,325 
2028 22 
Thereafter 164 
Total $ 970,784 
Class B Units
Pursuant to the Senior Credit Agreement, BKRF HCB, LLC, an indirect wholly-owned subsidiary of the Company, has issued 397.6 million Class B Units to certain Senior Lenders as of September 30, 2024. To the extent that there is distributable cash, the Company is obligated to make certain distribution payments to holders of Class B Units, that end on the later of five years after the Facility commences commercial operations or the date on which the Class B Units equal 2.0x MOIC, after which the units will no longer require further distributions and will be considered fully redeemed. The aggregate total payments (including distributions to the Class B Units, all interest and principal payments) to the certain Senior Lenders cannot exceed two times the amount of the borrowings under the Senior Credit Agreement Tranche A and Tranche B, or approximately $792.0 million. The Tranche A and B loans under the Senior Credit Agreement, which represent $265.4 million of the $714.2 million outstanding principal and paid-in-kind interest balance as of September 30, 2024, do earn Class B Units, while the Tranche C and Tranche D loans do not receive Class B Units. The balance of the Class B Units was unchanged by the transfer of Tranche B loans to Tranche C+ under Amendments No. 16 and No.17. The aggregate fair value of such units on the date of their issuances totaled approximately $16.5 million which were recorded as debt discount. The aggregate fair value of the earned units as of September 30, 2024 and December 31, 2023 was approximately $3.5 million and $3.6 million, respectively. It is expected that the fair value will fluctuate depending on market inputs that impact the projected distributable cash.