Item 1.01. Entry into a Material Definitive Agreement.
Second Amendment to Security Agreement
On December 29, 2019, Pacific Ethanol Pekin, LLC ("Pekin"), an indirect
wholly-owned subsidiary of Pacific Ethanol, Inc. (the "Company"), and CoBank,
ACB ("CoBank") entered into a Second Amendment to Security Agreement (the
"Second Amendment") dated effective as of December 20, 2019 by and between Pekin
and CoBank as agent for the benefit of Compeer Financial, PCA (the "Lender", and
together with CoBank, the "Lender Parties"), successor by merger to 1st Farm
Credit Services, PCA, further amending that certain Security Agreement dated as
of December 15, 2016 by and between Pekin and CoBank as agent for the benefit of
1st Farm Credit Services, PCA (the "Security Agreement").
Under the Second Amendment, the parties agreed to amend the secured obligations
under the Security Agreement to include Pekin's unconditional guarantee for the
payment of up to an aggregate $40.0 million to satisfy the obligations of
Illinois Corn Processing, LLC ("ICP"), an indirect wholly-owned subsidiary of
the Company, to the Lender Parties under the Credit Agreement dated as of
September 15, 2017 by and among ICP and the Lender Parties (as amended, the "ICP
Credit Agreement").
The Second Amendment also contains customary representations, warranties and
covenants, and other terms and conditions.
A description of the Security Agreement is set forth in the Company's Current
Report on Form 8-K for December 15, 2016 filed with the Securities and Exchange
Commission on December 20, 2016 and is incorporated herein by this reference.
Descriptions of the ICP Credit Agreement are set forth in the Company's Current
Reports on Forms 8-K for September 15, 2017 and December 20, 2019 filed with the
Securities and Exchange Commission on September 21, 2017 and December 26, 2019,
respectively, and are incorporated herein by this reference.
Pekin Guaranty
On December 29, 2019, Pekin entered into a Guaranty (the "Pekin Guaranty") dated
effective as of December 20, 2019 in favor of the Lender Parties. The Pekin
Guaranty provides for the unconditional guarantee by Pekin, and Pekin agreed to
be liable for, the payment and performance when due of up to an aggregate $40.0
million of ICP's obligations under the ICP Credit Agreement. The Pekin Guaranty
also contains customary representations, warranties and covenants, and other
terms and conditions.
Third Amendment to Illinois Future Advance Real Estate Mortgage
On December 29, 2019, Pekin and Lender entered into a Third Amendment to
Illinois Future Advance Real Estate Mortgage (the "Third Amendment to Mortgage")
dated effective as of December 20, 2019 by and between Pekin and Lender, further
amending that certain Illinois Future Advance Real Estate Mortgage dated as of
December 15, 2016 by Pekin in favor of CoBank as agent for and on behalf of
1stFarm Credit Services, PCA (the "Pekin Mortgage").
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Under the Third Amendment to Mortgage, Pekin agreed to amend the definition of
obligations under the Pekin Mortgage to include all obligations under the Pekin
Guaranty (as described above), provided that upon payment of an aggregate $40.0
million to the Lender Parties, the obligations shall mean the obligations under
the Credit Agreement dated as of December 15, 2016 by and among Pekin and the
Lender Parties (as amended, the "Pekin Credit Agreement") and certain promissory
notes made by Pekin. The Third Amendment to Mortgage also amended Exhibit B to
the Pekin Mortgage to include only promissory notes made by Pekin.
The Third Amendment to Mortgage also contains customary representations,
warranties and covenants, and other terms and conditions.
Descriptions of the Pekin Credit Agreement are set forth in the Company's
Current Reports on Forms 8-K for December 15, 2016, August 7, 2017, March 30,
2018, March 21, 2019, July 15, 2019, November 15, 2019, December 16, 2019 and
December 20, 2019 filed with the Securities and Exchange Commission on December
20, 2016, August 11, 2017, April 5, 2018, March 27, 2019, July 19, 2019,
November 19, 2019, December 26, 2019 and December 26, 2019, respectively, and
are incorporated herein by this reference.
First Amendment to Security Agreement
On December 29, 2019, ICP and CoBank entered into a First Amendment to Security
Agreement (the "First Amendment") dated effective as of December 20, 2019 by and
between ICP and CoBank, amending that certain Security Agreement dated as of
September 15, 2017 by and between ICP and CoBank as agent for the benefit of
Lender (the "ICP Security Agreement").
Under the First Amendment, the parties agreed to amend the secured obligations
under the ICP Security Agreement to include ICP's unconditional guarantee for
the payment of up to an aggregate $40.0 million to satisfy the obligations of
Pekin to the Lender Parties under the Pekin Credit Agreement.
The First Amendment also contains customary representations, warranties and
covenants, and other terms and conditions.
A description of the ICP Security Agreement is set forth in the Company's
Current Report on Form 8-K for September 15, 2017 filed with the Securities and
Exchange Commission on September 21, 2017 and is incorporated herein by this
reference.
ICP Guaranty
On December 29, 2019, ICP entered into a Guaranty (the "ICP Guaranty") dated
effective as of December 20, 2019 in favor of the Lender Parties. The ICP
Guaranty provides for the unconditional guarantee by ICP, and ICP agreed to be
liable for, the payment and performance when due of up to an aggregate $40.0
million of Pekin's obligations under the Pekin Credit Agreement. The ICP
Guaranty also contains customary representations, warranties and covenants, and
other terms and conditions.
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Amendment to Illinois Future Advance Real Estate Mortgage
On December 29, 2019, ICP and Lender entered into an Amendment to Illinois
Future Advance Real Estate Mortgage (the "Amendment to Mortgage") dated
effective as of December 20, 2019 by and between ICP and Lender, amending that
certain Illinois Future Advance Real Estate Mortgage dated as of September 15,
2017 by ICP in favor of CoBank as agent for and on behalf of Lender (the "ICP
Mortgage").
Under the Amendment to Mortgage, ICP agreed to amend the definition of
obligations under the ICP Mortgage to include all obligations under the ICP
Guaranty (as described above), provided that upon payment of an aggregate $40.0
million to the Lender Parties, the obligations shall mean the obligations under
the ICP Credit Agreement. The Amendment to Mortgage also amended Exhibit B to
the ICP Mortgage to include only promissory notes made by ICP.
The Amendment to Mortgage also contains customary representations, warranties
and covenants, and other terms and conditions.
A description of the ICP Mortgage is set forth in the Company's Current Report
on Form 8-K for September 15, 2017 filed with the Securities and Exchange
Commission on September 21, 2017 and is incorporated herein by this reference.
Descriptions of the ICP Credit Agreement are set forth in the Company's Current
Reports on Forms 8-K for September 15, 2017 and December 20, 2019 filed with the
Securities and Exchange Commission on September 21, 2017 and December 26, 2019,
respectively, and are incorporated herein by this reference.
Amended and Restated Guaranty and Contribution Agreement
On December 29, 2019, Pacific Ethanol Central, LLC ("PE Central"), Pekin's and
ICP's parent company and a wholly-owned subsidiary of the Company, entered into
an Amended and Restated Guaranty and Contribution Agreement (the "Amended
Guaranty") dated effective as of December 20, 2019 in favor of the Lender
Parties. The Amended Guaranty amended the guaranteed amount under the Guaranty
and Contribution Agreement (the "Original Guaranty") dated as of March 20, 2019
by PE Central in favor of the Lender Parties from an amount equal to (i) $30.0
million, minus the then-existing amount of Pekin's working capital, plus the
amount of any accounts receivable owed by PE Central to Pekin, plus $12.0
million to (ii) $40.0 million and all payments due to the Lender Parties under
certain provisions of the Pekin Credit Agreement and ICP Credit Agreement. The
Amended Guaranty also contains customary representations, warranties and
covenants, and other terms and conditions.
A description of the Original Guaranty is set forth in the Company's Current
Report on Form 8-K for March 21, 2019 filed with the Securities and Exchange
Commission on March 27, 2019 and is incorporated herein by this reference.
First Amendment to Security Agreement
On December 29, 2019, PE Central and CoBank entered into a First Amendment to
Security Agreement (the "PE Central First Amendment") dated effective as of
December 20, 2019 by and between PE Central and CoBank as agent for the benefit
of Lender, amending that certain Security Agreement dated as of March 20, 2019
by and among PE Central and the Lender Parties (the "PE Central Security
Agreement").
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Under the PE Central First Amendment, the parties agreed to amend the collateral
under the PE Central Security Agreement to include PE Central's equity interests
in ICP. The PE Central First Amendment also contains customary representations,
warranties and covenants, and other terms and conditions.
A description of the PE Central Security Agreement is set forth in the Company's
Current Report on Form 8-K for March 21, 2019 filed with the Securities and
Exchange Commission on March 27, 2019 and is incorporated herein by this
reference.
Pledge Agreements
On December 29, 2019, PE Central and Pekin entered into a Pledge Agreement (the
"Pekin Pledge Agreement") dated effective as of December 20, 2019 with CoBank,
as agent for Lender, under which PE Central pledged its equity interests in
Pekin in favor of the Lender Parties as security for PE Central's obligations
under the Pekin Pledge Agreement and the Amended Guaranty. The Pekin Pledge
Agreement also contains customary representations, warranties and covenants, and
other terms and conditions.
On December 29, 2019, PE Central and ICP entered into a Pledge Agreement (the
"ICP Pledge Agreement") dated effective as of December 20, 2019 with CoBank, as
agent for Lender, under which PE Central pledged its equity interests in ICP in
favor of the Lender Parties as security for PE Central's obligations under the
ICP Pledge Agreement and the Amended Guaranty. The ICP Pledge Agreement also
contains customary representations, warranties and covenants, and other terms
and conditions.
On December 29, 2019, PE Central and Pacific Aurora, LLC ("Pacific Aurora"), an
indirect subsidiary of the Company, entered into a First Amendment to Pledge
Agreement (the "First Amendment to Pledge") dated effective as of December 20,
2019 with CoBank, as agent for the benefit of Lender, amending the Pledge
Agreement dated as of March 20, 2019 by and among PE Central and the Lender
Parties (the "Original Pledge Agreement"), under which PE Central agreed to
amend the Original Pledge Agreement to permit PE Central to retain dividends
payable to PE Central unless an event of default has occurred or as otherwise
described in the loan documents. The First Amendment to Pledge also imposed
negative covenants on PE Central, including PE Central's obligation not to sell,
convey or dispose of the pledged collateral. The First Amendment to Pledge also
contains customary representations, warranties and covenants, and other terms
and conditions.
A description of the Original Pledge Agreement is set forth in the Company's
Current Report on Form 8-K for March 21, 2019 filed with the Securities and
Exchange Commission on March 27, 2019 and is incorporated herein by this
reference.
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Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
On December 29, 2019, Pekin and CoBank entered into the Second Amendment, as
described under Item 1.01 above and incorporated herein by this reference.
On December 29, 2019, Pekin entered into the Pekin Guaranty in favor of the
Lender Parties, as described under item 1.01 above and incorporated herein by
this reference.
On December 29, 2019, Pekin and Lender entered into the Third Amendment to
Mortgage, as described under Item 1.01 above and incorporated herein by this
reference.
On December 29, 2019, ICP and CoBank entered into the First Amendment, as
described under Item 1.01 above and incorporated herein by this reference.
On December 29, 2019, ICP entered into the ICP Guaranty in favor of the Lender
Parties, as described under Item 1.01 above and incorporated herein by this
reference.
On December 29, 2019, ICP and Lender entered into the Amendment to Mortgage, as
described under Item 1.01 above and incorporated herein by this reference.
On December 29, 2019, PE Central entered into the Amended Guaranty in favor of
the Lender Parties, as described under Item 1.01 above and incorporated herein
by this reference.
On December 29, 2019, PE Central and CoBank entered into the PE Central First
Amendment, as described under Item 1.01 above and incorporated herein by this
reference.
On December 29, 2019, PE Central, Pekin and CoBank entered into the Pekin Pledge
Agreement, as described under Item 1.01 above and incorporated herein by this
reference.
On December 29, 2019, PE Central, ICP and CoBank entered into the ICP Pledge
Agreement, as described under Item 1.01 above and incorporated herein by this
reference.
On December 29, 2019, PE Central, Pacific Aurora and CoBank entered into the
First Amendment to Pledge, as described under Item 1.01 above and incorporated
herein by this reference.
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