Acquisitions, Dispositions And Discontinued Operations

12 Months Ended

Dec. 31, 2020

Acquisitions, Dispositions And Discontinued Operations [Abstract]

Acquisitions, Dispositions And Discontinued Operations

5. ACQUISITIONS, DISPOSITIONS AND DISCONTINUED OPERATIONS

ACQUISITIONS

Acquisition of a Majority Interest in Fluid Quip Technologies, LLC

On December 9, 2020, the company acquired a majority interest in Fluid Quip Technologies, LLC. The acquisition capitalizes on the core strengths of each company to develop and implement proven, value-added agriculture, food and industrial biotechnology systems and rapidly expand installation and production of Ultra-High Protein across Green Plains facilities, as well as offer these technologies to partnering biofuel facilities. The agreement contains certain earn-out provisions to be received from the company if certain future results are met, including but not limited to, results of

implementation and execution of technology. We will record the obligation related to the earn-out provision as compensation within selling, general and administrative expenses as the earn-out becomes probable.

The purchase price allocation is based on the preliminary results of an external valuation. The purchase price and purchase price allocation are preliminary until contractual post-closing working capital adjustments and valuations are finalized. The company paid $29.1 million for its interests in Fluid Quip Technologies, of which $2.4 million settled liabilities assumed in conjunction with the acquisition, and recognized $6.7 million of noncontrolling interest as part of the FQT acquisition.

The following is a summary of the preliminary purchase price of assets acquired and liabilities assumed (in thousands):


Amounts of Identifiable Assets Acquired and Liabilities Assumed
Cash and restricted cash		$	8,911
Accounts receivable⁽¹⁾			5,446
Inventory			3,037
Intangible assets			30,803
Other assets			2,059

Current liabilities⁽¹⁾			(13,708)
Other long term liabilities			(743)
	Total identifiable net assets	$	35,805

(1)Accounts receivable contain $3.4 million of pre-existing receivables owed by the company, and current liabilities contain $5.8 million in deferred revenues associated with services to be performed for the company. These net to $2.4 million in liabilities assumed that were effectively settled at the time of acquisition of FQT.

Acquisition of Cattle Feeding Operations – Bartlett Cattle Company, L.P.

On August 1, 2018, the company acquired two cattle-feeding operations from Bartlett Cattle Company, L.P. for $16.2 million, plus working capital of approximately $106.6 million primarily consisting of work-in-process inventory. The transaction included the feed yards located in Sublette, Kansas and Tulia, Texas, which added combined feedlot capacity of 97,000 head of cattle to the company’s operations. The transaction was financed using cash on hand and proceeds from the Green Plains Cattle senior secured asset-based revolving credit facility. There were no material acquisition costs recorded for the acquisition.

The following is a summary of the assets acquired and liabilities assumed (in thousands):


Amounts of Identifiable Assets Acquired and Liabilities Assumed
Accounts receivable		$	1,897
Inventory			104,809
Property and equipment, net			16,190

Current liabilities			(118)
	Total identifiable net assets	$	122,778

The amounts above reflect the final purchase price allocation, which included working capital true-up payments by the company of $0.9 million made during 2018. After the disposition of GPCC, the assets and liabilities of the acquired feedlots were reclassified as discontinued operations. See Disposition of Equity Interest in Green Plains Cattle Company LLC and Disposition of Green Plains Cattle Company LLC described below.

DISPOSITIONS

Disposition of Hereford Ethanol Plant

On December 28, 2020, the company completed the sale of the ethanol plant located in Hereford, Texas, and certain related assets, to Hereford Ethanol Partners, L.P. for the sale price of $39.0 million, plus working capital. Correspondingly, the partnership’s ethanol storage assets located adjacent to such plants were sold to the company for $10.0 million, and certain railcar operating leases were assigned to Hereford Ethanol Partners, L.P. The divested assets were reported within the company’s ethanol production, agribusiness and energy and partnership segments. The company recorded a pretax loss on the sale of the ethanol plant of $22.4 million, of which a loss of $18.5 million was recorded within corporate activities and a loss

of $3.9 million was recorded within the ethanol production segment. Transaction fees related to the disposal were not material. The agreement contains certain earn-out provisions to be received from the buyers if certain provisions are met. The company will record any contingent amounts in the consolidated financial statements when the amount is reasonably determinable or the consideration is realized.

The asset and liabilities of the Hereford ethanol plant at closing on December 28, 2020 were as follows: (in thousands):


Amounts of Identifiable Assets Disposed and Liabilities Relinquished
Inventory		$	8,140
Prepaid expenses and other			196
Property and equipment			54,279
Operating lease right-of-use-assets			5,096

Accrued and other liabilities			(870)
Operating lease current liabilities			(977)
Operating lease long-term liabilities			(4,201)
Long-term liabilities			(186)
	Total identifiable net assets disposed	$	61,477

The amounts reflected above represent working capital estimates which are considered preliminary until contractual post-closing working capital adjustments are finalized.

Disposition of Equity Interest in Green Plains Cattle Company LLC

On October 1, 2020, pursuant to the Securities Purchase Agreement, the company sold its remaining 50% joint venture interest in GPCC to AGR, TGAM Agribusiness Fund LP and StepStone (the “Buyers”) for $80.5 million in cash, plus closing adjustments. The transaction resulted in a reduction in other assets of $69.7 million as a result of the removal of the equity method investment in GPCC, and a reduction in accumulated other comprehensive income (loss) of $10.7 million as a result of the removal of the company’s share of equity method investees accumulated other comprehensive loss. Transaction fees related to the disposal were not material. There was no material gain or loss recorded as part of this transaction. The Securities Purchase Agreement contains certain earn-out provisions to be paid to or received from the Buyers if certain EBITDA thresholds are met. The company will record any contingent amounts associated with the earn-out provision in the consolidated financial statements when the amount is probable and reasonably determinable or the consideration is realized. See Note 21 – Equity Method Investments for further details.

Disposition of Fleischmann’s Vinegar

On November 27, 2018, the company and Green Plains II LLC, an indirect wholly-owned subsidiary of the company, completed the sale of Fleischmann’s Vinegar Company, Inc. to Kerry Holding Co. (“Kerry”). The company received as net consideration from Kerry $354.0 million in cash and restricted cash, excluding net working capital adjustments. The divested assets were reported within the company’s food and ingredients segment. The company recorded a pretax gain on the sale of Fleischmann’s Vinegar of $58.2 million, including offsetting related transaction costs of $7.4 million within corporate activities.

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The assets and liabilities of Fleischmann’s Vinegar at closing on November 27, 2018 were as follows (in thousands):


Amounts of Identifiable Assets Disposed and Liabilities Relinquished
Cash		$	2,107
Accounts receivable, net			16,142
Inventory			15,167
Prepaid expenses and other			853
Property and equipment			64,552
Other assets			79,389

Current liabilities			(8,837)
Deferred tax liabilities			(26,617)
	Total identifiable net assets		142,756

Goodwill			142,002
	Net assets disposed	$	284,758

The amounts above reflect the final purchase price allocation, including a working capital payment made to and received from Kerry of $0.3 million and $0.3 million during the first and third quarters of 2019, respectively.

Disposition of Bluffton, Lakota and Riga Ethanol Plants

On November 15, 2018, the company completed the sale of three ethanol plants located in Bluffton, Indiana, Lakota, Iowa, and Riga, Michigan, and certain related assets from subsidiaries, to Valero Renewable Fuels Company, LLC (“Valero”) for the sale price of $323.2 million, including net working capital and other adjustments. Correspondingly, the partnership’s storage assets located adjacent to such plants were sold to Green Plains Inc. for $120.9 million. The company received as consideration from Valero approximately $323.2 million, while the partnership received as consideration from the company 8.7 million partnership units and a portion of the general partner interest equating to 0.2 million equivalent limited partner units to maintain the general partner’s 2% interest. In addition, the partnership also received additional consideration of approximately $2.7 million from Valero for the assignment of certain railcar operating leases. The divested assets were reported within the company’s ethanol production, agribusiness and energy services and partnership segments. The company recorded a pretax gain on the sale of the three ethanol plants of $92.2 million, of which $89.5 million was recorded within corporate activities and $2.7 million was recorded within the partnership segment, including offsetting transaction costs of $4.2 million, of which $3.7 million were recorded within corporate activities and $0.5 million were recorded within the partnership segment.

The assets and liabilities of the Bluffton, Lakota and Riga ethanol plants at closing on November 15, 2018 were as follows (in thousands):


Amounts of Identifiable Assets Disposed and Liabilities Relinquished
Inventory		$	36,812
Prepaid expenses and other			189
Property and equipment			184,970
Other assets			1,717

Current liabilities			(746)
Other liabilities			(4,706)
	Total identifiable net assets		218,236

Goodwill			6,188
	Net assets disposed	$	224,424

The amounts above reflect the final working capital true-up payments by Valero of $3.4 million received during the first quarter of 2019.

The company determined that the dispositions noted above did not meet the criteria for discontinued operations presentation as the disposition of these businesses did not represent a strategic shift that will have a major effect on its operations and financial results.

Disposition of Green Plains Cattle Company LLC

On September 1, 2019, the company, TGAM and StepStone formed a joint venture and entered into the LLC Agreement. GPCC was previously a wholly owned subsidiary of Green Plains. Green Plains also entered into a Securities Purchase Agreement with TGAM and StepStone, whereby TGAM and StepStone purchased an aggregate of 50% of the membership interests of GPCC from Green Plains for approximately $76.9 million in cash. There was no gain or loss recorded as part of this transaction. The LLC Agreement contains certain earn-out or bonus provisions to be paid by or received from GPCC if certain EBITDA thresholds are met. Pursuant to the bonus provision, on August 31, 2020, Green Plains earned $2.0 million which has been recorded within loss (gain) on sale of assets, net on the consolidated statements of operations for the year ended December 31, 2020.

The assets and liabilities of the GPCC at closing on September 1, 2019 were as follows (in thousands):


Amounts of Identifiable Assets Disposed and Liabilities Relinquished
Cash		$	2
Accounts receivable, net			17,920
Inventory			387,534
Derivative financial instruments			48,189
Property and equipment			71,678
Other assets			2,291

Current liabilities			(49,297)
Short-term notes payable and other borrowings			(38)
Current maturities of long-term debt			(324,028)
Long-term debt			(80)
Other liabilities			(403)
	Total identifiable net assets disposed	$	153,768

DISCONTINUED OPERATIONS

After closing on September 1, 2019, GPCC is no longer consolidated in the company’s consolidated financial statements and the GPCC investment was accounted for using the equity method of accounting. Additionally, the company concluded that the disposition of GPCC met the requirements under ASC 205-20. As such, GPCC results prior to its disposition are classified as discontinued operations for the years ended December 31, 2019 and 2018. Financial results of GPCC were previously recorded within the food and ingredients segment.

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Summarized Results of Discontinued Operations

The following table presents the results of our discontinued operations for the periods presented. GPCC was disposed of on September 1, 2019, and as such, operational results through August 31, 2019 are included in the fiscal year 2019 amounts presented below (in thousands).


	Year Ended December 31,
	2019⁽¹⁾		2018⁽¹⁾

Product revenues	$	638,122	$	884,072

Costs and expenses
Cost of goods sold (excluding depreciation and amortization expenses reflected below)		614,671		845,160
Selling, general and administrative expenses		5,931		7,775
Depreciation and amortization expenses		4,198		5,361
Total costs and expenses		624,800		858,296
Operating income		13,322		25,776

Other income (expense)
Interest income		182		147
Interest expense		(12,417)		(13,576)
Other, net		-		2,613
Total other expense		(12,235)		(10,816)
Income before income taxes		1,087		14,960
Income tax expense		(258)		(3,421)
Net income	$	829	$	11,539

(1)Product revenues, costs of goods sold and selling, general and administrative expenses include certain revenue and expense items which were previously considered intercompany transactions prior to the disposition of GPCC and therefore eliminated upon consolidation. These revenue and costs of goods sold transactions total $14.5 million and $24.6 million for the years ended December 31, 2019 and 2018, respectively.