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5. Notes Payable | 3 Months Ended
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Mar. 31, 2014
Debt Disclosure [Abstract] |
5. Notes Payable | Debt consists of the notes from our senior lender, Third Eye Capital, acting as Agent for the Purchasers (Third Eye Capital), other working capital lenders and subordinated lenders as follows:
|  | March 31, 2014 |  |  | December 31, 2013 |
Third Eye Capital term note |  | $ | 7,349 |  |  | $ | 7,193 |
Third Eye Capital revolving credit facility |  |  | 31,603 |  |  |  | 38,349 |
Third Eye Capital revenue participation term note |  |  | 9,890 |  |  |  | 9,465 |
Third Eye Capital acquisition term note |  |  | 17,620 |  |  |  | 17,280 |
Cilion shareholder Seller note payable |  |  | 5,083 |  |  |  | 4,869 |
State Bank of India secured term loan |  |  | 6,066 |  |  |  | 5,857 |
Subordinated notes |  |  | 4,982 |  |  |  | 5,317 |
EB-5 long term promissory notes |  |  | 1,521 |  |  |  | 1,037 |
Unsecured working capital loans and short-term notes |  |  | 1,086 |  |  |  | 2,391 |
Total debt |  |  | 85,200 |  |  |  | 91,758 |
Less current portion of debt |  |  | 12,134 |  |  |  | 17,966 |
Total long term debt |  | $ | 73,066 |  |  | $ | 73,792 |
Third Eye Capital Note Purchase Agreement On July 6, 2012, Aemetis, Inc. and Aemetis Advanced Fuels Keyes, Inc. (“AAFK”), entered into an Amended and Restated Note Purchase Agreement with Third Eye Capital (the “Note Purchase Agreement”). Pursuant to the Note Purchase Agreement, Third Eye Capital extended credit in the form of (i) senior secured term loans in an aggregate principal amount of approximately $7.2 million to replace existing notes held by Third Eye Capital (the “Term Notes”); (ii) senior secured revolving loans in an aggregate principal amount of $18.0 million (“Revolving Credit Facility”); (iii) senior secured term loans in the principal amount of $10.0 million to convert the prior revenue participation agreement to a Note (“Revenue Participation Term Notes”); (iv) senior secured term loans in an aggregate principal amount of $15.0 million (“Acquisition Term Notes”) used to fund the cash portion of the acquisition of Cilion, Inc. After this financing transaction, Third Eye Capital obtained sufficient equity ownership in the Company to be considered a related party (the Term Notes, Revolving Credit Facility, Revenue Participation Term Notes and Acquisition Term Notes are referred to herein collectively as, the “Notes”). Initially, the Acquisition Term Notes and the Revenue Participation Term Notes matured on July 6, 2014, the Term Notes matured on October 18, 2012 and the Revolving Credit Facility matured on July 6, 2013 with extension rights subject to satisfaction of certain conditions. The Notes have the maturity date of July 1, 2015, as described below. In May 2014, Third Eye Capital agreed to the Limited Waiver and Amendment No. 7 to the Note Purchase Agreement to extend the maturity date of the Notes to July 1, 2015, to modify the waterfall table, to fix the interest rate at 14%, and to redefine the operating cash available to the Company for operating expenses. As consideration, the Company is required to pay an additional extension fee of $2.0 million plus an escalating monitoring fee beginning January 2015. As a result of the extension of the maturity of the Notes under Amendment No. 7, the Note balances have been classified as noncurrent liabilities in the accompanying March 31, 2014 balance sheet. Further details regarding the terms of the Notes are set forth below under the heading “Terms of Third Eye Capital Notes.” Terms of Third Eye Capital Notes Details about each portion of the Third Eye Capital financing facility are as follows:
A. | Term Notes. As of March 31, 2014, AAFK had $7.3 million in principal and interest outstanding, net of unamortized fair value discounts of $0.2 million. The Term Notes mature on July 1, 2015. Interest on the Term Notes accrues at 14% per annum. The Term Notes contain various covenants, including but not limited to, minimum free cash flow and production requirements and restrictions on capital expenditures. On July 26, 2013 and October 28, 2013, the Company received waivers for certain covenants by Amendment No. 5 and Amendment No. 6 to the Note Purchase Agreement, respectively. Additionally, Amendment No. 5 waived the requirement for minimum monthly base payments, interest payments and mandatory tiered redemption payments in favor of a daily cash flow sweep equal to 20% of cash deposits from operating activities.
B. | Revolving Credit Facility. On July 1, 2012 AAFK entered into a Revolving Credit Facility with a commitment of $18.0 million. Through various amendments to the Note Purchase Agreement, the amount of the Revolving Loan Facility was increased to approximately $39.0 million. Interest on the Revolving Credit Facility accrues at the prime rate plus 13.75% (17% as of March 31, 2014) payable monthly in arrears. The Revolving Credit Facility matures on July 6, 2015. As of March 31, 2014 AAFK had $31.6 million in principal and interest outstanding, net of unamortized debt issuance costs of $0.9 million, on the Revolving Credit Facility with available credit set aside to pay Third Eye Capital.
C. | Revenue Participation Term Notes. The Revenue Participation Note bears interest at 5% per annum and matures on July 1, 2015. As of March 31, 2014 AAFK had $9.9 million in principal and interest outstanding, net of unamortized discounts of $0.5 million, on the Revenue Participation Note.
D. | Acquisition Term Notes. The Acquisition Term Notes accrue interest at prime rate plus 10.75% (14% per annum as of March 31, 2014) and mature on July 1, 2015. As of March 31, 2014 Aemetis Facility Keyes had $17.6 million in principal and interest outstanding, net of unamortized discounts of $0.4 million, on the Term Notes.
The Third Eye Capital Notes are secured by first-lien deeds of trust on all real and personal property, and assignment of proceeds from all government grants and guarantees from Aemetis, Inc. The Notes all contain cross-collateral and cross-default provisions. McAfee Capital, solely owned by Eric McAfee, the Company’s Chairman and CEO, provided a guaranty of payment and performance secured by all of its Company shares. In addition, Eric McAfee provided a blanket lien on substantially all of his personal assets, and a guarantee in the amount of $8.0 million from McAfee Capital. Cilion shareholder Seller note payable. The Company’s merger with Cilion on July 6, 2012 provided $5.0 million in notes payable to Cilion shareholders as merger compensation subordinated to the senior secured Third Eye Capital Notes. The liability bears interest at 3% per annum and is due and payable after the Third Eye Capital Notes have been paid in full. As of March 31, 2014, Aemetis Facility Keyes, Inc. had $5.1 million in principal and interest outstanding, net of unamortized debt discount of $0.2 million, under the Cilion shareholder Seller note payable. State Bank of India secured term loan. On July 17, 2008, Universal Biofuels Private Limited (“UBPL”), the Company’s India operating subsidiary, entered into a six year secured term loan with the State Bank of India in the amount of approximately $6.0 million. The term loan matured in March 2014 and is secured by UBPL’s assets, consisting of the biodiesel plant and land in Kakinada. In July 2008 the Company drew approximately $4.6 million against the secured term loan. The loan principal amount is repayable in 20 quarterly installments of approximately $0.3 million, using exchange rates corresponding to the date of payment, with the first installment due in June 2009 and the last installment payment due in March 2014. As of March 31, 2014, the 12% interest rate under this facility is subject to adjustment every two years, based on 0.25% above the Reserve Bank of India advance rate. The principal payments scheduled for June 2009 through December 2013 were not made. The term loan provides for liquidating damages at a rate of 2% per annum for the period of default. On March 10, 2011, one of our subsidiaries, Universal Biofuels Pvt. Ltd. (“UBPL”), received a demand notice from the State Bank of India with respect to the Agreement of Loan for Overall Limit dated as of June 26, 2008. The notice informs UBPL that an event of default has occurred for failure to make an installment payment on the loan since June 2009 and demands repayment of the entire outstanding indebtedness of 19.60 crore rupees (approximately $3.2 million) together with all accrued interest thereon and any applicable fees and expenses. As of March 31, 2014, UBPL was in default on interest and principal repayments, and all covenants, including asset coverage and debt service coverage ratios. Additional provisions of default include the bank having the unqualified right to disclose or publish the Company’s name and its director’s names as defaulter in any medium or media. At the bank’s option, it may also demand payment of the balance of the loan, since the principal payments have been in default since June 2009. As a result, the Company has classified the entire loan amount as current. The State Bank of India has filed a legal case before the Debt Recovery Tribunal (“DRT”), Hyderabad, for recovery of approximately $5.0 million against the Company and also impleaded Andhra Pradesh Industrial Infrastructure Corporation (“APIIC”) to expedite the process of registration of the factory land for which counter reply is yet to be filed by APIIC. UBPL asserts that the State Bank of India did not provide the committed funding of the working capital loan and only funded a portion of the term loan, thus requiring the Company to enter into a working capital facility at unfavorable terms which served to hinder the business from developing at the planned rate. The State Bank of India has additionally required the personal guarantee of our Executive Officer and the registration of the land underlying the factory as conditions prior to restructure of the loan. Payments have recently been made against the facility; however, the State Bank of India has rejected these payments as a good faith effort. In January 2014, the Company made payment of $162 thousand (1 crore rupees) against principal on the facility which was accepted by the State Bank of India. UBPL filed for a stay against further collection efforts pending the development of sufficient business in a domestic or international market that would allow UBPL to make meaningful repayments against the facility. In May 2014, the Company obtained an interim stay subject to payments of 1 crore rupees (approximately $0.2 million) each by May 15, 2014 and June 15, 2014. In the event that the Company is unable to prevail with the aforementioned legal case, DRT may pass a decree for recovery of the amount due, which could include seizing Company property for recovery of amounts due. As of March 31, 2014 and December 31, 2013, the State Bank of India loan had $3.1 million and $3.2 million, respectively, in principal outstanding and accrued interest plus default interest of $3.0 million and $2.7 million respectively. Subordinated Notes. On January 6 and January 9, 2012, AAFK entered into Note and Warrant Purchase Agreements with two accredited investors pursuant to which it issued $3.0 million in 5% annual interest rate notes to the investors (the “Sub Notes”). An additional $0.6 million and $0.8 million in Sub Notes were issued to one of the existing accredited investor’s Sub Notes balance in May and December 2012, respectively. This same accredited investor received payments of $0.6 million in principal and $3 thousand in interest in July 2012. The Sub Notes included 2-year warrants exercisable for 170 thousand shares of Aemetis common stock at a price of $0.01 per share, subject to adjustment. Interest is due at maturity. Neither AAFK nor Aemetis may make any principal payments under the Sub Notes until all loans made by Third Eye Capital to AAFK are paid in full, except for a few exceptions where Sub Note investors will receive funds from EB-5 investments or sale of equipment. The Company agreed to an Amendment No.1 to the Sub Notes to extend the maturity of the January 2012 Sub Notes to July 1, 2014 and refinanced the additional December 2012 Sub Note as two Sub Notes dated December 2012 and January 19, 2013, with principal amounts of $0.5 million and $0.1 million, respectively. Both the December 2012 Sub Note and the January 19, 2013 Sub Note had a maturity date of April 30, 2013. On January 24, 2013, an additional $0.3 million Sub Note was issued with a maturity date of April 30, 2013. On May 23, 2013, all Sub Notes above with a maturity date of April 30, 2013 were refinanced as a $1.0 million Sub Note (“May 2013 Note”) with a maturity date of December 31, 2013. On January 1, 2014, the May 2013 Sub Note was amended to extend the maturity date until the earlier of (i) June 30, 2014; (ii) completion of an equity financing by AAFK or Aemetis in an amount of not less than $25.0 million; (iii) the completion of an Initial Public Offering by AAFK or Aemetis; or (iv) after the occurrence of an Event of Default, including failure to pay interest or principal when due and breaches of note covenants. A 10 percent cash extension fee was paid by adding the fee to the balance of the new Note and 30 thousand in common stock warrants were granted with a term of two years and an exercise price of $0.01 per share. These January 1, 2014 amendments and the refinancing terms of the Note were evaluated and determined in accordance with ASC 470-50 Debt – Modification and Extinguishment that the loan was extinguished and as a result a loss on debt extinguishment of approximately $0.1 million was recorded in January 2014. In March 2014, the Company received $0.5 million from EB-5 investments and paid to one of accredited investors holding a sub note of January 2012 of $0.5 million. On January 14, 2013, Laird Cagan, a related party, loaned $0.1 million through a promissory note maturing on April 30, 2013 with a five percent annualized interest rate and the right to exercise 5 thousand warrants exercisable at $0.01 per share. At March 31, 2014 and December 31, 2013, the Company owed, in aggregate, subordinated notes in the amount of $5.0 million and $5.3 million in principal and interest outstanding, net of unamortized issuance and fair value discounts of $0.2 million and $0.3 million, respectively. EB-5 long-term promissory notes. EB-5 is a US government program authorized by the Immigration and Nationality Act designed to foster employment-based visa preference for immigrant investors to encourage the flow of capital into the U.S. economy and to promote employment of U.S. workers. On March 4, 2011, and amended January 19, 2012, and July 24, 2012, the Company entered into a Note Purchase Agreement with Advanced BioEnergy, LP, a California limited Partnership authorized as a Regional Center to receive EB-5 investments, for the issuance of up to 72 subordinated convertible promissory notes bearing interest at 3%, each note in the principal amount of $0.5 million is due and payable four years from the date of the note for a total aggregate principal amount of up to $36.0 million. The notes are convertible after three years at a conversion price of $30.00 per share. Advanced BioEnergy, LP arranges investments with foreign investors, who each make investments in the Keyes plant project in investment increments of $0.5 million. The Company sold notes in the amount of $1.0 million to the first two investors during the fourth quarter of 2012 and sold $0.5 million note to an investor during the first quarter of 2014. As of March 31, 2014, $21thousand in accrued interest remained outstanding on the notes. The availability of the remaining $35.0 million will be determined by the ability of Advanced BioEnergy, LP to attract additional qualified investors. Unsecured working capital loans. In November 2008, the Company entered into an operating agreement with Secunderabad Oils Limited (“Secunderabad”). Under this agreement Secunderabad agreed to provide the Company with working capital, on an as needed basis, to fund the purchase of feedstock and other raw materials for its Kakinada biodiesel facility. Working capital advances bear interest at the actual bank borrowing rate of Secunderabad of fifteen percent (15%). In return, the Company agreed to pay Secunderabad an amount equal to 30% of the plant’s monthly net operating profit. In the event that the Company’s biodiesel facility operates at a loss, Secunderabad owes the Company 30% of the losses. The agreement can be terminated by either party at any time without penalty. During the three months ended March 31, 2014 and 2013, the Company made principal payments to Secunderabad of approximately $1.5 million and $1.1 million, respectively, under the agreement and interest payments of approximately $51 thousand and $0.1 million respectively, for working capital funding. At March 31, 2014 and December 31, 2013 the Company had approximately $1.0 million and $1.9 million outstanding under this agreement, respectively. Short-term notes. Aemetis Technologies, formerly Zymetis, Inc., carries certain debt obligations associated with a series of grants issued by the Maryland Department of Business and Economic Development to Zymetis prior to the merger. These grants were converted to promissory notes with interest upon the achievement of certain objectives. In the first quarter of 2014, the Company entered into a payment settlement agreement to pay off the principal and interest of approximately $0.4 million in monthly installments. As part of this agreement, the long term debt of $0.4 million has been classified into other long term liabilities. At March 31, 2014, the Company had approximately $300 thousand and $90 thousand in the other long term liabilities and other current liabilities, respectively. There is only one promissory note with principal and interest of approximately $47 thousand remaining in the short term debt. Scheduled debt repayments for loan obligations follow:
Twelve months ending March 31, 2014 |  | Debt Repayments |
2014 |  | $ | 12,309 |
2015 |  |  | 70,479 |
2016 |  |  | 4,042 |
2017 |  |  | 260 |
2018 |  |  | 479 |
Total debt |  |  | 87,569 |
Discounts |  |  | (2,369 | )
Total debt, net of discounts |  | $ | 85,200 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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