XML 20 R9.htm IDEA: XBRL DOCUMENT

4. Debt

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Debt consists of the following:

		September 30, 2016				December 31, 2015
Third Eye Capital term notes		$	6,459			$	6,269
Third Eye Capital revolving credit facility			32,525				25,870
Third Eye Capital revenue participation term notes			10,846				10,526
Third Eye Capital acquisition term notes			18,768				18,260
Cilion shareholder seller notes payable			5,636				5,523
State Bank of India secured term loan			3,161				4,200
Subordinated notes			7,114				6,340
EB-5 long term promissory notes			25,830				23,907
Unsecured working capital loans			441				-
Total debt			110,780				100,895
Less current portion of debt			12,546				11,947
Total long term debt		$	98,234			$	88,948

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 (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 (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); and (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. (the Term Notes, Revolving Credit Facility, Revenue Participation Term Notes and Acquisition Term Notes are referred to herein collectively as the Third Eye Capital Notes). The Third Eye Capital Notes have a maturity date of April 1, 2017, extendable by the Company to April 2018 upon payment of a fee equal to 5% of the carrying value of the debt. After this financing transaction, Third Eye Capital obtained sufficient equity ownership in the Company to be considered a related party.

On March 21, 2016, Third Eye Capital agreed to Amendment No. 12 to the Note Purchase Agreement to: (i) extend the maturity date of the Third Eye Capital Notes to April 1, 2017 in exchange for a 5% extension fee consisting of adding $3.1 million to the outstanding principal balance of the Revolving Credit Facility, with an allowable further extension of the maturity date of the Third Eye Capital Notes to April 1, 2018, at the Company’s election, for an additional extension fee of 5% of the then outstanding Third Eye Capital Notes, (ii) waive the free cash flow financial covenant under the Note Purchase Agreement for the three months ended December 31, 2015, (iii) provide that such covenant need not be complied with for the fiscal quarters ending March 31, June 30 and September 30, 2016, (iv) revise the Keyes Plant market value to note indebtedness ratio to 70%, (v) add a covenant that the Company shall have received I-924 approval from the U.S. Citizenship and Immigration Services (USCIS) for additional EB-5 Program financing of at least $35 million by June 1, 2016 and (vi) increase the basket for all costs and expenses that may be reimbursed to directors of the Company and its affiliates to $0.3 million in any given fiscal year. As consideration for such amendment and waiver, the borrowers agreed to pay Third Eye Capital an amendment and waiver fee of $1.5 million to be added to the outstanding principal balance of the Revolving Credit Facility, and to deliver a binding letter of intent from Aemetis Advanced Fuels Goodland, Inc. to acquire the plant, property and equipment located in Goodland, Kansas and previously owned by New Goodland Energy Center for $15,000,000 in assumed debt. In addition, a Promissory Note dated February 9, 2016 for $0.3 million was added to the outstanding principal balance of the Revolving Credit Facility as part of the Amendment No. 12 to the Note Purchase Agreement.

On April 15, 2016, a Promissory Note for $1.2 million (April Promissory Note) was advanced by Third Eye Capital to Aemetis Inc., as a bridge loan with 12% interest per annum maturing on the earlier of (a) receipt of proceeds from any financing to Aemetis Advanced Fuels Goodland, Inc., and (b) 60 days from the April Promissory Note date or June 14, 2016. The April Promissory Note was subject to cross default provisions on other Third Eye Capital Notes and the waiver was obtained on July 31, 2016 to extend the maturity date of the April Promissory Note to September 30, 2016 with an increase in interest per annum to 18%. As of September 30, 2016, the Company had repaid all of the principal and interest outstanding on the bridge loan Promissory Note.

Terms of Third Eye Capital Notes

A.	Term Notes. As of September 30, 2016, the Company had $6.5 million in principal and interest outstanding under the Term Notes, net of unamortized fair value discounts of $0.2 million. The Term Notes mature on April 1, 2017* and accrue interest at 14% per annum.

B.

Revolving Credit Facility. As of September 30, 2016, AAFK had $32.5 million in principal and interest outstanding, net of unamortized debt issuance costs of $1.0 million on the Revolving Credit Facility. The Revolving Credit Facility matures on April 1, 2017* and accrues interest at the prime rate plus 13.75% (17.25% as of September 30, 2016), payable monthly in arrears.

C.

Revenue Participation Term Notes. As of September 30, 2016, AAFK had $10.8 million in principal and interest outstanding, net of unamortized discounts of $0.4 million, on the Revenue Participation Term Notes. The Revenue Participation Term Notes mature on April 1, 2017* and accrue interest at 5% per annum.

D.

Acquisition Term Notes. As of September 30, 2016, Aemetis Facility Keyes, Inc. had $18.8 million in principal and interest outstanding, net of unamortized discounts of $0.6 million, on the Acquisition Term Notes. The Acquisition Term Notes mature on April 1, 2017* and accrue interest at prime rate plus 10.75% (14.25% per annum as of September 30, 2016).

The Third Eye Capital Notes contain various covenants, including but not limited to, minimum free cash flow debt ratio and production requirements and restrictions on capital expenditures.

The Third Eye Capital Notes are secured by first priority liens on all real and personal property of, and assignment of proceeds from all government grants and guarantees from Aemetis, Inc. The Third Eye Capital Notes all contain cross-collateral and cross-default provisions. McAfee Capital, LLC (McAfee Capital), 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 McAfee Capital provided a guarantee in the amount of $8.0 million.

*The note maturity date can be extended by the Company to April 2018. As a condition to any such extension, the Company would be required to pay a fee of 5% of the carrying value of the debt. By this ability to extend the maturity at the Company’s will, the Third Eye Capital Notes are classified as non-current debt.

Cilion shareholder seller notes payable. In connection with the Company’s merger with Cilion, Inc. (Cilion) on July 6, 2012, the Company issued $5.0 million in notes payable to Cilion shareholders (Cilion Notes) as merger compensation, subordinated to the Third Eye Capital Notes. The Cilion Notes bear interest at 3% per annum and are due and payable after the Third Eye Capital Notes have been paid in full. As of September 30, 2016, Aemetis Facility Keyes, Inc. had $5.6 million in principal and interest outstanding on the Cilion Notes.

State Bank of India secured term loan. On June 26, 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 is secured by UBPL’s assets, consisting of the Kakinada plant.

On August 22, 2015, UBPL received from the State Bank of India a One Time Settlement Sanction Letter allowing for, among other things, four payments over a 360 day period amounting to $4.3 million, an interest rate holiday for 15 days, after which the interest rate is payable at the rate of 2% above the base rate of the Reserve Bank of India, and certain releases by both parties. The base rate was at 9.3% to 9.7% and interest has accrued at 11.3% to 11.7%. Upon performance under the agreement, including the payment of all stipulated amounts, UBPL will receive relief for prior accrued interest in the amount of approximately $2.1 million. We paid the first payment under the settlement on August 23, 2015, the second payment under the settlement on October 22, 2015 and the third payment under the settlement on March 27, 2016. The final payment under the settlement was due on August 25, 2016 with a grace period until October 25, 2016. As of September 30, 2016, the State Bank of India loan had $3.2 million in principal and accrued interest outstanding. On October 20, 2016, the Company paid the final stipulated amount and received relief for prior accrued interest in the amount of approximately $2.1 million.

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 $0.9 million and $2.5 million in original notes to the investors (Subordinated Notes). The Subordinated Notes mature every six months. Upon maturity, the notes are generally extended with a fee of 10% added to the balance outstanding plus issuance of warrants exercisable at $0.01 with a two year term. Interest is due at maturity. Neither AAFK nor Aemetis may make any principal payments under the Subordinated Notes until all loans made by Third Eye Capital to AAFK are paid in full.

On July 1, 2016, the Subordinated Notes were amended to extend the maturity date until the earlier of (i) December 31, 2016; (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% cash extension fee was paid by adding the fee to the balance of the new note and warrants to purchase 113 thousand shares of common stock were granted with a term of two years and an exercise price of $0.01 per share. We evaluated these July 1, 2016 amendments and the refinancing terms of the notes and determined that modification accounting was appropriate in accordance with ASC 470-50 Debt – Modification and Extinguishment.

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 (Laird Cagan Note). In February 2015, the Laird Cagan Note was amended to extend the maturity date until the earlier of (i) December 31, 2016; (ii) completion of an equity financing by AAFK or the Company in an amount of not less than $25.0 million; (iii) the completion of an initial public offering by AAFK or Company; or (iv) after the occurrence of an Event of Default, including failure to pay interest or principal when due and breaches of note covenants.

At September 30, 2016 and December 31, 2015, the Company had, in aggregate, the amount of $7.1 million and $6.3 million in principal and interest outstanding, respectively, under the Subordinated Notes including the Laird Cagan Note.

EB-5 long-term promissory notes. EB-5 is a U.S. 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. The Company entered into a Note Purchase Agreement dated March 4, 2011, (as further amended on January 19, 2012 and July 24, 2012) 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 (EB-5 Notes) bearing interest at 3%, with each note in the principal amount of $0.5 million and due and payable four years from the date of the note, for a total aggregate principal amount of up to $36.0 million (EB-5 Phase I funding). The EB-5 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 loans to the Keyes plant in increments of $0.5 million. The Company has sold an aggregate principal amount of $36.0 million of EB-5 Notes under the EB-5 Phase I funding since 2012 to the report date of this filing. As of September 30, 2016, $25.0 million have been released from the escrow amount to the Company, with $11.0 million remaining in escrow. On Oct. 12, 2016, an additional $6.0 million was released from the escrow amount, with the availability of the remaining $5.0 million dependent on USCIS approval of those investors who have made escrow deposits. As of September 30, 2016, $25.0 million in principal and $0.8 million in accrued interest was outstanding on the EB-5 Notes.

On October 16, 2016, the Company launched a new $50.0 million EB-5 Phase II funding, issuing EB-5 Notes on the same terms and conditions as those issued under the Company’s EB-5 Phase I funding.

Unsecured working capital loans. In November 2008, the Company entered into an operating agreement with Secunderabad Oils Limited (Secunderabad Oils). Under this agreement, Secunderabad Oils 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 Oils of 15%. In return, the Company agreed to pay Secunderabad Oils 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 Oils would owe the Company 30% of the losses. The agreement can be terminated by either party at any time without penalty. On January 1, 2016, Secunderabad Oils suspended the agreement to use any funds provided under the agreement to buy feedstock until commodity prices returned to economically viable levels. On June 1, 2016, the agreement was reinstated on the terms described above.

During the three months ended September 30, 2016 and 2015, the Company made principal and interest payments to Secunderabad Oils of approximately $3.6 million and $2.4 million, respectively. During the nine months ended September 30, 2016 and 2015, the Company made principal and interest payments to Secunderabad Oils of approximately $4.5 million and $3.5 million, respectively. As of September 30, 2016 and December 31, 2015, the Company had approximately $0.4 million and none outstanding under this agreement, respectively.

Scheduled debt repayments for loan obligations follow:

Twelve months ended September 30,		Debt Repayments
2017		$	12,546
2018			73,335
2019			20,500
2020			6,636
2021			-
Total debt			113,017
Discounts			(2,237	)
Total debt, net of discounts		$	110,780