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Note 7 - Debt
 3 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Debt Disclosure [Text Block]

7. Debt

 

Debt consists of the following:

 

  

March 31, 2024

  

December 31, 2023

 

Third Eye Capital term notes

 $7,172  $7,159 

Third Eye Capital revolving credit facility

  23,800   20,922 

Third Eye Capital revolving notes Series B

  57,694   54,412 

Third Eye Capital revenue participation term notes

  12,046   12,011 

Third Eye Capital acquisition term notes

  26,709   26,655 

Third Eye Capital Fuels Revolving Line

  35,168   32,511 

Third Eye Capital Carbon Revolving Line

  23,673   23,486 

Construction and term loans

  43,894   41,024 

Cilion shareholder purchase obligation

  7,081   7,028 

Subordinated notes

  17,747   17,625 

EB-5 promissory notes

  42,439   42,211 

Working capital loans

  3,954   3,827 

Term loans on capital expenditures

  5,847   5,850 

Total debt

  307,224   294,721 

Less current portion of debt

  72,807   37,028 

Total long term debt

 $234,417  $257,693 

 

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 (the “Note Purchase Agreement”) with Third Eye Capital Corporation (“Third Eye Capital”). 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 (the “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 (the “Revenue Participation Term Notes”); and (iv) senior secured term loans in an aggregate principal amount of $15.0 million (the “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 “Original Third Eye Capital Notes”).

 

The Original Third Eye Capital Notes have been amended several times. Most recently, on  March 25, 2024, the Company and Third Eye Capital Corporation entered into a “Limited Waiver and Amendment No. 28 to Amended and Restated Note Purchase Agreement” (“Amendment No. 28”) that (i) revised the loan covenant related to Keyes plant note indebtedness to exclude certain draws on Third Eye credit facilities and to exclude the "Redemption Fee," as defined in the Amended and Restated Note Purchase Agreement, and (ii) changed the maximum ratio of Note Indebtedness to the Keyes Plant market value to 120%. As consideration for Amendment No. 28, the Company agreed to pay Third Eye Capital an amendment fee of $0.1 million. We evaluated the terms of Amendment No. 28 in accordance with ASC 470-50 Debt – Modification and Extinguishment and ASC 470-60 Troubled Debt Restructuring and applied modification accounting treatment.

 

Terms of Original Third Eye Capital Notes:

 

A.

Term Notes.  As of March 31, 2024, the Company had $7.3 million in principal and interest outstanding under the Term Notes and $104 thousand unamortized debt issuance costs. The Term Notes accrue interest at 14% per annum. The Term Notes mature on April 1, 2025.

 

B.

Revolving Credit Facility. The Revolving Credit Facility accrues interest at the prime rate plus 13.75% (22.25% as of March 31, 2024) payable monthly in arrears. The Revolving Credit Facility matures on April 1, 2025. As of March 31, 2024, AAFK had $24.8 million in principal and interest and waiver fees outstanding and $1.0 million unamortized debt issuance costs under the Revolving Credit Facility.

 

C.

Revolving Notes Series B. The Revolving Notes Series B accrues interest at the prime rate plus 13.75% (22.25% as of March 31, 2024) payable monthly in arrears. The Revolving Notes Series B matures on April 1, 2025. As of March 31, 2024, AAFK had $58.5 million in principal and interest and waiver fees outstanding and $0.8 million unamortized debt issuance costs under the Revolving Notes Series B.

 

D.

Revenue Participation Term Notes. The Revenue Participation Term Notes bear interest at 5% per annum and mature on April 1, 2025. As of March 31, 2024, AAFK had $12.2 million in principal and interest outstanding under the Revenue Participation Term Notes and $168 thousand unamortized debt issuance costs.

 

E.

Acquisition Term Notes. The Acquisition Term Notes accrue interest at the prime rate plus 10.75% (19.25% per annum as of March 31, 2024) and mature on April 1, 2025. As of March 31, 2024, Aemetis Facility Keyes, Inc. had $27.0 million in principal and interest and redemption fees outstanding under the Acquisition Term Notes and $325 thousand unamortized debt issuance costs. The outstanding principal balance includes $7.5 million in redemption fee on which interest is not charged.

 

The Original Third Eye Capital Notes contain various covenants, including but not limited to, debt to plant value ratio, minimum production requirements, and restrictions on capital expenditures. The terms of the Notes allow the lender to accelerate the maturity in the event of any default that could reasonably be expected to have a material adverse effect on the Company, such as any change in the business, operations, or financial condition. The Company has evaluated the likelihood of such an acceleration event and determined such an event to not be probable in the next twelve months. The Notes allow interest to be added to the outstanding principal balance. The Original 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 the Company’s North American subsidiaries. The Original Third Eye Capital Notes all contain cross-collateral and cross-default provisions. McAfee Capital, LLC (“McAfee Capital”), owned by Eric McAfee, the Company’s Chair and CEO, provided a guaranty of payment and performance secured by all Company shares owned by McAfee Capital and additional assets. In addition, Eric McAfee has provided a personal guaranty of up to $10 million plus a pledge of his ownership interests in several personal assets.

 

Third Eye Capital Reserve Facility. On March 6, 2020, we entered into a reserve liquidity facility governed by a promissory note, payable to Third Eye Capital Corporation, in the principal amount of $18 million. The reserve liquidity facility has been amended several times.  Most recently, on March 25, 2024, the Company and Third Eye Capital entered into a "Seventh Amended and Restated Promissory Note" that increased the amount available under the reserve liquidity facility to $85 million and extended the maturity date to  April 1, 2025. Borrowings under the Note are available until maturity. Interest on borrowed amounts would accrue at a rate of 30% per annum, to be paid monthly in arrears, or 40% if an event of default has occurred and continues. Interest payments due may be capitalized into the principal balance of the Note. The Company pays a standby fee of 2% per annum of the difference between the aggregate principal outstanding under the Note and the commitment, payable monthly arrears in either cash or stock. The Note also requires the Company to pay a fee in the amount of $0.5 million in connection with a request for an advance on the Note, provided that such fee may be added to the principal amount of the Note. In addition, the Company would be required to make payments on the Note with funds received from the closing of certain new debt or equity financing or transactions, as described in the Note. The Note is secured by liens and security interests upon the property and assets of the Company. As of March 31, 2024, we have no borrowings outstanding under the Reserve Liquidity Note.

 

Third Eye Capital Revolving Credit Facility for Fuels and Carbon Lines. On March 2, 2022, Goodland Advanced Fuels, Inc. ("GAFI) and Aemetis Carbon Capture, Inc. (“ACCI”) entered into an Amended and Restated Credit Agreement (“Credit Agreement”) with Third Eye Capital, as administrative agent and collateral agent, and the lender party thereto (the “New Credit Facility”). The New Credit Facility provides for two credit lines with aggregate availability of up to $100 million, consisting of a revolving credit facility with GAFI for up to $50 million (the “Fuels Revolving Line”) and a revolving credit facility with ACCI for up to $50 million (the “Carbon Revolving Line” and together with the Fuels Revolving Line, the “Revolving Lines”). Loans received under the Fuels Revolving Line have a maturity date of March 1, 2025, and accrue interest per annum at a rate equal to the greater of (i) the prime rate plus 6.00% and (ii) ten percent (10.0%).  Loans received under the Carbon Revolving Line have a maturity date of March 1, 2026 and accrue interest per annum at a rate equal to the greater of (i) the prime rate plus 4.00% and (ii) eight percent (8.0%). Loans under the Fuels Revolving Line are available for working capital purposes and loans made under the Carbon Revolving Line are available for projects that reduce, capture, use, or sequester carbon with the objective of reducing carbon dioxide emissions. As of March 31, 2024, GAFI had principal and interest outstanding of $35.1 million classified as current debt and $1.8 million unamortized debt issuance costs. As of March 31, 2024, ACCI had principal and interest outstanding of $0.3 million classified as current debt, $23.4 million classified as long-term debt, and $1.5 million in unamortized debt issuance costs.  

 

Cilion Shareholder Purchase Obligation. In connection with the Company’s merger with Cilion, Inc. (“Cilion”), on July 6, 2012, the Company incurred a $5.0 million payment obligation 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, 2024, Aemetis Facility Keyes, Inc. had $7.0 million in principal and interest outstanding under the Cilion payment obligation under the merger agreement.

 

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 $3.4 million in original notes to the investors (“Subordinated Notes”). The Subordinated Notes mature every six months. Upon maturity, the Subordinated Notes are renewable at the Company's election for six month periods with a fee of 10% added to the balance outstanding plus issuance of warrants exercisable at $0.01 with a two-year term. Interest accrues at 10% per annum and 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  January 1, 2024, the maturity on the Subordinated Notes was extended to June 30, 2024. In connection with the extension, the Company paid a $340 thousand extension fee by adding the fee to the balance of the Subordinated Notes and issued warrants exercisable for 113 thousand shares of common stock with a term of two years and an exercise price of $0.01 per share. The Company evaluated the January 1, 2024, amendment and the refinancing terms of the notes and applied modification accounting treatment in accordance with ASC 470-50 Debt – Modification and Extinguishment.  At March 31, 2024 and December 31, 2023, the Company had, in aggregate, $17.7 million and $17.6 million in principal and interest outstanding, respectively, under the Subordinated Notes.

 

EB-5 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 (the “EB-5 Notes”) bearing interest at 2-3%. Advanced BioEnergy, LP arranged equity investments by foreign investors, and then Advanced BioEnergy used the invested equity to make loans to the Keyes Plant. Each note was issued in the principal amount of $0.5 million for a total aggregate principal amount of up to $36.0 million (the “EB-5 Phase I funding”). The original maturity date on the promissory notes has been extended. On February 27, 2019, Advanced BioEnergy, LP, and the Company entered into an Amendment to the EB-5 Notes which restated the original maturity date on the promissory notes with automatic six-month extensions as long as the Advanced Bioenergy investors’ immigration processes are in progress. Given the COVID-19 pandemic and processing delays for immigration process, Advanced BioEnergy, LP extended the maturity dates for debt repayment based on their projected processing timings as long as the investors do not give notice of withdrawal or an I-829 gets approved. Accordingly, the notes have been recognized as long-term debt while investor notes who obtained green card approval have been classified as current debt. The EB-5 Notes are convertible into Aemetis, Inc. common stock at a conversion price of $30 per share. As of March 31, 2024, $35.5 million has been released from the escrow amount to the Company, with $0.5 million remaining to be funded to escrow. As of March 31, 2024 and December 31, 2023, $38.0 million and $37.9 million was outstanding, respectively, on the EB-5 Notes.

 

On October 16, 2016, the Company launched its EB-5 Phase II funding (the “EB-5 Phase II Funding”) and entered into a Note Purchase Agreement with Advanced BioEnergy II, LP, a California limited partnership authorized as a Regional Center to receive EB-5 Phase II funding investments.  The Company received $4.0 million in loan funds before certain changes to and expiration of the EB-5 program prevented further funding.  The federal EB-5 program was recently reauthorized, and in March 2024, the U.S. Customs and Immigration Service approved the Company's project for up to $200 million of additional investment using EB-5 funds. Under the new rules, the minimum investment was raised from $0.5 million per investor to $0.8 million per investor. The terms of the EB-5 Phase II Funding are similar to the terms of the first round of EB-5 funding. As of March 31, 2024, and  December 31, 2023, $4.4 million and $4.3 million were outstanding on the EB-5 Notes under the EB-5 Phase II funding, respectively.

 

 

India Biodiesel Secure and Unsecured Loans. On November 13, 2023, the Company entered into a secure loan agreement with Secunderabad Oils Limited in an amount not to exceed $3.6 million. The loan is secured by the fixed assets and currents assets of the India Plant. The loans bear interest at 18% and are payable monthly. On November 6, 2023, the Company entered into a short-term loan with Leo Edibles & Fats Limited in an amount not to exceed $1.27 million. The loans bears interest at 18% and are payable monthly.  The loans are repayable on demand by the lender or within one year from the date of issuance. As of March 31, 2024 and December 31, 2023, the Company had outstanding balance of $4.0 million and $3.8 million, respectively.

 

Aemetis Biogas 1 LLC Term Loan. On  October 4, 2022, the Company entered into a Construction Loan Agreement (“AB1 Construction Loan”) with Greater Nevada Credit Union (“GNCU”). Pursuant to the AB1 Construction Loan, the lender made available an aggregate principal amount of $25 million, secured by all personal property collateral and real property collateral of Aemetis Biogas 1 LLC. The AB1 Construction Loan contained certain financial covenants to be measured as of the last day of each fiscal year end, and annually for the term of the loan. Effective as of December 22, 2023, the AB1 Construction Loan was refinanced and replaced with a term loan ("AB1 Term Loan"). The AB1 Term Loan is secured by all personal property collateral and real property collateral of Aemetis Biogas 1 LLC. It bears interest at a rate of 9.25% per annum, to be adjusted every five years thereafter to equal the five-year Treasury Constant Maturity Rate, as published by the Board of Governors of the Federal Reserve System as of the adjustment date, plus 5.00% or (ii) the index floor. Other material terms of the loan include: (i) payments of interest only to be paid in monthly installments beginning January 22, 2024, (ii) payments of equal combined monthly installments of principal and interest beginning on January 22, 2025, and (iii) a maturity date of December 22, 2042, at which time the entire unpaid principal amount, together with accrued and unpaid interest thereon, shall become due and payable. The AB1 Term Loan contains certain financial covenants to be measured as of the last day of each fiscal year beginning fiscal year end 2025, and annually for the term of the loan. The AB1 Term Loan also contains other affirmative and negative covenants, representations and warranties and events of default customary for loan agreements of this nature. As of March 31, 2024 and December 31, 2023, the Company had $25.3 million and $25.1 million, respectively, outstanding under the AB1 Term Loan.

 

Aemetis Biogas 2 LLC Construction and Term Loan. On July 28, 2023, the Company entered into a second Construction and Term Loan Agreement (“AB2 Loan") with Magnolia Bank, Incorporated. Pursuant to the AB2 Loan, the lender has made available an aggregate principal amount not to exceed $25 million. The loan is secured by all personal property collateral and real property collateral of Aemetis Biogas 2 LLC. The loan bears interest at a rate of 8.75% per annum, to be adjusted every five years thereafter to equal the five-year Treasury Constant Maturity Rate, as published by the Board of Governors of the Federal Reserve System as of the adjustment date, plus 5.00%. Other material terms of the AB2 Loan include: (i) payments of interest only to be paid in monthly installments beginning August 15, 2023, (ii) payments of equal combined monthly installments of principal and interest beginning on August 15, 2025, and (iii) a maturity date of July 28, 2043, at which time the entire unpaid principal amount, together with accrued and unpaid interest thereon, shall become due and payable. The AB2 Loan contains certain financial covenants to be measured as of the last day of each fiscal year beginning fiscal year end 2025, and annually for the term of the loan. The AB2 Loan also contains other affirmative and negative covenants, representations and warranties and events of default customary for loan agreements of this nature. As of March 31, 2024, and December 31, 2023, the Company had $19.4 million and $16.8 million, respectively, outstanding and unamortized discount issuances costs of $0.8 million for each period, respectively, under the AB2 Loan. 

 

Financing Agreement for Capital Expenditures. The Company entered into an agreement with Mitsubishi Chemical America, Inc. (“Mitsubishi”) to purchase ZEBREXTM membrane dehydration equipment to conserve energy and improve operating efficiencies at the Keyes Plant. The Company also entered into a financing agreement with Mitsubishi for $5.7 million for this equipment. Payments pursuant to the financing transaction will commence after the installation date and interest will be charged based on the certain performance metrics after operation of the equipment. After an initial start-up process, process bottlenecks were encountered and operations were suspended pending further examination and optimization. We recorded the asset in property, plant and equipment, net and recorded the related liability of $2.2 million in short term borrowings and $3.6 million in other long-term debt, respectively as of March 31, 2024.

 

Maturity Date Schedule

 

Scheduled debt repayments for the Company’s loan obligations by year are as follows:

 

Twelve Months ended March 31,

 

Debt Repayments

 

2025

 $72,807 

2026

  180,279 

2027

  13,211 

2028

  4,375 

2029

  2,085 

Thereafter

  39,220 

Total debt

  311,977 

Debt issuance costs

  (4,753)

Total debt, net of debt issuance costs

 $307,224