Item 1.01. Entry into a Material Definitive Agreement.
On January 10, 2020, Gevo, Inc. (the "Company") entered into an Exchange and
Purchase Agreement (the "Purchase Agreement") with the guarantors party thereto,
the holders (the "Holders") of the Company's existing 12.0% Convertible Senior
Secured Notes due 2020 (the "Existing Notes"), which were issued under that
certain Indenture dated as of June 20, 2017, by and among the Company,
Wilmington Savings Fund Society, FSB, as trustee and as collateral trustee, and
the Company and its subsidiaries, as supplemented (the "Existing Indenture"),
and Whitebox Advisors LLC, in its capacity as representative of the Holders
("Whitebox"). Pursuant to the terms of the Purchase Agreement, the Holders,
subject to certain conditions, agreed to exchange all of the outstanding
principal amount of the Existing Notes, which was approximately $14.1 million
including unpaid accrued interest, for approximately $14.4 million in aggregate
principal amount of the Company's newly created 12.0% Convertible Senior Secured
Notes due 2020/21 (the "New Notes") (the "Exchange"). Pursuant to the Purchase
Agreement, the Company also granted the Holders an option (the "Purchase
Option") to purchase up to an additional aggregate principal amount of
approximately $7.14 million of New Notes (the "Option Notes"), at a purchase
price equal to the aggregate principal amount of such Option Notes purchased
less an original issue discount of 2.0%, having identical terms (other than with
respect to the issue date and restrictions on transfer relating to compliance
with applicable securities law) to the New Notes issued, at any time during the
period beginning on the date of closing of the Exchange and ending on the later
of (a) one hundred eighty (180) days thereafter, and (b) thirty (30) days
following the date on which the Stockholder Approval (as defined below) is
obtained. In addition, on January 10, 2020, the Company completed the Exchange,
terminated the Existing Indenture and cancelled the Existing Notes. In addition,
the Company entered into an Indenture by and among the Company, the guarantors
named therein (the "Guarantors") and Wilmington Savings Fund Society, FSB, as
trustee and as collateral trustee (the "Indenture"), pursuant to which the
Company issued the New Notes.
The New Notes will mature on December 31, 2020, provided that the maturity date
will automatically be extended to April 1, 2021 if (i) approval of a stockholder
proposal is obtained prior to March 20, 2020 for the issuance of shares of the
Company's common stock, par value $0.01 per share (the "Common Stock") under
this Indenture in excess of 19.99% of the outstanding shares of Common Stock on
the date of the Indenture (the "Stockholder Approval"), and (ii) the aggregate
outstanding principal balance of the New Notes (including any Option Notes) as
of December 15, 2020 is less than $7 million. The New Notes bear interest at a
rate equal to 12% per annum (with 4% payable as PIK Interest (as defined and
described below)), payable on March 31, June 30, September 30 and December 31 of
each year. Under certain circumstances, the Company will have the option to pay
a portion of the interest due on the New Notes by either (a) increasing the
principal amount of the New Notes by the amount of interest then due or (b)
issuing additional New Notes with a principal amount equal to the amount of
interest then due (interest paid in the manner set forth in (a) or (b) being
referred to as "PIK Interest"). In the event the Company pays any portion of the
interest due on the New Notes as PIK Interest, the maximum aggregate principal
amount of New Notes that could be convertible into shares of Common Stock will
be increased.
The New Notes are convertible into shares of Common Stock voluntarily by the
Holder at the conversion price, subject to certain terms and conditions. The
initial conversion price of the New Notes is equal to $2.4420 per share of
Common Stock (the "Conversion Price"), or 0.4095 shares of Common Stock per $1
principal amount of New Notes. The Company and the Holders may also mutually
agree on other conversions of the New Notes into shares of Common Stock on a
monthly basis (a "Contractual Conversion") pursuant to the terms of the
Indenture. The Conversion Price in a Contractual Conversion will be reduced to
the lesser of the then-applicable Conversion Price or a 10% discount to the
average of the daily VWAP of the Common Stock for the three forward trading days
prior to the date of the Contractual Conversion.
Each Holder has agreed not to convert its New Notes into shares of Common Stock
to the extent that, after giving effect to such conversion, the number of shares
of Common Stock beneficially owned by such Holder and its affiliates would
exceed 4.99% of Common Stock outstanding at the time of such conversion (the
"4.99% Ownership Limitation"); provided that a Holder may, at its option and
upon sixty-one (61) days' prior notice to the Company, increase such threshold
to 9.99% (the "9.99% Ownership Limitation"). If a conversion of New Notes by a
Holder would exceed the 4.99% Ownership Limitation or the 9.99% Ownership
Limitation, as applicable, the Purchase Agreement contains a provision granting
the holder a fully funded prepaid warrant for such Common Stock with a term of
nine months, subject to a six month extension, which it can draw down from time
to time.
The New Notes may be redeemed in whole or in part, at the Company's option, for
cash at any time after the Stockholder Approval is obtained and upon 120 days'
notice to the Holders. Following a notice of redemption of the New Notes by the
Company, the Holders may elect to convert the New Notes into shares of Common
Stock at the same conversion price as applicable to a Contractual Conversion.
. . .
Item 1.02. Termination of a Material Definitive Agreement.
The information set forth in Item 1.01 above is incorporated herein by reference
in this Item 1.02.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under
an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 above is incorporated herein by reference
in this Item 2.03.
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 above is incorporated herein by reference
in this Item 3.02.
The Company issued the New Notes in reliance on the exemption from registration
under Section 3(a)(9) under the Securities Act of 1933, as amended (the
"Securities Act"). The Option Notes will be issued, if applicable, without
registration under the Securities Act, in reliance upon the exemption provided
in Section 4(a)(2) thereunder.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
4.1+ Indenture, dated January 10, 2020, by and among Gevo, Inc., the
guarantors party thereto, and Wilmington Savings Fund Society, FSB,
as trustee and as collateral trustee.
4.2 Registration Rights Agreement, dated January 10, 2020, by and
among Gevo, Inc. and the investors named therein.
10.1+ Exchange and Purchase Agreement, dated January 10, 2020, by and
among Gevo, Inc., the guarantors party thereto, the holders named in
Schedule I thereto, and Whitebox Advisors LLC, in its capacity as
representative of the holders.
+ Certain schedules and exhibits have been omitted pursuant to
Item 601(a)(5) of Regulation S-K under the Securities Exchange Act
of 1934, as amended. The Company hereby undertakes to supplementally
furnish copies of any omitted schedules to the Securities and
Exchange Commission upon request.
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