Item 1.01. Entry into a Material Definitive Agreement.
On September 20, 2007, Commerce Energy Group, Inc., a Delaware corporation (the Company),
Commerce Energy, Inc., a California corporation and wholly-owned subsidiary of the Company
(Commerce), Wachovia Capital Finance Corporation (Western), a California corporation, as Agent
and Lender (the Agent), and The CIT Group/Business Credit, Inc., as Lender, entered into a letter
agreement modifying (the Modification Agreement) that certain Loan and Security Agreement dated
June 8, 2006, as amended (the Credit Facility) by and among the Company, Commerce and the Agent.
Capitalized terms, not otherwise defined have the meaning set forth in the Credit Facility.
Under the Modification Agreement, during the period from September 20, 2007 until October 5,
2007, Commerce will be permitted to exceed the Borrowing Base as calculated without giving effect
to the Reserves established in the applicable amount of the Letter of Credit Obligations as
required under the Credit Facility (the Gross Borrowing Base). In addition, during the same time
period, the amount of Excess Availability required to be maintained by Commerce will be reduced to
zero.
After October 5, 2007, except as otherwise agreed in writing by the Agent and/or Lenders
pursuant to the Credit Facility, Commerce shall cause the aggregate outstanding principal amount of
the Revolving Loans and Letter of Credit Obligations to be equal to or less than the Gross
Borrowing Base. In addition, the amount of Excess Availability that Commerce is required to
maintain under the Credit Facility shall be $2,500,000 from October 6, 2007 through and including
October 30, 2007 and at all times from November 1, 2007
through and including November 30, 2007,
$5,000,000 on October 31, 2007, and $10,000,000 at all times on or after December 1, 2007.
The foregoing summary of the Modification Agreement is not complete and is qualified in its
entirety by reference to the actual Modification Agreement, which is attached hereto as Exhibit
99.1 and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following item is filed as an exhibit to this Report:
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Exhibit No.
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Description
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99.1
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Letter Agreement, dated September 20, 2007, by and among
Commerce Energy Group, Inc., Commerce Energy, Inc.,
Wachovia Capital Finance Corporation (Western), as Agent
and Lender and The CIT Group/Business Credit, Inc., as
Lender
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