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| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
On November 8, 2022 (the “Amendment Date”), the Company and its directly or indirectly wholly-owned subsidiaries Benson Hill Holdings, Inc., BHB Holdings, LLC, DDB Holdings, Inc., Dakota Dry Bean Inc., Benson Hill Ingredients, LLC, Benson Hill Seeds Holding, Inc., Benson Hill Seeds, Inc., Benson Hill Fresh, LLC, J&J Produce, Inc., J&J Southern Farms, Inc., and Trophy Transport, LLC (the Company and such subsidiaries are each individually referred to as a “Borrower” and are all collectively referred to as the “Borrowers”), entered into a Second Amendment to Loan Documents (the “Second Amendment”) with Avenue Capital Management II, L.P., as administrative agent and collateral agent (the “Agent”); and Avenue Venture Opportunities Fund, L.P., Avenue Venture Opportunities Fund II, L.P., Avenue Sustainable Solutions Fund, L.P., Avenue Global Dislocation Opportunities Fund, L.P., and Avenue Global Opportunities Master Fund LP (each individually referred to as a “Lender” and all collectively as the “Lenders”). The Second Amendment amends the Loan and Security Agreement among the Borrowers, the Lenders, and the Agent entered into December 29, 2021 (as amended, restated, or supplemented from time to time, the “Loan Agreement”), which was previously filed as Exhibit 10.1 to the Current Report on Form 8-K filed on January 4, 2022, as previously amended pursuant to the Joinder and First Amendment to Loan Documents previously filed as Exhibit 10.1 to the Current Report on Form 8-K filed on July 7, 2022.
Pursuant to the Second Amendment:
•The definition of “Outstanding Shares” is changed to mean the shares of the Company’s capital stock which have been issued and are outstanding within the meaning of the Delaware General Corporation Law, as reflected on the cover of the Company’s most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, which is then adjusted if any shares have since been cancelled or issued.
•The definition of Market Cap Threshold 1 is changed to mean that the Company has maintained an Average Public Market Capitalization of at least $550,000,000 (instead of $650,000,000).
•The Agent confirmed achievement of Milestone 2, which requires achievement of: (i) at least 85% of projected consolidated revenue for the nine months ending September 30, 2022; (ii) Gross Margin for the nine months ending September 30, 2022, greater than -1.50%; and (iii) Market Cap Threshold 1 during the trailing 30 days prior to September 30, 2022. Consequently, (x) the Interest-only Period is extended for an additional 12 months, such that the Interest-only Period as extended continues through December 29, 2023, and (y) the Maturity Date is extended for an additional six months, such that the Maturity Date as extended is June 29, 2025.
•The “Designated Rate” is increased by 25 basis points such that the “Designated Rate” is a variable rate of interest per annum equal to the sum of (i) the greater of (A) the Prime Rate and (B) 3.25%, plus (ii) 6.00%.
•The RML (“remaining months’ liquidity”) requirement is reduced from six months to four months, from the Amendment Date through March 31, 2023 (the “RML Relief”). During the “RML Relief Election Period” from April 1, 2023 through April 30, 2024 the Company may, at its option, terminate the RML requirement reduction and reinstate the RML requirement to six months. The Final Payment will increase by either 10 basis points or 20 basis points per month of the RML Relief Election Period that the Company does not terminate the RML Relief, depending upon whether the Company’s Average Public Market Capitalization over the prior 30 Trading Days is at least Market Cap Threshold 1 and whether the Borrowers’ unrestricted cash balance is at least $100,000,000.
•The Agent agreed to consent to and approve the Borrowers’ disposition of its Benson Hill Fresh business, if the Borrowers elect to consummate any such sale, subject to the Agent’s satisfactory review of final documentation of such a sale, and so long as (i) a binding purchase agreement is executed on or before February 14, 2023, and closes no later than July 31, 2023, and (ii) the sale generates non-escrowed cash closing proceeds, that are not otherwise subject to any contingencies, of at least a specified minimum amount (the “Minimum Sale Proceeds”) that are received on or before July 31, 2023. The cash closing proceeds from any such sale must be held in a restricted, blocked account in favor of the Agent until a date that is at least 60 days next following the date of the closing of the Benson Hill Fresh sale, and at which time the cash closing proceeds will be released to the Borrowers so long as: (i) the RML Relief has terminated or expired, and (ii) the Company’s Average Public Market Capitalization over the 30 Trading Days prior to the release date is at least Market Cap Threshold 1.
•The definition of Revolving Indebtedness was changed to mean Indebtedness in favor of other lenders, subject to a formula-based, borrowing base calculation comprised of cash, accounts receivable and inventory, not including the BHO Indebtedness, not to exceed the aggregate principal amount of (i) $20,000,000 up to and including June 30, 2023, if (x) approved by the Agent, (y) the Company’s Average Public Market Capitalization over the prior 30 Trading Days is at least Market Cap Threshold 1 when measured by the date of a Borrower’s entry into the Revolving Indebtedness, and (z) Borrowers have elected to terminate the RML Relief; and (ii) $40,000,000 on or after July 1, 2023, if (x) approved by the Agent, (y) the Company’s Average Public Market Capitalization over the 30 preceding Trading Days is at least $600,000,000 when measured by the date of a
Borrower’s entry into the added Revolving Indebtedness, and (z) the Borrowers have elected to terminate the RML Relief.
•The Agent earned a $1,500,000 Amendment Fee, $500,000 of which has been paid and $1,000,000 of which is payable on or before December 15, 2022.
The other material terms of the Loan Agreement remain effective as described in the Company’s Current Reports on Form 8-K filed on January 4, 2022 and July 7, 2022. The foregoing description of the Second Amendment does not purport to be complete and is qualified in its entirety by reference to the text of the Loan Agreement, which was previously filed as Exhibit 10.1 to the Current Report on Form 8-K filed on January 4, 2022; the Joinder and First Amendment to Loan Documents, which was previously filed as Exhibit 10.1 to the Current Report on Form 8-K filed on July 7, 2022; and the Second Amendment, which is filed as Exhibit 10.1 to this Current Report on Form 8-K, and are incorporated herein by reference.