UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D. C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported) November 7, 2008
MGP
Ingredients, Inc.
(Exact
name of registrant as specified in its charter)
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KANSAS
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0-17196
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48-0531200
|
|
(State
or other jurisdiction
of
incorporation)
|
(Commission
File
Number)
|
(IRS
Employer
Identification
No.)
|
100
Commercial Street
Box
130
Atchison,
Kansas 66002
(Address
of principal executive offices) (Zip Code)
(913)
367-1480
(Registrant's
telephone number, including area code)
Not
Applicable
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any
of the following provisions (see General Instruction A.2.
below):
□ Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
□ Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
□ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
□ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01. Entry into a Material Definitive Agreement
As disclosed in our Form 10-Q for the
quarter ended September 30, 2008, as of November 7, 2008, the lenders
under our credit agreement agreed to a second amendment to the credit agreement
extending the standstill period established by the first amendment to the credit
agreement, which was entered on September 3, 2008, to February 27, 2009. During
this extension, the Company will be subject to new interim financial covenants.
These require the Company to maintain fiscal year to date adjusted EBITDA
(EBITDA adjusted to eliminate any mark-to-market adjustments reflected in net
income) of ($30.0 million) at the end of October 2008, ($44.0 million) at the
end of November 2008, and ($46.0 million) at the end of December 2008 and
January 2009. Terms of the second amendment also include (i) a provision
limiting loans to base rate loans, with an increase in the interest rate on
outstanding borrowings from LIBOR plus 2.75% or prime plus 0.50% to base rate,
as defined, plus 3%, with base rate being the greater of 4%, Agent’s prime rate
or the federal funds rate plus 1%, (ii) a provision increasing the fee on letter
of credits to an annual rate of 3% of the lenders’ exposure, payable monthly in
arrears (on the date of this report, we had no outstanding letters of
credit), (iii) an amendment fee of $110,000 (we expect related legal
and other professional fees to be approximately $100,000), (iv) a fee
of 1% of the outstanding credit commitment, as defined, payable on February 27,
2009 unless all outstanding obligations are paid in full and the credit
agreement is terminated (this contingent fee is estimated at $350,000), (v) the
pledge of substantially all of the Company’s remaining unpledged assets, (vi)
restricting our use of a portion (approximately $9.2 million) of the commitment
under the credit agreement in an amount equal to a tax refund anticipated to be
received in the second quarter generally to either fund margin calls or for
other grain hedging positions, and (vii) requiring us to use any portion of such
anticipated tax refund received after November 7 (estimated at approximately
$8.0 million) to reduce outstanding borrowings under the credit
agreement.
After
receipt of the full tax refund anticipated in the second quarter, the effect of
the provision described in clause (vi) above is to limit
approximately $9.2 million of our total availability under the credit agreement
to application against margin calls and other sums owning with respect to grain
hedging positions. The prepayment requirement referred to in clause
(vii) above would not reduce the lenders’ total commitment under the credit
agreement.
As noted
above, the second amendment expands the lien securing our obligations to the
lenders so that it now covers substantially all of our assets, excluding (i) our
new office building and laboratory in Atchison and our interest in our German
joint venture and (ii) property at our KCIT facility in Kansas City, so long as
it is encumbered by existing liens. We are obligated to deliver a
recordable mortgage with respect to our Atchison facility by November
17. We are also required to cause any person acting as a commodity
intermediary to execute a commodity account control agreement in favor of our
lenders.
The second
amendment also provides that on or before November 21, 2008, we must engage a
financial consultant, reasonably satisfactory to the lenders , to review our
operating plan and performance, to monitor and report on our operating
performance for the benefit of the Agent and the lenders , and to enable us to
furnish to the Agent and the lenders weekly borrowing base reports
with respect to our accounts. We are also obligated to cause Global
Risk Management to furnish the lenders follow up and final reports on our
hedging program by December 15 and December 31, 2008, respectively, and to
conduct periodic audits of our books related to sales contracts and futures and
options positions.
In the
second amendment, Commerce also waived the cross default under our 5.45% Secured
Promissory Note to Commerce.
Item
9.01 Financial Statements and Exhibits
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4.1
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Second
Amendment to Credit Agreement, dated as of November 7,
2008
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4.2
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Second
Amendment to Security Agreement, dated as of November 7,
2008
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4.3
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Mortgage,
Security Agreement, Assignment of Leases and Rents and Fixture Filing with
respect to the Company’s Onaga, Kansas facility, dated November 7,
2008
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
MGP INGREDIENTS,
INC.
Date: November
12,
2008 By:
/s/
Timothy W. Newkirk
President
and Chief Executive Officer