DEBT FINANCING

3 Months Ended

Jan. 31, 2012

DEBT FINANCING

DEBT FINANCING

8.              DEBT FINANCING

Debt financing consists of the following:

	January 31,		October 31,
	2012		2011*
Term note payable to lending institution, see terms below	$	38,983,192	$	39,747,497
Revolving term note to lending institution, see terms below	2,864,561		6,864,561
Assessments payable	3,163,575		3,170,517
Notes payable to electrical company	777,330		883,340
Equipment note	6,930		13,860
Construction note payable	1,000,000		737,750
Total	46,795,588		51,417,525
Less amounts due on demand or within one year	4,107,827		4,572,613
Net long term debt	$	42,687,761	$	46,844,912

*    Derived from audited financial statements

Term Note

The Company has a five-year term loan initially amounting to $40,000,000, comprised of two tranches of $20,000,000 each, with the first tranche bearing interest at a variable rate equal to the greater of LIBOR plus 3.50% or 5.0%, and the second tranche bearing interest at 5.75%.  The Company must make equal monthly payments of principal and interest on the term loan based on a ten-year amortization, provided the entire principal balance and accrued and unpaid interest on the term loan is due and payable in full on the maturity date of September 1, 2016.  In addition, the Company is required to make additional payments annually on debt for up to 25% of the excess cash flow, as defined by the agreement, up to $2 million per year.  As part of the agreement, the premium above LIBOR on the loans may be reduced based on a financial ratio.  The loan agreements are secured by substantially all business assets and are subject to various financial and non-financial covenants that limit distributions and debt and require minimum debt service coverage, net worth, and working capital requirements.  The Company was in compliance with the covenants of its master loan agreement with AgStar at January 31, 2012.

Revolving Term Note

The Company has obtained a five-year term revolving loan commitment in the amount of $8,008,689 until September 1, 2016.  Amounts borrowed by the Company under the term revolving loan and repaid or prepaid may be re-borrowed at any time prior to maturity date of the term revolving loan, provided that outstanding advances may not exceed the amount of the term revolving loan commitment.  Amounts outstanding on the term revolving loan bear interest at a variable rate equal to the greater of a LIBOR rate plus 3.50% or 5.0%, payable monthly.  The Company also pays an unused commitment fee on the unused portion of the term revolving loan commitment at the rate of 0.35% per annum, payable in arrears in quarterly installments during the term of the term revolving loan.  Under the terms of the agreement, the term revolving loan commitment is scheduled to decline by $500,000 annually, beginning on September 1, 2012 and each anniversary date thereafter.  The maturity date of the term revolving loan is September 1, 2016.  The Company has a $600,000 outstanding standby letter of credit at January 31, 2012, which reduces the amounts available.

Construction Note Payable

The Company has a construction note payable to a financial institution, through its ownership in Agrinatural, in the amount of $1,000,000. This note was converted to a three year term loan in March 2012 with monthly payment of $30,159 including interest at 5.29% until maturity in April 2015.  The note is secured by assets of Agrinatural.

Estimated maturities of long-term debt at January 31, 2012 are as follows based on the most recent debt agreement:

2012	$	4,107,827
2013	4,031,489
2014	4,605,241
2015	4,700,328
2016	27,681,117
After 2017	1,669,586
Total long-term debt	$	46,795,588