Note 14 - Debt

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Debt Disclosure [Text Block]

14. Debt

2021 Bond Issuance

On April 15, 2021, 2021 Bonds were issued totaling $68,155,000. The 2021 Bonds initially bear interest at the rate of 1.50% per annum during the Initial Term Rate Period (as defined in the hereinafter defined Indenture), payable semi-annually on January 1 and July 1 of each year, commencing on July 1, 2021. The 2021 Bonds mature on  April 1, 2042, are callable and remarketable on or after October 1, 2022, and are also subject to mandatory tender for purchase on April 1, 2024, pursuant to the terms of the Indenture (as defined below). The 2021 Bonds were issued at a premium of $0.8 million. Debt issuance costs totaled $3.0 million. 

The 2021 Bonds were issued under a Trust Indenture, dated as of April 1, 2021 (the “Indenture”), between the Authority and Citibank, N.A., as trustee (the "Trustee"). The principal of and the interest on the 2021 Bonds is payable solely from (i) payments to be made by Gevo RNG to the Trustee pursuant to a separate financing agreement, dated as of April 1, 2021 (the "Bond Financing Agreement"), between Gevo RNG and the Authority, (ii) all moneys received by the Authority or the Trustee in respect of payment of the loan of the proceeds of the 2021 Bonds from the Authority to Gevo RNG pursuant to the Bond Financing Agreement, (iii) all moneys and investments in the "Bond Fund" established and maintained by the Trustee pursuant to the Indenture, including without limitation moneys received by the Trustee pursuant to the Letter of Credit (as defined below), (iv) all moneys and investments in the “Project Fund” established and maintained by the Trustee pursuant to the Indenture from proceeds of the sale of the 2021 Bonds, and (v) all income and profit from the investment of the foregoing moneys, excluding any payments received by the Authority pursuant to rights of the Authority to receive certain additional payments and reimbursements of expenses as set forth in the Bond Financing Agreement. Pursuant to the Bond Financing Agreement, the proceeds of the 2021 Bonds will be loaned to Gevo RNG (1) to finance in part the construction of the biogas facility to be developed, designed, constructed, owned and operated by or on behalf of Gevo RNG, which is comprised of (A) three anaerobic digesters and related equipment situated on dairy farms located in Northwest Iowa that will produce partially conditioned raw biogas from cow manure, (B) gathering pipelines to transport biogas to a centrally located gas upgrade system, (C) a centrally located gas upgrade system located in Doon, Iowa that will upgrade biogas to pipeline quality natural gas and interconnect to Northern Natural Gas’ interstate pipeline, and (D) other related improvements, (2) to capitalize a portion of the interest due on the 2021 Bonds during the Initial Term Rate Period to be used to reimburse the Credit Facility Provider (as defined below) for interest draws on the Letter of Credit during such period, and (3) to pay a portion of the costs of issuing the 2021 Bonds.

On April 15, 2021, Gevo obtained a letter of credit for $71.2 million (the “Letter of Credit”) from the Credit Facility Provider, pursuant to the terms of a letter of credit reimbursement agreement dated as of April 1, 2021 (the "Reimbursement Agreement"), between Gevo and the Credit Facility Provider. The Letter of Credit will permit the Trustee to draw thereon in accordance with its terms in amounts sufficient to pay the principal and purchase price of the 2021 Bonds and up to 203 days’ interest on the 2021 Bonds. Pursuant to the terms of the Reimbursement Agreement, Gevo is obligated to reimburse the Credit Facility Provider for amounts drawn under the Letter of Credit. It is expected that payments of the principal and interest on the 2021 Bonds, and the purchase price of 2021 Bonds that are tendered for mandatory purchase and not remarketed, will be made by draws on the Letter of Credit. Gevo has pledged and assigned restricted cash to the Credit Facility Provider as security for the reimbursement obligations of Gevo pursuant to the Reimbursement Agreement in an amount equal to the principal amount of the 2021 Bonds plus three years of interest payments on the 2021 Bonds.

Gevo anticipates remarketing the 2021 Bonds under revised terms that will include a long-term maturity date and be non-recourse to Gevo. Upon a successful remarketing, Gevo anticipates that the Letter of Credit, the Reimbursement Agreement and the associated pledge of cash will be terminated.

Loans Payable - Other

The equipment loans are secured by the related equipment.

In April 2020, the Company and Agri-Energy each entered into a loan agreement with Live Oak Banking Company, pursuant to which the Company and Agri-Energy obtained loans from the SBA PPP totaling $1.0 million in the aggregate (the "SBA Loans").

On April 15, 2021, the Small Business Administration forgave the entire balance of $0.5 million of the Company's and $0.1 million of Agri-Energy's loans and accrued interest obtained through the SBA PPP. The remaining SBA Loan for Agri-Energy totals $0.3 million, bears interest at 1.0% and matures in April 2025. Monthly payments of $8,000, including interest, began on June 5, 2021 and are payable through April 2025.

The SBA Loans are treated as debt on the Consolidated Balance Sheets and classified as "Loans payable – other (current)" and "Loans payable – other (long-term)". The Consolidated Statements of Operations classifies the interest as "Interest expense" and the loan forgiveness as "Gain on forgiveness of SBA Loans".

The summary of the 2021 Bonds and Loans payable - other at December 31, 2021 and 2020 are as follows (in thousands):

			Years Ended December 31,
	Interest Rate	Maturity Date	2021			2020
2021 Bonds	1.5%	January 2042	$	66,486		$	—
SBA Loans	1.0%	April 2025		320			1,006
Equipment	4% to 5%	February 2022 to December 2024		156			248
				66,962			1,254
Less current portion				(158	)		(807	)
Long-term portion			$	66,804		$	447

Included in the 2021 Bonds above is Bond Premium of $0.6 million and Debt Issuance Costs of $2.3 million in the principal portion as of December 31, 2021. Total interest of $2.4 million, $2.1 million and $2.7 million was incurred during the years ended December 31, 2021, 2020 and 2019, respectively. Interest of $1.2 million and nil relating to our borrowings, and interest of $0.9 million and nil relating to certain of our finance leases, was capitalized as part of "Construction in progress" and included in "Property, plant and equipment" in the Consolidated Balance Sheets for the years ended December 31, 2021 and 2020, respectively.

Future payments for the Company's long-term debt are as follows (in thousands):

Year Ending December 31,	Amount
2022	$	158
2023		159
2024		66,616
2025		29
	$	66,962

2020/2021 Notes

The following table sets forth information pertaining to the 2020/21 Notes which is included in the Company’s Consolidated Balance Sheets (in thousands):

	Principal Amount of 2020 Notes			Principal Amount of 2020/21 Notes			Debt Discount			Debt Issue Costs			Total Notes			2020 Notes Embedded Derivative			Total 2020 Notes and 2020/21 Notes Embedded Derivative
Balance, December 31, 2019	$	14,053		$	—		$	(123	)	$	(30	)	$	13,900		$	—		$	13,900
Amortization of debt discount		—			—			405			—			405			—			405
Amortization of debt issue costs		—			—			—			30			30			—			30
Paid-in-kind interest		47			269			—			—			316			—			316
Exchange of 2020 Notes for 2020/21 Notes		(14,100	)		14,100			—			—			—			—			—
Conversion of 2020/21 Notes into common Stock		—			(14,651	)		—			—			(14,651	)		—			(14,651	)
Original issue discount paid with 2020/21 Notes		—			282			(282	)		—			—			—			—
Fair value of 2020/21 embedded derivative liability upon issuance		—			—			—			—			—			2,848			2,848
Increase in fair value of 2020/21 Notes embedded derivative liability prior to conversion of 2020/21 Notes		—			—			—			—			—			5,759			5,759
Decrease in fair value of 2020/21 Notes embedded derivative liability upon conversion to common stock		—			—			—			—			—			(8,607	)		(8,607	)
Balance, December 31,2020	$	—		$	—		$	—		$	—		$	—		$	—		$	—

On April 19, 2017, the Company entered into an Exchange and Purchase Agreement (the "2017 Purchase Agreement") with WB Gevo, LTD (the "2017 Holder") the holder of the Company's 12% convertible senior secured notes due 2017 (the "2017 Notes"), which were issued under that certain Indenture dated as of June 6, 2014, by and among the Company, the guarantors party thereto, and Wilmington Savings Fund Society ("FSB"), as trustee and as collateral trustee (as supplemented, the "2017 Notes Indenture"), and Whitebox Advisors LLC ("Whitebox"), in its capacity as representative of the 2017 Holder. Pursuant to the terms of the 2017 Purchase Agreement, the 2017 Holder, subject to certain conditions, including approval of the transaction by the Company's stockholders (which was received on June 15, 2017), agreed to exchange all of the outstanding principal amount of the 2017 Notes for an equal principal amount of the 2020 Notes, plus an amount in cash equal to the accrued and unpaid interest (other than interest paid in kind) on the 2017 Notes (the "2017 Exchange"). On June 20, 2017, the Company completed the 2017 Exchange, terminated the 2017 Notes Indenture and cancelled the 2017 Notes.

The 2020 Notes had a maturity date of March 15, 2020 and were secured by a first lien on substantially all of our assets. The 2020 Notes had an interest rate equal to 12% per annum (with 2% potentially payable as PIK Interest (as defined and described below) at our option), payable on March 31, June 30, September 30 and December 31 of each year. To the extent that the Company paid any portion of the interest due on the 2020 Notes as PIK Interest, the maximum aggregate principal amount of 2020 Notes that would have been convertible into shares of the Company's common stock increased.

Under certain circumstances, the Company had the option to pay a portion of the interest due on the 2020 Notes by either (a) increasing the principal amount of the 2020 Notes by the amount of interest then due or (b) issuing additional 2020 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").

Additional shares of the Company's common stock could also have become issuable pursuant to the 2020 Notes in the event the Company was required to make certain make-whole payments as provided in the 2020 Notes Indenture.

The 2020 Notes were convertible into shares of the Company's common stock, subject to certain terms and conditions. The initial conversion price of the 2020 Notes was equal to $14.72 per share of common stock, or 0.0679 shares of common stock per $1 principal amount of 2020 Notes.

2020/21 Notes

On January 10, 2020, the Company entered into an Exchange and Purchase Agreement (the "2020/21 Purchase Agreement") with the guarantors party thereto, the 2017 Holder and Whitebox, in its capacity as representative of the 2017 Holder. Pursuant to the terms of the 2020/21 Purchase Agreement, the 2017 Holder, subject to certain conditions, agreed to exchange all of the outstanding principal amount of the 2020 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% Convertible Senior Notes due 2020/21 (the "2020/21 Notes") (the "2020/21 Exchange"). On January 10, 2020, the Company completed the 2020/21 Exchange, terminated the 2017 Notes Indenture and cancelled the 2020 Notes. In addition, the Company entered into an Indenture by and among the Company, the guarantors named therein (the "2020/21 Notes Guarantors") and FSB, as trustee and as collateral trustee (the "2020/21 Notes Indenture"), pursuant to which the Company issued the 2020/21 Notes.

The 2020/21 Notes matured on December 31, 2020. The 2020/21 Notes bore interest at a rate equal to 12% per annum (with 4% payable as PIK Interest (as defined and described above)), payable on March 31, June 30, September 30 and December 31 of each year. In the event the Company pays any portion of the interest due on the 2020/21 Notes as PIK Interest, the maximum aggregate principal amount of 2020/21 Notes that could be convertible into shares of the Company’s common stock will be increased.

The 2020/21 Notes were convertible into shares of the Company’s common stock voluntarily by the 2017 Holder at the conversion price, subject to certain terms and conditions. The initial conversion price of the 2020/21 Notes was equal to $2.442 per share of the Company’s common stock (the "2020/21 Notes Conversion Price"), or 0.4095 shares of the Company’s common stock per $1 principal amount of 2020/21 Notes. The Company and the 2017 Holder may also mutually agree on other conversions of the 2020/21 Notes into shares of the Company’s common stock on a monthly basis (a "Contractual Conversion") pursuant to the terms of the 2020/21 Notes Indenture. The 2020/21 Notes Conversion Price in a Contractual Conversion will be reduced to the lesser of the then-applicable 2020/21 Notes Conversion Price or a 10% discount to the average of the daily volume weighted average price of the Company’s common stock for the three forward trading days prior to the date of the Contractual Conversion.

Each 2017 Holder has agreed not to convert its 2020/21 Notes into shares of the Company’s common stock to the extent that, after giving effect to such conversion, the number of shares of the Company’s common stock beneficially owned by such 2017 Holder and its affiliates would exceed 4.99% of the Company’s common stock outstanding at the time of such conversion (the "4.99% Ownership Limitation"); provided that a 2017 Holder may, at its option and upon 61 days’ prior notice to the Company, increase such threshold to 9.99% (the "9.99% Ownership Limitation"). If a conversion of 2020/21 Notes by a 2017 Holder would exceed the 4.99% Ownership Limitation or the 9.99% Ownership Limitation, as applicable, the 2020/21 Purchase Agreement contains a provision granting the 2017 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 2020/21 Notes did not contain any anti-dilution adjustments for future equity issuances that were below the 2020/21 Notes Conversion Price, and adjustments to the 2020/21 Notes Conversion Price would only generally be made in the event that there is a dividend or distribution paid on shares of the Company’s common stock, a subdivision, combination or reclassification of the Company’s common stock, or at the discretion of the Board of Directors of the Company in limited circumstances and subject to certain conditions.

The 2020/21 Notes were secured by a lien on substantially all of the assets of the Company and the 2020/21 Notes Guarantors, including intellectual property and real property, and were guaranteed by the Company’s existing subsidiaries.

Under certain circumstances, the Company may file one or more registration statements on Form S-3 or amend filings in order to register shares of common stock for sale or resale, as necessary in connection with the 2020/21 Notes.

Conversion of 2020/21 Notes

On July 10, 2020, certain holders of the 2020/21 Notes converted $2.0 million in the aggregate principal amount of 2020/21 Notes (including the conversion of an additional $0.3 million for make-whole payment) into 4,169,426 shares of common stock pursuant to the terms of the indenture. In  December 2020, certain holders of the 2020/21 Notes converted the remaining $12.7 million in aggregate principal amount of 2020/21 Notes (including the conversion of an additional $1.2 million for make-whole payment) into an aggregate of 5,672,654 shares of common stock pursuant to the terms of the 2020/21 Notes related Indenture. As a result, as of December 31, 2020, all obligations under the 2020/2021 Notes had been fully paid and satisfied, and the 2020/2021 Notes related indenture had been terminated in accordance with its terms at maturity on December 31, 2020. During the year ended December 31, 2020, the Company recognized an approximately $1.9 million loss on the conversion of the 2020/21 Notes into common stock within the Consolidated Statements of Operations as a result of the make-whole payments.