Debt

12 Months Ended

Dec. 31, 2019

DEBT

Term debt

The Company’s term debt at December 31 is as follows:



	2019		2018
2.75% Convertible Senior Notes, matured and paid in June 2019	$	—	$	66,361
4.00% Convertible Senior Notes, $89,627 face amount, due in June 2036	69,668		75,477
REG Danville term loan, secured, variable interest rate of LIBOR plus 4%, due in July 2022	6,468		8,964
REG Ralston term loan, variable interest rate of LIBOR plus 2.25%, due in October 2025	15,980		18,948
REG Grays Harbor term loan, variable interest of minimum 3.5% or Prime Rate plus 0.25%, due in May 2022	6,966		8,828
REG Capital term loan, fixed interest rate of 3.99%, due in January 2028	6,929		7,185
Other	33		54
Total debt before debt issuance costs	106,044		185,817
Less: Current portion of long-term debt	77,131		149,006
Less: Debt issuance costs (net of accumulated amortization of $1,139 and $3,873, respectively)	2,783		3,390
Total long-term debt	$	26,130	$	33,421

2019 Convertible Senior Notes

In June 2014, the Company issued $143,800 in convertible senior notes with a maturity date of June 15, 2019, unless earlier converted or repurchased. The 2019 Convertible Senior Notes bore interest at a rate of 2.75% per annum, payable semi-annually in arrears, beginning December 15, 2014. The initial conversion rate was 75.3963 shares of Common Stock per $1,000 principal amount of 2019 Convertible Senior Notes, which represented an initial conversion price of approximately $13.26 per share.

On June 15, 2019, the 2019 Convertible Senior Notes matured. The Company paid $67,380 in cash to settle the outstanding principal amount and issued 1,902,781 treasury shares at an average share price of $9.87 to settle the conversion value that was in excess of the principal.

In connection with the issuance of the 2019 Convertible Senior Notes, the Company entered into capped call transactions in private transactions. Under the Capped Call, the Company purchased capped call options that in aggregate relate to 92.5% of the total number of shares of the Company's Common Stock underlying the 2019 Convertible Senior Notes, with a strike price equal to the conversion price of the 2019 Convertible Senior Notes and with a cap price equal to $16.02 per share. As part of the settlement of the 2019 Convertible Senior Notes, the Company settled all related capped call options in June 2019 and received 625,558 shares of common stock. The impact of this transaction, net of tax, was reflected as an addition to Additional Paid-in Capital as presented in the Consolidated Statements of Stockholders' Equity.

2036 Convertible Senior Notes

On June 2, 2016, the Company issued $152,000 aggregate principal amount of the 2036 Convertible Senior Notes in a private offering to qualified institutional buyers. The 2036 Convertible Senior Notes bear interest at a rate of 4.00% per year payable semi-annually in arrears on June 15 and December 15 of each year, beginning December 15, 2016. The notes will mature on June 15, 2036, unless repurchased, redeemed or converted in accordance with their terms prior to such date.

Prior to December 15, 2035, the 2036 Convertible Senior Notes will be convertible only upon satisfaction of certain conditions and during certain periods as stipulated in the indenture. On or after December 15, 2035 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the 2036 Convertible Senior Notes may convert their notes at any time. The 2036 Convertible Senior Notes may be settled in cash, the Company’s common shares or a combination of cash and the Company’s common shares, at the Company’s election. The Company may not redeem the 2036 Convertible Senior Notes prior to June 15, 2021. Holders of the 2036 Convertible Senior Notes will have the right to require the Company to repurchase for cash all or some of their notes at 100% of their principal, plus any accrued and unpaid interest on each of June 15, 2021, June 15, 2026 and June 15, 2031. Holders of the 2036 Convertible Senior Notes will have the right to require the Company to repurchase for cash all or some of their notes at 100% of their principal, plus any accrued and unpaid interest upon the occurrence of certain fundamental changes. The initial conversion rate is 92.8074 common shares per $1,000 (one thousand) principal amount of 2036 Convertible Senior Notes (equivalent to an initial conversion price of approximately $10.78 per common share).

In addition, the 2036 Convertible Senior Notes will become convertible in the subsequent quarter if the closing price of the Company’s common stock exceeds $14.01, 130% of the Convertible Senior Notes’ initial conversion price, for at least 20 trading days during the 30 consecutive trading days prior to each quarter-end date. If the 2036 Convertible Senior Notes becomes convertible and should the holders elect to convert, the Company’s current intent and policy is to settle the principal amount the 2036 Convertible Senior Notes in cash, with the remaining value satisfied at the Company’s option in cash, stock or a combination of cash and stock. As of December 31, 2019 and 2018, the early conversion event was met based on the Company's stock price and as a result, the 2036 Convertible Senior Notes have been classified as a current liability on the Company's Consolidated Balance Sheets at December 31, 2019.

The net proceeds from the offering of the 2036 Convertible Senior Notes were approximately $147,118, after deducting fees and offering expenses of $4,882, which was capitalized as debt issuance costs and is being amortized through June 2036. The debt discount is to be amortized through June 2036. The effective interest rate on the debt liability component was 1.53%.

REG Ralston

In April 2017, REG Ralston, LLC ("REG Ralston") entered into a construction loan agreement ("Construction Loan Agreement") with First Midwest Bank. The Construction Loan Agreement allowed REG Ralston to borrow up to $20,000 during the construction period at REG Ralston. On October 19, 2018, REG Ralston entered into an amended loan agreement with First Midwest bank to convert the Construction Loan Agreement into a term loan ("Ralston Term Loan") for a principal amount of $19,177, due on October 19, 2025. The Ralston Term Loan will bear floating interest using a LIBOR rate plus 2.25% per annum. The loan agreement contains various loan covenants. At December 31, 2019, the effective interest rate on the amount borrowed under this Loan Agreement was 3.96% per annum.

REG Danville

In July 2017, REG Danville, LLC ("REG Danville") entered into an amended loan agreement ("Loan Agreement") with Fifth Third Bank. The Loan Agreement allowed REG Danville to borrow $12,500 maturing in July 2022. The loan requires

monthly principal payments and bears LIBOR-based variable interest rates. The loan agreement contains various loan covenants. At December 31, 2019, the effective interest rate on the amount borrowed under this Loan Agreement was 5.75% per annum.

REG Capital

In December 2017, REG Capital, LLC ("REG Capital") entered into a mortgage refinancing loan agreement ("Mortgage Refinancing Loan Agreement") with First National Bank to refinance existing mortgages on our office buildings in Ames, IA. The outstanding principal under the Mortgage Refinancing Loan Agreement is $7.4 million with a maturity date of January 3, 2028. The loan requires monthly principal payments and bears a fixed interest rate of 3.99% per annum.

Lines of Credit

The following table shows the Company's lines of credit:



	2019		2018
Total revolving loans (current)	$	76,990	$	14,250
Maximum remaining available to be borrowed under revolving lines of credit	$	101,485	$	114,889

The Company's wholly-owned subsidiaries, REG Services Group, LLC and REG Marketing & Logistics Group, LLC, are borrowers under a Credit Agreement dated December 23, 2011 with the lenders party thereto (“Lenders”) and Wells Fargo Capital Finance, LLC, as the agent, (as amended, the “M&L and Services Revolver”). Prior to an amendment in November 2019, the maximum commitment of the Lenders under the M&L and Services Revolver to make revolving loans was $150,000. Following this amendment, the maximum commitment was increased to $200,000 through April 30, 2020, subject to borrowing base limitations and further subject to an accordion feature, which allows the borrowers to request commitments for additional revolving loans in aggregate amount not to exceed to $50,000, the making of which are subject to customary conditions, including the consent of Lenders providing such additional commitments. After April 30, 2020, the maximum commitment of the Lenders under the M&L Services Revolver will automatically decrease to $150,000.

The maturity date of the M&L and Services Revolver is September 30, 2021. Loans advanced under the M&L and Services Revolver bear interest based on a one-month LIBOR rate (which shall not be less than zero), plus a margin based on Quarterly Average Excess Availability (as defined in the Revolving Credit Agreement), which may range from 1.75% per annum to 2.25% per annum.

The M&L and Services Revolver contains various loan covenants that restrict each subsidiary borrower’s ability to take certain actions, including restrictions on incurrence of indebtedness, creation of liens, mergers or consolidations, dispositions of assets, repurchase or redemption of capital stock, making certain investments, making distributions to the Company unless certain conditions are satisfied, entering into certain transactions with affiliates or changing the nature of the subsidiary’s business. In addition, the subsidiary borrowers are required to maintain a fixed charge coverage ratio of at least 1.0 to 1.0 if excess availability under the M&L and Services Revolver is less than 10% of the total $200,000 of current revolving loan commitments, or $20,000 currently. The M&L and Services Revolver is secured by the subsidiary borrowers’ membership interests and substantially all of their assets. In addition, the M&L and Services Revolver is secured by the accounts receivable and inventory of REG Albert Lea, LLC, REG Houston, LLC, REG New Boston, LLC, REG Geismar, LLC and REG Seneca, LLC (collectively, the "Plant Loan Parties") subject to a $40,000 limitation with respect to each of the Plant Loan Parties.

On March 3, 2020 the M&L and Services Revolver was amended to allow the borrowing base related to the BTC to increase from $50,000 to $75,000. The amendment also allows the fixed charge coverage ratio testing threshold to be reduced from 10% to 5% until April 30, 2020.

Maturities of the term debt, including the convertible notes, are as follows for the years ending December 31:



2020	$	77,131
2021	7,560
2022	5,989
2023	3,875
2024	3,476
Thereafter	8,013
Total term debt	106,044
Less: current portion	77,131
Total long-term debt before debt issuance costs	$	28,913

In January 2020, REG Danville and REG Grays Harbor, LLC ("REG Grays Harbor") paid off the outstanding balance of the debt that each company held at December 31, 2019.