Benson Hill obtains $100 million loan for ZFS Creston acquisition

By Rebecca Melvin

Concord, N.H., Jan. 4 – Benson Hill Inc. and its subsidiaries entered into a $100 million loan and security agreement with Avenue Capital Management II, LP as administrative agent and collateral agent, on Dec. 29, according to an 8-K filing with the Securities and Exchange Commission.

The company drew down $80 million at closing to help fund its acquisition of ZFS Creston LLC’s manufacturing operations in southwest Iowa. An additional $20 million is available between April 30 and June 30, upon the achievement of certain milestones.

On Dec. 30, Benson Hill and its wholly-owned subsidiary DDB Holdings Inc. entered into a membership interest purchase agreement with ZFS Creston under which Benson Hill acquired all the membership interests of the seller for $102 million in cash, subject to adjustments for cash, debt and working capital.

The Avenue Capital loan bears interest at a variable rate equal to the sum of the greater of the prime rate of interest as published in the Wall Street Journal or 325 basis points per year, plus 575 bps per year.

Accrued interest is payable on a monthly basis for 12 months from the initial closing, followed by payments of principal and accrued interest for 24 additional months, at which time the loan matures.

The interest-only period may be extended to 24 months from the initial closing upon the achievement of certain milestones. The maturity date may be extended to 42 months from the initial closing upon achievement of certain milestones.

At maturity, a $10.7 million final payment is due in addition to other payments of principal and interest. In the event all or any part of any loan is outstanding when a change of control occurs the required final payment is $14.2 million. There is a prepayment fee ranging from 100 bps to 600 bps of the principal amount of the loan that is due.

The loan is secured by collateral consisting of all of each borrower’s receivables, equipment, fixtures, general intangibles, inventory, investment property, deposit accounts, shares, and other goods and personal property of each borrower.

At any time after six months from initial closing, up to $20 million of the principal amount of the loan then outstanding may be converted at the lender’s option into shares of the company’s common stock. The price per share will be equal to the lower of $8.22, a 15% premium to the five-day volume weighted average price determined as of June 30; or in the case of any equity purchase commitments and/or at-the-market or similar transactions which result in the realization by the company of gross proceeds of $20 million or more over any period of 14 consecutive trading days prior to Sept. 30, 2022, the volume-weighted average price of the common stock on the last trading day of such 14 day period, where five-day VWAP means the volume-weighted average price of the common stock determined for the five consecutive trading days through and including the applicable date; and the effective price per share of any bona fide equity offering prior to Sept. 30, 2022.

As additional consideration for the loan, the lenders received warrants exercisable or exchangeable for up to such aggregate number of shares determined by dividing $3 million by the exercise price at a lender’s option.

The exercise price of the warrants is also subject to certain parameters regarding the stock price.

The food technology company is based in St. Louis.

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