BioFuel Energy gets loan default notice but refutes the claims

By Sara Rosenberg

New York, May 28 - BioFuel Energy Corp. received a notice of default under its credit facility, but disagrees with the assertions and has retained a financial advisor to support ongoing discussions with lenders, according to an 8-K filed with the Securities and Exchange Commission.

The lenders claim that a material adverse effect had occurred, that the company was generally unable to pay its debts when due and that certain other events of default occurred.

As a result, the lenders didn't want to permit additional borrowings under the credit facility or convert the construction loans into term loans.

The company, however, claims that it has not failed to make any payments due or payable under the credit agreement, or to any other creditors or vendors, and that it fully expects to meet the interest payment due to the lenders at the end of this month.

For now, the company has entered into a limited consent and waiver and amendment with the lenders, under which they will have immediate access to their bank accounts to pay vendors for corn, natural gas and other materials, while they continue discussions seeking to arrive at a long-term solution to its liquidity requirements.

BNP Paribas is the administrative agent on the deal.

BioFuel is a Denver-based producer and seller of ethanol and its co-products.

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