REG Geismar gets $101.32 million substitute letter of credit for bonds

By Susanna Moon

Chicago, July 14 – REG Geismar, LLC obtained a substitute letter of credit with Bank of America, NA for $101,315,069 related to the issue of its $100 million Louisiana Public Facilities Authority revenue bonds (Dynamic Fuels, LLC project), series 2008.

The letter-of-credit amount is the sum of the outstanding $100 million principal amount of the bonds plus $1,315,069 of interest, according to an 8-K filing by Renewable Energy Group, Inc. with the Securities and Exchange Commission.

Through two separate deals that closed in June, REG Synthetic Fuels, LLC, a wholly owned subsidiary of the company, acquired all of the outstanding limited liability company membership interests in Dynamic Fuels, LLC and Dynamic Fuels changed its name to REG Geismar, LLC.

The substitute letter of credit expires on July 8, 2015.

REG Geismar must reimburse Bank of America for any draws on the substitute letter of credit.

In 2008, REG Geismar received a $100 million loan of the proceeds from the issuance of revenue bonds by the Louisiana Public Facilities Authority, with loan proceeds used by REG Geismar to finance a portion of the costs to construct a 75 million gallon per year nameplate capacity renewable diesel fuel production facility located in Geismar, La.

REG Geismar’s payment obligations under the loan agreement mirror the authority’s obligations on the bonds and mature on Oct. 1, 2033.

At the time the bonds were issued, Tyson Foods, Inc., one of the former equityholders of REG Geismar, obtained an irrevocable direct-pay letter of credit that was provided to the trustee for the bonds and drawn upon to pay the principal and interest on the bonds and the portion of the purchase price attributable to principal and interest on the bonds in connection with any bond repurchase obligations of REG Geismar.

Ames, Iowa-based Renewable Energy is a biodiesel producer.

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