Item 1.01. Entry into a Material Definitive Agreement.
As CHS Inc. (the "Company") has previously reported, on July 22, 2016, the
Company entered into (i) a Sale and Contribution Agreement (the "Sale
Agreement"), by and among the Company, CHS Capital, LLC ("CHS Capital") and
Cofina Funding, LLC ("Cofina Funding"), and (ii) a Receivables Financing
Agreement (the "Receivables Financing Agreement"), by and among the Company,
individually and as Servicer, Cofina Funding, as Seller, Victory Receivables
Corporation ("Victory") and Nieuw Amsterdam Receivables Corporation B.V. ("Nieuw
Amsterdam"), as Conduit Purchasers, Coöperatieve Rabobank U.A. ("Rabobank"), as
a Committed Purchaser, Coöperatieve Rabobank U.A., New York Branch ("Rabobank
New York"), as a Purchaser Agent, and the Bank of Tokyo-Mitsubishi UFJ, Ltd.,
New York Branch ("BTMU"), as a Committed Purchaser, Purchaser Agent and as
Administrative Agent. As the Company has also previously reported, the Sale
Agreement and the Receivables Financing Agreement were each previously amended
by Omnibus Amendment No. 1, dated as of February 1, 2017 ("Amendment No. 1"), by
and among Cofina Funding, as Seller, the Company, as Servicer and as an
Originator, CHS Capital, as an Originator, BTMU, as Administrative Agent, a
Committed Purchaser and Purchaser Agent, Victory, as a Conduit Purchaser, Nieuw
Amsterdam, as a Conduit Purchaser, Rabobank, as a Committed Purchaser, Rabobank
New York, as a Purchaser Agent, and U.S. Bank National Association ("U.S.
Bank"), as Custodian.
On July 18, 2017, the Company entered into (i) an Amended and Restated
Receivables Purchase Agreement (the "Receivables Purchase Agreement"), by and
among the Company, individually and as Servicer, Cofina Funding, as Seller,
Victory and Nieuw Amsterdam, as Conduit Purchasers, Rabobank, as a Committed
Purchaser, Rabobank New York, as a Purchaser Agent, and BTMU, as a Committed
Purchaser, Purchaser Agent and as Administrative Agent, which Receivables
Purchase Agreement amends and restates the Receivables Financing Agreement in
its entirety, including, without limitation, extending the maturity of the
facility provided for therein, and (ii) an Omnibus Amendment No. 2 ("Amendment
No. 2"), among Cofina Funding, as Seller, the Company, as Servicer and as an
Originator, CHS Capital, as an Originator, the Conduit Purchasers, the Committed
Purchasers and the Purchaser Agents set forth on the signature pages thereto,
BTMU, as Administrative Agent, and U.S. Bank, as Custodian, amending, among
other things, the Sale Agreement.
Pursuant to the Sale Agreement, as amended by Amendment No. 1 and Amendment No.
2 (the "Amended Sale Agreement"), the Company and CHS Capital will continue,
from time to time, to assign, sell and contribute their rights to certain loans
and receivables and certain related property (collectively, the "Assets") to
Cofina Funding. Cofina Funding will finance its purchase of the Assets with cash
available, including cash received upon the resale of the Assets to the Conduit
Purchasers, Committed Purchasers and Purchaser Agents (the "Purchasers"), and by
issuing subordinated promissory notes (the "Notes") to the Company and CHS
Capital for the amount of the purchase price of the Asset not paid in cash,
provided that the issuance of those Notes does not decrease Cofina Funding's net
worth to less than $16,000. The Notes will bear interest at a rate equal to
LIBOR. The Amended Sale Agreement contains various customary representations and
warranties and affirmative and negative covenants and provides for customary
indemnification and remedial provisions.
Pursuant to the Receivables Purchase Agreement, Cofina Funding will sell and
assign up to an aggregate amount of $700 million of the Assets to the
Purchasers, which $700 million represents a decrease from the $750 million of
sales and assignments contemplated under the Receivables Financing Agreement.
Cofina Funding will generally not have any right or obligation to repurchase any
Asset that is sold and assigned to the Purchasers under the Receivables Purchase
Agreement unless (i) a representation or warranty by Cofina Funding under the
Receivables Purchase Agreement with respect to that Asset is incorrect in any
material respect or in any manner that adversely affects the value or
collectability of that Asset, (ii) the Company or Cofina Financing fails to
perform or observe any term, covenant or agreement with respect to that Asset
under the Amended Sale Agreement, the Receivables Purchase Agreement or any of
the ancillary documents and agreements related thereto or (iii) either (a) the
Company or Cofina Funding instructs the debtor or obligor with respect to that
Asset to pay any amount with respect to that Asset to an account other than
certain specified Purchaser accounts or (b) that debtor or obligor refuses to
make any payment to those specified Purchaser accounts. In each such case, at
the option of the Administrative Agent, Cofina Funding will be required to
repurchase that Asset for a purchase price equal to the unpaid balance thereof.
The sales and assignments of Assets by Cofina Funding to the Purchasers under
the Receivables Purchase Agreement are expected to qualify for sale treatment
under accounting principles generally accepted in the United States. The
Receivables Purchase Agreement contains various customary representations and
warranties and affirmative and negative covenants, including, without
limitation, the repurchase covenant described above, and also contains customary
indemnification and termination provisions. In addition, the Company and Cofina
Funding are required to pay certain fees to the Administrative Agent and each
Purchaser Agent. The Receivables Purchase Agreement has an initial termination
date of July 18, 2018, unless earlier terminated upon 60 days' prior written
notice by Cofina Funding.
The Company has provided a customary performance guaranty for certain of Cofina
Funding and CHS Capital's obligations under both the Amended Sale Agreement and
the Receivables Purchase Agreement (but not the payment obligations of the
debtors and obligors under the Assets).
BTMU and Rabobank are also parties to one or more of the Company's outstanding
credit facilities, including that certain 2015 Amended and Restated Credit
Agreement (5-Year Revolving Loan), dated September 4, 2015, by and between the
Company, CoBank, ACB, as a syndication party and as the administrative agent,
Wells Fargo Bank, National Association, as syndication agent, and the other
syndication parties party thereto. In addition, BTMU and Rabobank are holders of
notes issued by the Company under that certain Note Purchase and Private Shelf
Agreement, dated April 13, 2004, between the Company and Prudential Capital
Group. Also, certain parties to the Receivables Purchase Agreement and/or their
affiliates have from time to time engaged, and in the future may engage, in
various financial advisory and investment banking transactions with, and provide
services to, the Company and its subsidiaries in the ordinary course of business
for which they received or will receive customary fees and expenses.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
Reference is made to the information set forth in Item 1.01 of this Current
Report on Form 8-K, which is incorporated herein by reference.
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