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we may not be able to repay such debt or borrow sufficient funds to refinance. Even if new financing is available, it may not
be on terms that are acceptable. No assurance can be given that the future operating results of our subsidiaries will be
sufficient to achieve compliance with such covenants and requirements, or in the event of a default, to remedy such default.
In the past, we have received waivers from our lenders for failure to meet certain financial covenants and have amended
our subsidiary loan agreements to change these covenants. For example, during 2011, the Green Plains Bluffton loan
agreement was amended to include equity contributions in the denominator of the fixed coverage ratio and increase the
capital expenditures limit. No assurance can be given that, if we are unable to comply with these covenants in the future, we
will be able to obtain the necessary waivers or amend our subsidiary loan agreements to prevent a default. Default by us or
any of our subsidiaries with respect to any loan in excess of $10.0 million constitutes an event of default under our
convertible senior notes, which could result in the convertible senior notes being declared due and payable.
Additionally, in October 2010 we acquired Global Ethanol, LLC, which we renamed Green Plains Holdings II LLC, or
Holdings II. Global Ethanol’s lenders had agreed, during a specified forbearance period, to not exercise any right or remedy
under its credit agreement for specified defaults related to certain loan covenants that it had been unable to satisfy. Upon
closing of the Global Ethanol acquisition, Holdings II entered into an amendment to the existing credit agreement which
modifies existing covenants and extends the forbearance period to April 1, 2013. If any future defaults under Holdings II’s
credit agreement occur, the lenders are permitted to accelerate the maturity date on the outstanding balance. Notwithstanding
these actions, we cannot assure you that Holdings II will be able to comply with the new covenants going forward or obtain
additional waivers for non-compliance.
We may fail to realize all of the anticipated benefits of mergers and acquisitions that we have undertaken or may undertake
because of integration challenges.
We have increased the size of our operations significantly through mergers and acquisitions and intend to continue to
explore potential merger or acquisition opportunities. For example, in March 2011, we acquired our Otter Tail ethanol plant
with an annual production capacity of approximately 60 million gallons of ethanol, in June 2011, we acquired 2.0 million
bushels of grain storage capacity located in Hopkins, Missouri and in January 2012, we acquired 1.9 million bushels of grain
storage capacity located in St. Edward, Nebraska. The anticipated benefits and cost savings of such mergers and acquisitions
may not be realized fully, or at all, or may take longer to realize than expected. Acquisitions involve numerous risks, any of
which could harm our business, including:
difficulties in integrating the operations, technologies, products, existing contracts, accounting processes and
personnel of the target and realizing the anticipated synergies of the combined businesses;
risks relating to environmental hazards on purchased sites;
risks relating to acquiring or developing the infrastructure needed for facilities or acquired sites, including access to
rail networks;
difficulties in supporting and transitioning customers, if any, of the target company;
diversion of financial and management resources from existing operations;
the purchase price or other devoted resources may exceed the value realized, or the value we could have realized if
the purchase price or other resources had been allocated to another opportunity;
risks of entering new markets or areas in which we have limited or no experience, or are outside our core
competencies;
potential loss of key employees, customers and strategic alliances from either our current business or the business of
the target;
assumption of unanticipated problems or latent liabilities, such as problems with the quality of the target company’s
products; and
inability to generate sufficient revenue to offset acquisition costs and development costs.
We also may pursue growth through joint ventures or partnerships. Partnerships and joint ventures typically involve
restrictions on actions that the partnership or joint venture may take without the approval of the partners. These types of
provisions may limit our ability to manage a partnership or joint venture in a manner that is in our best interest but is opposed
by our other partner or partners.