Lauren,
I hope you had a good weekend. We have reviewed the KBW second draft of the Credit Agreement circulated on October 7, and I am attaching the following on behalf of our client, Greenfield Agricultural Partners LLC, in connection with the proposed $80,000,000 senior secured asset-based revolving credit facility with Heartland Commerce Bank, N.A. as Administrative Agent:
1. **Credit Agreement — C&H Second Markup** (redline against the KBW second draft dated October 7, 2022) [credit-agreement-sc-second-markup.docx] 2. **Comment Letter — C&H Second Markup Issues List** [credit-agreement-second-markup-comment-letter.docx]
The comment letter walks through our positions in detail, but I wanted to flag the principal areas of focus in this markup:
- **Availability Reserves.** Greenfield's position remains that the initial availability reserve should be set at $3,500,000, reduced from HCB's originally proposed $5,000,000. As you'll recall, this was discussed on the October 3 call and we understood there was general alignment on the reduced figure, but the second draft did not fully reflect that agreed position. We have marked the relevant provisions accordingly.
- **Borrowing Base — Advance Rates.** We have continued comments on the crop-input inventory advance rate (70% of the lower of cost or market) and on the warehouse receipt valuation methodology, which we believe should be tied to the CBOT settlement price less applicable basis rather than the fixed-discount approach in the current draft.
- **Field Examination Fee Cap.** The Borrower's markup proposes a cap of $50,000 per examination, with a maximum of two (2) examinations per year at Borrower's expense outside a Trigger Period. During a Trigger Period, additional examinations would be at Borrower's expense without a cap.
- **Commodity Hedging Negative Pledge.** We have comments on the scope of this restriction. Greenfield needs the flexibility to hedge up to 80% of anticipated production without Agent consent, which is consistent with standard market practice for agricultural borrowers of this size.
- **Anti-Cash-Hoarding Provisions.** The markup includes Borrower's proposed revisions to these provisions.
Please refer to the attached comment letter for the full list of open items and our detailed commentary.
**Scheduling the Next Call**
We would like to schedule a negotiation call to work through the second markup and remaining open issues. Would the week of October 17 or, if schedules are tight, the week of October 24 work on your end? Ian Blackwood and Nina Vasquez (Greenfield's General Counsel) are both available on October 20 or 21. Could you check availability for Richard Whitfield and the HCB team, including Gregory Thorn and Allison Kuo? In addition to borrowing base items, we should plan to cover financial covenant issues on the call — specifically the springing FCCR, distribution baskets, and change of control provisions — so it would be helpful to have the full group. Please circulate proposed times when you can.
**Pryor & Associates Field Examination — Timing and Coordination**
We understand that Pryor & Associates LLC (Thomas Pryor's firm) has been engaged by HCB to conduct the field examination and inventory appraisal of Greenfield's crop inventory and receivables, and that the on-site work is scheduled to commence the week of October 17 at Greenfield's Des Moines headquarters (4100 Grand Prairie Boulevard, Suite 300) and select grain elevator sites. Could you confirm the following:
1. The exact start date for the Pryor on-site work. 2. Which elevator sites Pryor plans to visit. As you know, Greenfield operates fourteen (14) grain elevator facilities and three (3) regional distribution centers across Iowa, Illinois, and Indiana through its subsidiary, Greenfield Grain Storage LLC, so advance notice on site selection would be helpful for logistics. 3. The expected timeline for completion of the field exam and delivery of the appraisal report.
On the Greenfield side, Raymond Foss (VP of Operations) and Patricia Calloway (CFO) will serve as the primary contacts for scheduling site access and providing financial records to Pryor's team.
Coordination on timing is important because the initial borrowing base certificate will be a closing deliverable, and the eligible crop inventory component — 65% of NOLV per the proposed advance rate — will depend on Pryor's appraisal values. This is particularly significant given that we are in the peak seasonal inventory period (September through November), during which Greenfield estimates total crop inventory of approximately $125–$145 million. We want to make sure the borrowing base certificate preparation is sequenced appropriately with the appraisal findings, especially the NOLV determinations for eligible crop inventory.
**Ancillary Documents**
On a separate track, we are concurrently working on drafts of the Security Agreement, Guaranty, Pledge Agreement, and mortgage forms, and expect to circulate those separately in the coming weeks.
Please confirm receipt of the attachments, and feel free to reach out if you have any preliminary questions before we get the next call on the calendar. Happy to jump on the phone informally if that would be useful.
Best regards,
Sophie Tremblay Calderwood & Harkness LLP 150 North Michigan Avenue, Suite 3600 Chicago, Illinois 60601 T: (312) 555-4892 stremblay@calderwoodharkness.com
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