Greenlight Capital Files 13D on BioFuel Energy (BIOF), Provides Bridge Loan ~ market folly

Monday, September 27, 2010

Greenlight Capital Files 13D on BioFuel Energy (BIOF), Provides Bridge Loan

David Einhorn's hedge fund Greenlight Capital just filed an amended 13D with the SEC regarding shares of BioFuel Energy Corp (BIOF). Per the filing, Greenlight shows a 39.8% ownership stake in BIOF with 11,853,500 shares. This is an increase in their position because back on June 30th, they owned 7,542,104 shares of BIOF. This marks a 57% boost in their position size. To see the rest of Greenlight's portfolio, head to a free sample of our Hedge Fund Wisdom newsletter.

BIOF is up around 35% today on news that the company entered a six month bridge loan agreement with Greenlight Capital and an affiliate of Dan Loeb's Third Point LLC for $19,420,620 with an interest rate of 12.5%, a maturity date of March 24th, 2011, and a funding fee of 4%. If the company does not pay off the loan, the hedge funds would be issued warrants exercisable for an aggregate of 15% of BIOF's equity capitalization on a fully diluted bases at an exercise price of $0.01 per share. Dan Loeb's Third Point owns 5,803,284 shares of the company, or a 25.7% ownership stake.

From the press release:

"The proceeds from the bridge loan were used to repay in full its working capital loans under its senior debt facility. In addition, the Company has entered into an agreement with Greenlight and Third Point pursuant to which it has agreed to conduct a rights offering in which all holders of its Common Stock and Class B Common Stock will be granted the right to purchase convertible preferred stock of the Company, with the goal of generating sufficient proceeds to repay the bridge loan and BioFuel Energy, LLC's subordinated debt and to make certain other payments."

Those interested can read the full filing here. Taken from Google Finance, BioFuel Energy Corp "produces and sells ethanol and its co-products (primarily distillers grain), through its two ethanol production facilities located in Wood River, Nebraska and Fairmont, Minnesota."

Check out the rest of Einhorn and Loeb's investments in our Hedge Fund Wisdom Newsletter. Receive a free sample here.

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