Houston-based Vertex Energy (NASDAQ:VTNR) Inc. has made significant amendments to its financial and intercreditor agreements, according to a recent SEC filing. The petroleum refining company, operating under the symbol NASDAQ:VTNR, disclosed several key changes to its financial structure and creditor arrangements.
On June 3, 2024, Vertex (NASDAQ:VRTX) Energy's wholly-owned subsidiary, Vertex Refining Alabama LLC, and its subsidiary guarantors, entered into a revised intercreditor agreement with Macquarie Energy North America Trading Inc. and Cantor Fitzgerald Securities, the administrative and collateral agent. This second amendment removed references to the RD Supply and Offtake Agreement Documents, which may influence the company's ability to modify existing financial agreements and impose certain restrictions during insolvency procedures.
Moreover, Vertex Refining and Macquarie consented to a temporary modification allowing the subsidiary to maintain unrestricted cash between $15 million and $25 million for up to three consecutive business days until June 18, 2024. Falling below this threshold would constitute a default under the Supply and Offtake Agreement.
Additionally, Vertex Refining, along with Vertex Energy and its subsidiary guarantors, obtained consent from lenders for a similar cash threshold variation under the Loan Agreement. This arrangement is also valid until June 18, 2024.
The company also reported on a May 23, 2024, waiver related to the termination of the RD Supply and Offtake Agreement and associated documents. This included maintaining a designated bank account post-termination and waiving a technical default caused by the agreement's termination.
On the following day, May 24, 2024, Vertex Energy obtained a consent and partial lien release, which allowed for the release of certain assets of Vertex Renewables and the engagement in specific transactions with Idemitsu Apollo Renewable Corporation. This consent was set to expire on June 17, 2024.
To further solidify these changes, an Omnibus Amendment was entered into on June 3, 2024, amending the terms of the May 24th Consent and extending its expiration to July 8, 2024. This amendment also clarified the release of security interests and certain definitions within the Loan Agreement.
These strategic financial moves, detailed in the SEC filing, reflect Vertex Energy's efforts to navigate its financial obligations and maintain operational flexibility. The company's SEC filing provides the foundational data for these updates.
In other recent news, Vertex Energy's shareholders have elected directors and ratified auditors for the upcoming fiscal year. This follows the company's strategic shift from renewable diesel production to conventional fuel production, a move expected to contribute an additional $40 million in fuel gross margin. Additionally, Vertex Energy secured a new off-take agreement for jet fuel, projected to enhance profitability by $10 million. The company reported an adjusted EBITDA of nearly $20 million in the first quarter of 2024.
In line with these developments, a Stifel analyst lowered the price target for Vertex Energy's shares from $4.00 to $1.50. The analyst maintained a Hold rating on the stock, anticipating that the fuel gross margin will dip in the second quarter of 2024 but will gradually increase in the second half of the year. These recent developments reflect Vertex Energy's response to market conditions and its strategic focus on conventional refinery operations.
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