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Pinnacle Agriculture Reaches Agreement With Major Shareholders

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Pinnacle Operating Corp. has reached agreement with the majority of the holders of its First-Lien Term Loan and Second-Priority Notes on a financial recapitalization plan that will reduce Pinnacle’s overall debt, reduce cash interest costs, increase the company’s liquidity and strengthen its overall capital structure (“recapitalization”). The recapitalization is expected to reduce Pinnacle’s consolidated debt by approximately $200 million, reduce Pinnacle’s annual debt service costs by over $5 million and result in a capital infusion of more than $125 million into Pinnacle Agriculture Enterprises, LLC. The new capital investment will be provided by funds affiliated with Apollo Global Management, LLC, certain existing creditors of Pinnacle, certain members of the Pinnacle management team, and other new investors.

In connection with the recapitalization, Pinnacle has entered into: (i) an amendment to the First-Lien Term Loan with parties representing approximately 60% of the outstanding principal amount of its First-Lien Term Loan, and (ii) a Recapitalization Support Agreement with parties representing approximately 80% of the outstanding principal amount of the Second-Priority Notes.

“We have been diligently working with our financial advisors over the past few months to develop a longer-term financial plan for Pinnacle, exploring various options to improve our balance sheet and enhance our overall financial flexibility. We are pleased that a substantial majority of our creditors have already committed their support,” said Kenny Cordell, Pinnacle’s President and CEO. “We believe that the new capital investment, of over $125 million, demonstrates the confidence that our creditors and shareholders have in Pinnacle’s business plan and also positions Pinnacle to drive long-term value for all of the company’s key constituents, including its employees, customers and investors. Additionally, our management team is also investing new capital of approximately $1 million alongside the other investors.”

The Recapitalization Support Agreement, subject to the terms and conditions set forth therein, provides for new investment commitments of more than $125 million, backstopped by investment funds affiliated with Apollo, certain existing creditors of Pinnacle, as well as certain members of the Pinnacle management team. After the recapitalization, Apollo will remain the majority shareholder of Pinnacle.

Consents to the Recapitalization, to be effectuated through an exchange offer, will be sought from holders of the Second-Priority Notes pursuant to the terms and conditions that will be set forth in an offering memorandum, and consent solicitation. Extended First-Lien Term Loans will bear an interest at a rate of LIBOR + 5.50% per annum payable in cash, plus 1.75% per annum payable in kind. The amendment (and the Recapitalization) are conditioned upon, among other things, holders of no less than 90% of the aggregate principal amount of First-Lien Term Loans agreeing to such amendment.

Under the Recapitalization Support Agreement, the closing of the transaction will be conditioned upon, among other things, 95% of the aggregate principal amount of Pinnacle’s Second-Priority Notes being validly tendered and not withdrawn in the exchange offer. Additionally, in order to consummate the exchange, offer, Pinnacle will be seeking the maturity extension referenced above from its First-Lien Term Loan lenders, which has already been agreed to by approximately 60% of the outstanding principal amount of the First-Lien Term Loan, as well as a maturity extension from its asset based lenders. As long as the Recapitalization Support Agreement remains in effect, each of the parties to the agreement has agreed to use commercially reasonable efforts to support and complete the Recapitalization.

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