UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the Quarterly Period Ended AugustMarch 31, 20082009

Commission File Number 001-32924

GREEN PLAINS RENEWABLE ENERGY, INC.
(Exact name of registrant as specified in its charter)

105 North 31^st9420 Underwood Avenue, Suite 103  100

Omaha, NE 6813168114

(Address of principal executive offices, andincluding zip code)

(402) 884-8700

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    S X. Yes        £. No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

      £.      Accelerated filerS.      Non-accelerated filer£ X.      Smaller reporting company£.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).       

£. Yes    Yes   XS. No

The number of shares of common stock, par value $0.001 per share, outstanding as of October 3, 2008April 30, 2009 was 7,822,02824,933,514 shares.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements

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GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

See accompanying notes to the consolidated financial statements.

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GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in thousands, except per share amounts)

See accompanying notes to the consolidated financial statements.

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GREEN PLAINS RENEWABLE ENERGY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

(unaudited and in thousands)

See accompanying notes to the consolidated financial statements.

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GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)

64

GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (unaudited

(unaudited and in thousands)

See accompanying notes to the consolidated financial statements.

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GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(unaudited)

1.

BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of BusinessReferences to the Company

References to “we,” “us,” “our”“our,” “Green Plains” or the “Company” in the consolidated financial statements and in these notes to the consolidated financial statements refer to Green Plains Renewable Energy, Inc., an Iowa corporation, and its subsidiaries. We were formedAs discussed below, the consolidated financial statements for the three-month period ended March 31, 2008 are those of VBV LLC and its subsidiaries.

Reverse Acquisition Accounting

VBV LLC (“VBV”) and its subsidiaries became wholly-owned subsidiaries of the Green Plains Renewable Energy, Inc. pursuant to constructa merger on October 15, 2008. Under the purchase method of accounting in a business combination effected through an exchange of equity interests, the entity that issues the equity interests is generally the acquiring entity. In some business combinations (commonly referred to as reverse acquisitions), however, the acquired entity issues the equity interests. Statement of Financial Accounting Standard (“SFAS”) No. 141, “Business Combinations,” requires consideration of the facts and operate dry mill, fuel grade ethanol production facilities. Ethanol iscircumstances surrounding a renewable, environmentally clean fuel sourcebusiness combination that is produced at numerous facilities ingenerally involve the United States, mostly inrelative ownership and control of the Midwest. Inentity by each of the U.S., ethanol is produced primarily from corn and then blended with unleaded gasoline in varying percentages. To add shareholder value, we are seeking to expand our business operations beyond ethanol production to integrate strategic agribusiness and ethanol distribution services (see Note 2 relatedparties subsequent to the Aprilmerger. Based on a review of these factors, the October 2008 acquisition of Great Lakes Cooperative’s agribusiness assets and Note 13 related to the pending merger with VBV LLC)(the “Merger”) was accounted for as a reverse acquisition (i.e., Green Pl ains was considered the acquired company and VBV was considered the acquiring company).

ConstructionAs a result, Green Plains’ assets and liabilities as of October 15, 2008, the date of the Merger closing, have been incorporated into VBV’s balance sheet based on the fair values of the net assets acquired, which equaled the consideration paid for the acquisition. SFAS No. 141 also requires an allocation of the acquisition consideration to individual assets and liabilities including tangible assets, financial assets, separately recognized intangible assets, and goodwill. Further, the Company’s operating results (post-Merger) include VBV’s operating results prior to the date of closing and the results of the combined entity following the closing of the Merger. Although VBV was considered the acquiring entity for accounting purposes, the Merger was structured so that VBV became a wholly-owned subsidiary of Green Plains Renewable Energy, Inc.

Since the Merger occurred toward the end of our first ethanol plant, located in Shenandoah, Iowa, began in April 2006,fiscal year and operations commenced at the plant in August 2007. Construction began in August 2006 oninvolved complex legal and accounting issues, Green Plains performed a second plant located in Superior, Iowa. The Superior plant began start-up operations, which includes grinding corn and initiation of fermentation, in early July 2008. Bothtentative allocation of the above-mentioned ethanol production facilitiespurchase price using preliminary estimates of the values of the assets and liabilities acquired. We have expected production capacityengaged an expert to assist in the determination of 55 million gallons per year per plant. At capacity each plant is expectedthe purchase price allocation for purposes of SFAS No. 141. We believe the final allocation will be determined during 2009 with prospective adjustments recorded to on an annual basis, consume approximately 20 million bushelsour financial statements at that time, if necessary, in accordance with SFAS No. 141. A true-up of corn and produce approximately 55 million gallons of fuel-grade, undenatured ethanol, and approximately 175,000 tons of by-product known as distillers grains.the purchase price allocation could result in gains or losses recognized in our consolidated financial statements in future periods.

We sell ethanol and distillers grains in-house and via third-party brokers. Contractually, these third-party brokers are responsible for subsequent sales, marketing, and shippingChange in Fiscal Year End

Effective April 1, 2008, the Company changed its fiscal year end from March 31 to December 31 to more closely align our year end with that of the ethanol and distillers grains. We have contracted with Renewable Products Marketing Group, LLC, (“RPMG”), an independent broker, to sell the ethanol produced at the facilities. In May 2008, we provided notice to RPMG that we intend to terminatemajority of our ethanol marketing contract with respect to the Shenandoah plant effective September 30, 2008, after which we will perform Shenandoah ethanol sales in-house.

Our Shenandoah ethanol plant produces modified wet and dried distillers grains, and our Superior ethanol plant produces wet and dried distillers grains. We had previously entered into exclusive marketing agreements with CHS Inc., a Minnesota cooperative corporation, for the sale of dried distillers grains produced at the Shenandoah and Superior plants. The agreement with CHS Inc. related to the Shenandoah plant terminated on July 1, 2008. The Shenandoah ethanol plant currently markets its modified wet and dried distillers grains in-house and via third-party brokers (other than CHS Inc.). The Superior ethanol plant currently markets wet distillers grains in-house. CHS Inc. continues to market dried distillers grains produced at the Superior ethanol plant.peer group.

Consolidated Financial Statements

In the consolidated financial statements and the notes thereto, all references to the three-month period ended March 31, 2008 are related to VBV and its subsidiaries as the predecessor company pursuant to reverse acquisition accounting rules. Although pre-merger Green Plains had been producing ethanol since August 2007, under reverse acquisition accounting rules, the merged Company’s consolidated financial statements reflect VBV’s results as a development stage company (from inception on September 28, 2006 until September 2008) and as an operating company since September 2008. Accordingly, the Company’s operating results (post-Merger) include the operating results of VBV and its subsidiaries prior to the date of the Merger and the results of the combined entity following the closing of the Merger.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.

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The accompanying consolidated balance sheet as of November 30, 2007,December 31, 2008, which has been derived from our audited consolidated financial statements as filed in our annual report for the transition period then ended November 30, 2007, and the unaudited interim consolidated financial statements, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), and include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S.accounting principles generally accepted accounting principlesin the United States (“GAAP”) have been omitted pursuant to those rules and regulations. Certain amounts previously reported have been reclassified to conform to the current period presentation. We moved from a development stage company t o an operating entity during the quarter ended August 31, 2007. The consolidated financial statements at AugustMarch 31, 2008,2009, and for the threethree-months ended March 31, 2009 and nine months ended August 31, 2008 and 2007,200 8, are unaudited and reflect all adjustments of a normal recurring nature, except as otherwise disclosed herein, which are, in the opinion of management, necessary for a fair presentation, in all material respects, of the consolidated financial position, results of operations and cash flows for the interim periods. The results of the interim periods are not necessarily indicative of the results for the full year. The consolidated financial statements should be read in conjunction with the consolidated financial statements included in our Form 10-K as filed with the SEC and notes thereto and risk factors contained therein for the fiscal yearnine-month transition period ended November 30, 2007.

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On April 3, 2008, we completed our merger with Great Lakes Cooperative (“Great Lakes”), which is discussed in further detail in Note 2. Upon closing the merger with Great Lakes, Green Plains Grain Company LLC (“GP Grain”), a wholly-owned subsidiary of the Company, assumed Great Lakes’ assets and liabilities, with the exception of certain investments in regional cooperatives that were excluded from the merger. Opening balances, and operating activities of GP Grain since closing, are included in the consolidated financial statements as of and for the three and nine months ended AugustDecember 31, 2008.

Use of Estimates in the Preparation of Consolidated Financial Statements

The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

ConcentrationsDescription of Credit RiskBusiness

Green Plains was formed in June 2004 to construct and operate dry mill, fuel grade ethanol production facilities. Ethanol is a renewable, environmentally clean fuel source that is produced at numerous facilities in the United States, mostly in the Midwest. In the U.S., ethanol is produced primarily from corn and then blended with unleaded gasoline in varying percentages.

To add shareholder value, Green Plains expanded its business operations beyond ethanol production to integrate a full-service grain and agronomy business (via the April 2008 acquisition of Great Lakes Cooperative), ethanol marketing services, (see Note 3 related to the October 2008 merger between Green Plains and VBV, which provided additional ethanol production and marketing services) and terminal and distribution assets (see Note 4 related to the January 2009 acquisition of majority interest in Blendstar LLC, a biofuel terminal operator). As discussed above, under reverse acquisition accounting rules, VBV was considered the acquiring company in the October 2008 merger.

VBV was formed in September 2006 to capitalize on biofuels opportunities available within the United States. The goal was to create a company in the ethanol business with an integrated network combining production, distribution and marketing. VBV purchased controlling interest in two development stage ethanol plants: Indiana Bio-Energy, LLC, now known as Green Plains Bluffton LLC, and Ethanol Grain Processors, LLC, now known as Green Plains Obion LLC. Both plants were designed as dry mill, natural gas fired ethanol plants with estimated production capacity of 110 million gallons per year of fuel grade ethanol.

Operations commenced at our Shenandoah, IA plant in August 2007, and at our Superior, IA plant in July 2008. Each of these ethanol plants has expected production capacity of 55 million gallons per year (“mmgy”). In September 2008 and November 2008, respectively, the Bluffton, IN and Obion, TN facilities commenced ethanol production activities. Prior to the commencement of ethanol production at the Bluffton plant, VBV had no significant revenue-producing operations and had historically incurred net losses from operations during its development stage. At full capacity, the combined ethanol production of our four facilities is 330 million gallons per year. Processing at full capacity will consume approximately 120 million bushels of corn and produce approximately 1,020,000 tons of distillers grains.

The Company also has an in-house fee-based marketing business, Green Plains Trade Group LLC (“Green Plains Trade”), a wholly-owned subsidiary of the Company, which provides ethanol marketing services to other producers in the ethanol industry. We have entered into several ethanol marketing agreements with third parties, pursuant to which the Company has agreed to market substantially all of the ethanol that is expected to be produced by such parties on an annual basis. Annual production from these third-party plants is expected to be approximately 305 million gallons. Our plan is to expand our third-party ethanol marketing operations. Green Plains Trade is also now responsible for the sales, marketing and distribution of all ethanol produced at our four production facilities.

In April 2008, Green Plains completed the normal courseacquisition of business, we are exposed to credit risk resulting from the possibilityGreat Lakes Cooperative, a full-service cooperative that a loss may occur from the failure of another party to perform according to the terms of a contract. Concentrations of credit risk exist related to our accounts receivable since we have generally sold nearly all of our ethanol and distillers grains to third-party brokers. We have increased in-house sales of ethanol and distillers grains, which resultsspecializes in credit risks from new large customers. We are also exposed to credit risk resulting from sales of grain, to large commercial buyers, including other ethanol plants, which we continually monitor. Although payments are typically received within ten days from the date of sale for ethanol and distillers grains, we continually monitor this credit risk exposure. In addition, we may prepay for or make deposits on undelivered inventories. Concentrations of credit risk with respect to inventory advances are primarily with a few major suppliers of petroleum products and agricultural inputs.

Allowance for Doubtful Accounts

Bad debts are provided for on the reserve method based on historical experience and management’s evaluation of outstanding receivables at the end of the fiscal period.

Inventories

Within the Ethanol segment, corn for ethanol operations, ethanol and distillers grains inventories are stated at the lower of average cost (determined monthly) or market.

Grain inventories in the Agribusiness segment include readily-marketable physical quantities of grain, forward contracts to buy and sell grain, and exchange traded futures and option contracts (all stated at market value). The futures and options contracts, which are used to hedge the value of both owned grain and forward contracts, are considered derivatives under Statement of Financial Accounting Standard (“SFAS”) No. 133, as amended, “Accounting for Derivative Instruments and Hedging Activities.” All Agribusiness grain inventories are marked to the market price with changes reflected in cost of goods sold. The forward contracts require performance in future periods. Contracts to purchase grain from producers generally relate to the current or future crop years for delivery periods quoted by regulated commodity exchanges. Contracts for the sale of grain to processors or other consumers generally do not extend beyond one year. Th e terms of contracts for the purchase and sale of grain are consistent with industry standards.

Merchandiseagronomy, feed and petroleum products inventorieswith seven locations in northwestern Iowa. Now known as Green Plains Grain Company LLC (“Green Plains Grain”), this business complements the Agribusiness segment are valued atethanol plants in its grain handling and marketing, as well as grain procurement required in ethanol processing.

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In January 2009, the lowerCompany acquired majority interest in Blendstar LLC, a Houston-based biofuel terminal operator with six facilities in five states. Green Plains owns 51% of cost (first-in, first-out) or market price.Blendstar (seeNote 4 – Acquisition for further discussion related to this acquisition).

Goodwill

Goodwill represents the excessThe Company believes that as a result of the purchase price2008 mergers and the January 2009 Blendstar acquisition, the combined enterprise is a stronger, more competitive company capable of an acquired entity over the fair value of assets acquiredachieving greater financial strength, operating efficiencies, earning power, access to capital and liabilities assumed. Goodwill is not amortized, but is reviewed for impairment annually or more frequently if certain impairment conditions arise.growth than could have been realized previously.

Revenue Recognition

We recognize revenue when all of the following criteria are satisfied: persuasive evidence of an arrangement exists; risk of loss and title transfer to the customer; the price is fixed and determinable; and collectability is reasonably assured.

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We sellPreviously, the Company sold ethanol and distillers grains in-house and via third-party brokers,marketers, who arewere our customers for purposes of revenue recognition. Specifically, Green Plains Superior LLC, Green Plains Bluffton and Green Plains Obion each had contracted with independent marketers to purchase all of their ethanol production. These third-party brokers aremarketers were responsible for subsequent sales, marketing, and shipping of the ethanol and distillers grains. Accordingly, once the ethanol or distillers grains arewere loaded into rail cars and bills of lading arewere generated, the criteria for revenue recognition arewere considered to be satisfied and sales arewere recorded. As part of our contractsThe agreements with these third-party brokers, shipping costs incurred by them reducemarketers terminated in January 2009 and February 2009. Green Plains Trade is now responsible for the sales, price they pay us.marketing and distribution of all ethanol produced at the Company’s four production facilities. For sales of ethanol and distillers grains by G reen Plains Trade, sales are recognized when title to the product and risk of loss transfer to the customer. Under our contract with CHS, Inc., certain shipping costs for dried distillers grains are incurred directly by us, which are reflected in cost of goods sold. For distillers grains sold to local farmers, bills of lading are generated and signed by the driver for outgoing shipments, at which time sales are recorded. Revenues from Blendstar, which offers ethanol transload and splash blending services, are recognized as these services are rendered.

The Company routinely enters into fixed-price, physical-delivery ethanol sales agreements. In certain instances, the Company intends to settle the transaction by open market purchases of ethanol rather than by delivery from its own production. These transactions are reported net as a component of revenues.

Sales of agricultural commodities, fertilizers and other similar products are recognized when title to the product and risk of loss transfer to the customer, which is dependent on the agreed upon sales terms with the customer. These sales terms provide for passage of title either at the time shipment is made or at the time the commodity has been delivered to its destination and final weights, grades and settlement prices have been agreed upon with the customer. Shipping and handling costs are included as a component of cost of goods sold.Revenues from grain storage are recognized as services are rendered. Revenues related to grain merchandising are presented gross.

Cost of Goods Sold

Cost of goods sold includes costs for direct labor, materials and certain plant overhead costs. Direct labor includes all compensation and related benefits of non-management personnel involved in the operation of our ethanol plants. Grain purchasing and receiving costs, other than labor costs for grain buyers and scale operators, are also included in cost of goods sold. Direct materials consist of the costs of corn feedstock, denaturant, and process chemicals. Corn feedstock costs include realized and unrealized gains and losses on related derivative financial instruments, inbound freight charges, inspection costs and internal transfer costs. Plant overhead costs primarily consist of plant utilities, plant depreciation, sales commissions and outbound freight charges. Shipping costs incurred directly by us, including railcar lease costs, are also reflected in cost of goods sold. Throughput and unloading fees incurred by Blendstar are recognized as these se rvices are rendered.

We use exchange-traded futures and options contracts to minimize the effects of changes in the prices of agricultural commodities on our agribusiness grain inventories and forward purchase and sales contracts. Exchange-traded futures and options contracts are valued at quoted market prices. Forward purchase contracts and forward sale contracts are valued at market prices, where available, or other market quotes adjusted for differences, primarily transportation, between the exchange-traded market and the local markets on which the terms of the contracts are based. Changes in the market value of inventories, forward purchase and sale contracts, and exchange-traded futures and options contracts, are recognized in earnings as a component of cost of goods sold. These contracts are predominantly settled in cash. We are exposed to loss in the event of non-performance by the counter-party to forward purchase and forward sales contracts.

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Recent Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141R, “Business Combinations,” which replaces SFAS No. 141. SFAS No. 141R requires the acquirer to recognize the identifiable assets acquired, liabilities assumed, contingent purchase consideration and any noncontrolling interest in the acquiree at fair value on the date of acquisition. In April 2009, the FASB issued Final Staff Position (“FSP”) 141R-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies,” which amends SFAS No. 141R by establishing a model to account for certain pre-acquisition contingencies. Under FSP 141R-1, the acquirer is required to recognize, at fair value, an asset acquired or a liability assumed in a business combination that arises from a contingency if the acquisition-date fair value of that asset or liability can be determined durin g the measurement period. If the acquisition-date fair value cannot be determined, then the acquirer should follow the recognition criteria in SFAS No. 5, “Accounting for Contingencies,” and FASB Interpretation No. 14, “Reasonable Estimation of the Amount of a Loss – an interpretation of FASB Statement No. 5.” SFAS No. 141R and FSP 141R-1 are effective for annual reporting periods beginning January 1, 2009, and will apply prospectively to business combinations completed on or after that date. The impact of the adoption of SFAS No. 141R and FSP 141R-1 will depend on the nature of acquisitions completed after that date.

In January, 2009 the FASB issued FSP 107-1 and Accounting Principles Board (“APB”) Opinion No. 28-1, “Interim Disclosures about Fair Value of Financial Instruments.” These expand the fair value disclosures required for all financial instruments within the scope of SFAS No. 107, “Disclosures about Fair Value of Financial Instruments,” to interim periods. FAS 107-1 and APB Opinion No. 28-1 are effective for interim periods ending after June 15, 2009, and may result in increased disclosures in our interim periods.

2.  FAIR VALUE DISCLOSURES

Effective April 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 establishes a hierarchy for inputs used in measuring fair value. The following methods and assumptions were used in estimating the fair value of the Company’s financial instruments (which are separate line items in the consolidated balance sheet):

Level 1 – Market participant assumptions developed based on market data obtained from sources independent of the reporting entity (observable inputs):

Cash and cash equivalents – The carrying value of cash, cash equivalents and marketable securities represents their fair value due to the high liquidity and relatively short maturity of these instruments. Marketable securities considered cash equivalents are invested in low-risk interest-bearing government instruments and bank deposits, and the carrying value is determined by the financial institution where the funds are held.

 Commodity inventories and contracts – Exchange-traded futures and options contracts are valued at quoted market prices. Forward purchase contracts and forward sale contracts are valued at market prices where available or other market quotes, adjusted for differences, primarily transportation, between the exchange traded market and the local markets on which the terms of the contracts are based. Changes in the market value of inventories, forward purchase and sale contracts, and exchange-traded futures and options contracts are recognized in earnings as a component of cost of goods sold. These contracts are predominantly settled in cash. We are exposed to loss in the event of non-performance by the counter-party to forward purchase and forward sales contracts.

Operating ExpensesDerivative financial instruments– These instruments are valued at fair market value based upon information supplied by the broker at which these instruments are held. The fair value is determined by the broker based on closing quotes supplied by the Chicago Board of Trade or other commodity exchanges. The Chicago Board of Trade is an exchange with published pricing.

OperatingLevel 2 – The reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs):

Accounts receivable, accounts payable and accrued liabilities– The carrying value of accounts receivable, accounts payable and accrued expenses are primarilyreasonable estimates of their fair value due to the short duration of these items.

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3.  BUSINESS COMBINATION

In May 2008, definitive merger agreements were entered into by Green Plains and VBV. At that time, VBV held majority interest in two companies that were constructing ethanol plants. These two companies were Indiana Bio-Energy, LLC (“IBE”) of Bluffton, IN, an Indiana limited liability company which was formed in December 2004; and Ethanol Grain Processors, LLC, (“EGP”) of Obion, TN, a Tennessee limited liability company which was formed in October 2004. The Merger was completed on October 15, 2008. VBV and its subsidiaries became wholly-owned subsidiaries of Green Plains. Pursuant to the terms of the Merger, equity holders of VBV, IBE and EGP received Green Plains common stock and options totaling 11,139,000 shares. Upon closing of the Merger, VBV, IBE and EGP were merged into subsidiaries of the Green Plains. IBE has been renamed as Green Plains Bluffton LLC and EGP has been renamed as Green Plains Obion LLC. Simultaneously with t he closing of the Merger, NTR plc (“NTR”), a leading international developer and operator of renewable energy and sustainable waste management projects and majority equity holder of VBV prior to the Merger, through its wholly-owned subsidiaries, invested $60.0 million in Green Plains common stock at a price of $10 per share, or an additional 6.0 million shares. With this investment, NTR is our largest shareholder. This additional investment is being used for general corporate purposes and administrative expensesto finance future acquisitions.

4.  ACQUISITION

On January 20, 2009, the Company acquired majority interest in Blendstar LLC, a biofuel terminal operator. The transaction involved a membership interest purchase whereby Green Plains acquired 51% of Blendstar from Bioverda U.S. Holdings LLC, an affiliate of NTR, for employee salaries, incentivesa total of $8.9 million. The purchase price is comprised of a $7.5 million cash payment and benefits; office expenses; director compensation;three future annual payments of $0.5 million, beginning in July 2009. These future annual payments are recorded in debt at a present value of $1.4 million. The allocation of the purchase price to specific assets and professional fees for accounting, legal, consulting,liabilities was based, in part, on outside appraisals of the fair value of certain assets acquired. Approximately $21.3 million is attributed to assets acquired, of which $5.3 million was allocated to goodwill and investor relations activities;$3.1 million to intangible assets that are subject to amortization. Liabilities assumed total approximately $4.8 million. In addition, $7.6 million was recorded as noncontrolling interest in the purchase price allocation.

The acquisition of Blendstar is a strategic investment within the ethanol value chain. Blendstar operates terminal facilities in Oklahoma City, Little Rock, Nashville, Knoxville, Louisville and Birmingham and has announced commitments to build terminals in two additional cities. Blendstar facilities currently have splash blending and full-load terminal throughput capacity of over 200 million gallons per year. Blendstar’s operations are included in the Marketing and Distribution segment.

5.  SEGMENT INFORMATION

With the closing of the Merger, the Company’s chief operating decision makers began to review its operations in three separate operating segments. These segments are: (1) production of ethanol and related by-products (which we collectively refer to as “Ethanol Production”), (2) grain warehousing and marketing, as well as depreciationsales and amortization costs.  related services of agronomy and petroleum products (which we collectively refer to as “Agribusiness”) and (3) marketing and distribution of Company-produced and third-party ethanol and distillers grains (which we refer to as “Marketing and Distribution”).

Recent Accounting PronouncementsVBV was formed on September 28, 2006. Prior to completion of the Merger, VBV had controlling interests in two development stage ethanol plants. Operations commenced at these plants in September 2008 and November 2008, respectively. Accordingly, VBV, the acquiring entity for accounting purposes, was a development stage company until September 2008.

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The following are revenues, gross profit, operating income and total assets for our operating segments for the periods indicated (in thousands):

Previously, Green Plains Superior, Green Plains Bluffton and Green Plains Obion had contracted with third-party marketers to purchase all of their ethanol production. Under the agreements, we sold our ethanol production exclusively to them at a price per gallon based on a market price at the time of sale, less certain marketing, storage, and transportation costs, as well as a profit margin for each gallon sold. These agreements terminated in January and February 2009. Following completion of the Merger and prior to the termination of the agreements, nearly all of our ethanol that was sold to one of the third-party marketers was repurchased by Green Plains Trade, reflected in the Marketing and Distribution segment, and resold to other customers. Corresponding revenues and related costs of goods sold were eliminated in consolidation (see intersegment eliminations above).

6.  INVENTORIES

The components of inventories are as follows (in thousands):

7.  FINANCIAL DERIVATIVE INSTRUMENTS

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities.” The new standard is intended to improveSFAS No. 161 requires expanded disclosures regarding the location and amounts of derivative instruments in an entity’s financial reporting aboutstatements, how derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects onrelated hedged items are accounted for under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” and how derivative instruments and related hedged items affect an entity’s financial position, financial performance,operating results and cash flows. The adoption of SFAS No. 161 achieves these improvements by requiring disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also provides more information aboutdid not have an entity’s liquidity by requiring disclosure of derivative features that are credit risk related. Finally, it requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. We are currently evaluating the impact that this statement will have on our consolidated financial statements.

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2.  ACQUISITION

On April 3, 2008, we completed our merger with Great Lakes, a full-service cooperative that specializes in grain, agronomy, feedposition and petroleum products in northwestern Iowa and southwestern Minnesota. Upon closing the merger with Great Lakes, Green Plains Grain Company LLC, a wholly-owned subsidiaryresults of the Company, assumed Great Lakes’ assets and liabilities, with the exception of certain investments in regional cooperatives that were excluded from the merger. GP Grain has grain storage capacity of approximately 15.8 million bushels that will be used to support our grain merchandising activities, as well as our Superior ethanol plant operations. We believe that incorporating Great Lakes’ businesses into our operations increases efficiencies and reduces commodity price and supply risks. Pursuant to the merger agreement, all outstanding Great Lakes common and preferred stock was exchanged for an aggregate of 550,352 shares of our common stock and approximately $12.5 million in cash. The merger and the related working capital that may be associated with acquiring and storing significant quantities of corn required additional debt financing of approximately $56.8 million, including an operating line of credit.

The allocation of the purchase price to specific assets and liabilities was based, in part, upon outside appraisals of the fair value of certain assets acquired. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed in connection with the acquisition (in thousands):

A reconciliation of consideration paid to the allocation of the purchase price to specific assets and liabilities is as follows (in thousands):

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TheTo minimize the risk and the effects of the volatility of commodity price changes primarily related to corn, natural gas and ethanol, the Company uses various derivative financial instruments, including exchange-traded futures, and exchange-traded and over-the-counter options contracts. We monitor and manage this exposure as part of our overall risk management policy. As such, we seek to reduce the potentially adverse effects that the volatility of these markets may have on our operating results of GP Grain beginning April 3, 2008, have been includedresults. We may take positions in these commodities as one way to mitigate risk. While the Company attempts to link its hedging activities to purchase and sales activities, there are situations where these hedging activities can themselves result in losses.  

SFAS No. 133 requires companies to evaluate their contracts to determine whether the contracts are derivatives as certain derivative contracts that involve physical delivery may be exempted from SFAS No. 133 treatment as normal purchases or normal sales. Commodity forward contracts generally qualify for the normal purchase or sales exception under SFAS No. 133 and are therefore not subject to its provisions as they will be expected to be used or sold over a reasonable period in the consolidatednormal course of business.

Derivative contracts that do not meet the normal purchase or sales criteria are therefore brought to market with the corresponding gains and losses recorded in operating income unless the contracts qualify for hedge accounting treatment. The Company does not classify any commodity derivative contracts as hedging contracts for purposes of SFAS No. 133. These derivative financial results of the Company for the three and nine months ended August 31, 2008.instruments are recognized in other current assets or liabilities at fair value.  

The following represents unaudited pro forma combined resultsfinancial statement locations of operations of the Company and Great Lakesderivatives designated as if the acquisition had occurred as of December 1, 2006 (in thousands, except per share amounts):

The pro forma information for the three-month period ended August 31, 2008 presents the results of operations for the Company for its third quarter ended August 31, 2008 as Great Lakes’ operations for a full three-month period are already included in those amounts. The pro forma information for the three-month period ended August 31, 2007 combines the results of operations for the Company for its third quarter ended August 31, 2007 and Great Lakes for its third quarter ended May 31, 2007, after giving effect to the pro forma adjustments. The pro forma information for the nine-month period ended August 31, 2008 combines the results of operations for the Company for its nine-month period ended August 31, 2008 and Great Lakes for the period from December 1, 2007 to April 3, 2008, after giving effect to the pro forma adjustments. The pro forma information for the nine-month period ended August 31, 2007 combines the results of operations for the Company f or its nine-month period ended August 31, 2007 and Great Lakes for its nine-month period ended May 31, 2007, after giving effect to the pro forma adjustments.

The pro forma financial information includes historical Great Lakes revenues and expenses, with adjustments to the accounting base for interest expense, depreciation, amortization and income taxes. The pro forma financial information is shown for illustrative purposes only and is not necessarily indicative of future results of operations of the Company or the results of operations of the Company that would have actually occurred had the transaction been in effect for the periods presented.

3.  INVENTORIES

The Company produces dry mill, fuel grade ethanol; operates a licensed public grain warehouse; and sells seed, feed, fertilizer, chemicals and petroleum products. The components of inventorieshedging instruments under SFAS No. 133 are as follows (in thousands):

A substantial portion of the corn owned will be used in the production of ethanol. Seed, feed, fertilizer, chemicals and petroleum, as well as grain, other than corn, are held for sale. Distillers grains, a high-protein, high-energy animal feed supplement, is the principal by-product of the ethanol production process.

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4.8.  PROPERTY AND EQUIPMENT

The components of property and equipment are as follows (in thousands):

Plant and building costs are related to our Shenandoah ethanol production facilities, other related assets that were put into use during fiscal 2007, and GP Grain grain storage facilities. We began depreciating Shenandoah ethanol production facility assets (including the plant and administration building, railroad track and equipment, land improvements, certain computer and software, and certain other assets) at the beginning of the fourth quarter of fiscal 2007. The Superior plant began its ethanol-production operations in early July 2008. Accordingly, we started depreciating Superior ethanol production facility assets in July 2008, using estimates of expected lives of assets included in construction-in-progress. Completed not-classified plant costs will be allocated to their specific asset categories upon completion of a cost segregation study related to these assets during the remainder of fiscal 2008.

5.  OTHER ASSETS

The components of other assets are as follows (in thousands):

Recoverable Rail Line Costs

To secure rail access to our Shenandoah ethanol plant, we entered into a contract with Burlington Northern Santa Fe (“BNSF”) that required us to pay rail line renovation costs for the spur track from Red Oak, Iowa to the plant. Included in the contract is a provision for shipping cost rebates of up to $3.5 million provided sufficient rail traffic, measured annually, is achieved on the line. The term of the contract is nine years commencing from the date of our first billed shipment from the Shenandoah plant, which was late August 2007. The rebates are recorded as a reduction to the recoverable rail line costs until the full amount has been recovered. If the track is sold by BNSF, the agreement provides for repayment to us for any portion of the unrecovered renovation costs. We review this asset for impairment whenever events or changes in circumstances indicate that the carrying amount of these rail line costs may not be recoverable.  

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6.  ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The components of accounts payable and accrued expenses are as follows (in thousands):

7.9.  LONG-TERM DEBT AND LINES OF CREDIT

The components of long-term debt are as follows (in thousands):

Scheduled long-term debt repayments are as follows (in thousands):

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GPRE Shenandoah LLCLoan Terminology

On March 31, 2008, we entered into an Asset Transfer Agreement, transferring all assets associated withRelated to loan covenant discussions below, the Shenandoah ethanol plant, including real estate, equipment, inventories and accounts receivable, to a wholly-owned subsidiary, GPRE Shenandoah LLC. Pursuant to the Asset Transfer Agreement, GPRE Shenandoah LLC also assumed all liabilities related to the plant and its operations. On March 31, 2008, GPRE Shenandoah LLC executed a Master Loan Agreement and corresponding security agreements (individually and collectively, the “2008 Shenandoah Loan Agreement”) with Farm Credit Services of America, FLCA (“FCSA”). GPRE Shenandoah LLC assumed the Master Loan Agreement, originally dated January 30, 2006, as subsequently supplemented and amended (individually and collectively, the “2006 Shenandoah Loan Agreement”), between the Company and FCSA. All terms of the 2006 Shenandoah Loan Agreement remain in effect except as specificall y modified by the 2008 Shenandoah Loan Agreement. Under the 2006 Shenandoah Loan Agreement, the Company’s assets served as security. As modified in 2008 Shenandoah Loan Agreement, GPRE Shenandoah LLC’s assets are substituted as security. As a condition of the 2008 Shenandoah Loan Agreement, on March 31, 2008, we repaid $2.0 million in satisfaction of the free cash flow repayment requirement for fiscal 2008.

The terms of the Economic Development Grant were met and the grant was forgiven during the third quarter of fiscal 2008.

On October 10, 2008, in conjunction with the anticipated merger with VBV LLC and its subsidiaries, the net worth covenant of the 2008 Shenandoah Loan Agreement, was amended to modify the definition of net worth as determinedfollowing definitions will apply (all calculated in accordance with GAAP to eliminate the net adjustment to the carrying value of assets and liabilities resulting from the merger with VBV LLC and its subsidiaries, if completed. GPRE Shenandoah agreed to pay its next two quarterly scheduled loan payments immediately upon closing the merger.

Superior Ethanol, L.L.C.

On May 15, 2008, Superior Ethanol, L.L.C., a wholly-owned subsidiary of Green Plains Renewable Energy, Inc., executed Amendments to the Master Loan Agreement, the Construction and Term Loan Supplement, and the Construction and Revolving Term Loan Supplement with Farm Credit Services of America, FLCA  (individually and collectively, the “Loan Amendments”). The Loan Amendments modify the Master Loan Agreement, originally dated March 15, 2007, as subsequently supplemented and amended, which provided construction and working capital for our Superior, Iowa ethanol production facilities.

The Loan Amendments set forth a number of changes, including the following:consistently applied):

·

Superior Ethanol must maintain a net worth of not less than $58.1 million beginning May 31, 2008, increasing to at least $61.6 million effective November 30, 2008.Working capital – current assets over current liabilities.

·

Superior Ethanol must provide evidence of $3.3 million in additional equity by no later than May 15, 2008, for an aggregateNet worth – total equity investment of not less than $61.0 million.assets over total liabilities plus subordinated debt.

·

The commitment of the Construction and Term Loan Supplement is extended through July 15, 2008, or such later date as authorized by the lender.

The Loan Amendments reflected changes in circumstances as a result of the anticipated completion of the Superior, Iowa ethanol production facility.

As of August 31, 2008, Superior Ethanol’s working capital was less than the balance required by the Superior Loan Agreement. As a result of conversion by the Company of intercompany payables to contributed capital and additional investment by the Company in this wholly-owned subsidiary in September 2008, the lenders provided a waiver of our required compliance with the working capital covenant as of that date. Since we were able to promptly become compliant with this working capital covenant, management does not view temporary non-compliance with this covenant to be a significant indicator of future liquidity concerns.

On October 10, 2008, in conjunction with the anticipated merger with VBV LLC and its subsidiaries, theTangible owner’s equity – net worth covenant of the Superior Loan Agreement, was amended to modify the definition of net worth as determined in accordance with GAAP to eliminate the net adjustment to the carrying value of assets and liabilities resulting from the merger with VBV LLC and its subsidiaries, if completed. Superior Ethanol agreed to pay its next two quarterly scheduled loan payments immediately upon closing the merger.divided by total assets.

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Green Plains Renewable Energy, Inc.·

Debt service coverage ratio – (1) net income (after taxes), plus depreciation and amortization, divided by (2) all current portions of regularly scheduled long-term debt for the prior period (previous year end).

We entered into various fixed-priced corn purchase and sale contracts with Great Lakes subsequent to the execution of the original merger agreement in August 2007. At March 31, 2008, we had open purchase contracts for 11.9 million bushels of corn from April 2008 through February 2009. The Company and Great Lakes agreed to accelerate the sale of the corn and the related payment for 4.0 million bushels. Corn not already used is being stored in GP Grain’s elevators until required for our ethanol operations or sold to others. To finance the payment of this grain, we entered into a Business Loan Agreement, Commercial Pledge Agreement, and two Promissory Notes with Americana Community Bank (individually and collectively, the “Green Plains Loan Agreements”) totaling $16.0 million. Americana Community Bank received a loan origination fee of $450,000. Great Lakes utilized the proceeds from the grain sales to repay amounts outstanding under its revol ving credit agreement with CoBank, ACB.·

The Green Plains Loan Agreements are secured by negotiable grain warehouse receipts issued to us on 4.0 million bushels of corn. Under the terms of the Green Plains Loan Agreements, as amended, we are required to (1) maintain a minimum loan to valueFixed charge ratio and were required to purchase put options to minimize the underlying commodity price risk of the corn, (2) make monthly interest payments on unpaid principal balances at a 10% per annum interest rate, and (3) make principal payments of $1.0 million per week until completely repaid.  

Green Plains Grain Company LLC

GP Grain entered into a credit agreement with the First National Bank of Omaha (“FNBO”). The FNBO credit agreement, and related loan agreements including the Revolving Credit Note, Term Note, Security Agreement,  Post-Closing Agreement, and mortgages (individually and collectively, the “GP Grain Loan Agreements”) involved total term and revolving credit commitments of $39.0 million.

The term loan proceeds, which totaled $9.0 million, were used to refinance existing debt as well as pay former Great Lakes members a portion of the $12.5 million cash merger consideration. The revolving loan proceeds, which totaled $30.0 million, were used to repay amounts outstanding under Great Lakes’ revolving credit agreement with CoBank, ACB and will be used for working capital purposes for GP Grain. The term loan expires on April 3, 2013, and the revolving loan expires on April 3, 2010. Payments of $225,000 under the term loan are due on the last business day of each calendar quarter, with any remaining amount payable at the expiration of the loan term. The loans will bear interest at either the base rate (prime) minus 0.25% to plus 0.75% or short-term fixed rates at LIBOR (1, 2, 3 or 6 month) plus 1.75% to 2.75% (each depending on GP Grain’s Fixed Charge Ratio for the preceding four fiscal quarters). Under the GP Grain Loan Agreement, the Fixed Charge Ratio is defined as – adjusted EBITDAR divided by Fixed Charges,fixed charges, which are the sum of GP Grain’s interest expense, current maturities under the term loan, rent expense and lease expenses. Adjusted

·

EBITDAR is defined as – net income plus interest expense, rent and lease expense, and noncash expenses (including depreciation and amortization expense, deferred income tax expense and unrealized gains and losses on futures contracts), less interest income and certain capital expenditures.

GP·

Senior leverage ratio – debt, excluding amounts under the Green Plains Grain increasedrevolving credit note, divided by EBITDAR.

Ethanol Production Segment

Each of our Ethanol Production segment subsidiaries has credit facilities with lender groups that provided for term and revolving term loans to finance construction and operation of the production facilities (“Production Credit Facilities”). The Green Plains Bluffton loan is comprised of a $70.0 million amortizing term loan and a $20.0 million revolving term facility (individually and collectively, the “Green Plains Bluffton Loan Agreement”). The Green Plains Obion loan is comprised of a $60.0 million amortizing term loan, a revolving term loan of $37.4 million and a $2.6 million revolving line of credit (individually and collectively, the “Green Plains Obion Loan Agreement”). The Green Plains Shenandoah loan is comprised of a $30.0 million amortizing term loan, a $17.0 million revolving term facility, and a statused revolving credit supplement (seasonal borrowing capability) of up to $4.3 million (individually and collective ly, the “Green Plains Shenandoah Loan Agreement”). The Green Plains Superior loan is comprised of a $40.0 million amortizing term loan and a $10.0 million revolving term facility (individually and collectively, the “Green Plains Superior Loan Agreement”).

Loan Repayment Terms

·

Term Loans – The term loans were available for advances until construction for each of the plants was completed.

o

Scheduled quarterly principal payments (plus interest) are as follows:

§

Green Plains Bluffton  

  $1.75 million

§

Green Plains Obion  

  $2.4 million (beginning May 20, 2009)

§

Green Plains Shenandoah

  $1.2 million

§

Green Plains Superior  

  $1.375 million

o

Final maturity dates (at the latest) are as follows:

§

Green Plains Bluffton  

  November 1, 2013

§

Green Plains Obion  

  May 20, 2015

§

Green Plains Shenandoah

  May 20, 2014

§

Green Plains Superior  

  July 20, 2015

o

Each term loan has a provision that requires the Company to make annual special payments equal to a percentage ranging from 65% to 75% of the available free cash flow from the related entity’s operations (as defined in the respective loan agreements), subject to certain limitations, generally provided, however, that if such payment would result in a covenant default under the respective loan agreements, the amount of the payment shall be reduced to an amount which would not result in a covenant default.

o

Free cash flow payments are discontinued when the aggregate total received from such payments meets the following amounts:

§

Green Plains Bluffton  

  $16.0 million

§

Green Plains Obion  

  $18.0 million

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§

Green Plains Shenandoah

  $8.0 million

§

Green Plains Superior  

  $10.0 million

·

Revolving Credit NoteTerm Loans – The revolving term loans are generally available for advances throughout the life of the commitment. Allowable advances under the Green Plains Shenandoah Loan Agreement are reduced by $2.4 million each six-month period commencing on the first day of the month beginning approximately six months after repayment of the term loan, but in no event later than November 1, 2014. Allowable advances under the Green Plains Superior Loan Agreement are reduced by $2.5 million each six-month period commencing on the first day of the month beginning approximately six months after repayment of the term loan, but in no event later than July 1, 2015. Interest-only payments are due each month on all revolving term loans until the final maturity date, with the exception of the Green Plains Obion Loan Agreement, which requires additional semi-annual payments of $4.675 million beginning November 1, 2015.

o

Final maturity dates (at the latest) are as follows:

§

Green Plains Bluffton  

  November 1, 2013

§

Green Plains Obion  

  November 1, 2018

§

Green Plains Shenandoah

  November 1, 2017

§

Green Plains Superior  

  July 1, 2017

Pricing and Fees

·

The loans bear interest at either the Agent Base Rate (prime) plus from $300.0% to 1.0% or short-term fixed rates at LIBOR plus 2.5% to 3.9% (each based on a ratio of total equity to total assets). In some cases, the lender may allow us to elect to pay interest at a fixed interest rate to be determined.

·

Certain loans were charged an application fee and have an annual recurring administrative fee.

·

Unused commitment fees, when charged, range from 0.375% to 0.75%.  

·

Origination and other fees have been recorded in financing costs in the consolidated balance sheets.

Security

As security for the loans, the lenders received a first-position lien on all personal property and real estate owned by the respective entity borrowing the funds, including an assignment of all contracts and rights pertinent to construction and on-going operations of the plant. These borrowing entities are also required to maintain certain financial and non-financial covenants during the terms of the loans.

Representations, Warranties and Covenants

The loan agreements contain representations, warranties, conditions precedent, affirmative covenants (including financial covenants) and negative covenants including:

·

Maintenance of working capital as follows: by Green Plains Bluffton of not less than $10.0 million at the commencement of operations, and increasing to $35$12.0 million no later than 12 months after the date construction for the plant has been completed and continuing thereafter.

o

Green Plains Bluffton  

  $10.0 million (increasing to $12.0 million by September 11, 2009)

o

Green Plains Obion  

  $9.0 million (increasing to $12.0 million by December 31, 2009)

o

Green Plains Shenandoah

  $6.0 million

o

Green Plains Superior  

  $5.0 million

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·

Maintenance of net worth as follows:

o

Green Plains Bluffton  

  $80.0 million

o

Green Plains Obion  

  $77.0 million

o

Green Plains Shenandoah

  $37.5 million

o

Green Plains Superior  

  $26.6 million

·

Maintenance of tangible owner’s equity as follows:

o

Green Plains Bluffton  

  at least 40% (increasing to 50% by December 31, 2009)

·

Maintenance of debt service coverage ratio as follows:

o

Green Plains Bluffton  

  1.25 to 1.0

o

Green Plains Obion  

  1.25 to 1.0

o

Green Plains Shenandoah

  1.5 to 1.0

o

Green Plains Superior  

  1.25 to 1.0

·

Dividends or other annual distributions to the equity holder will be limited, subject to certain additional restrictions including maintenance with all loan covenants, terms and conditions, as follows:

o

Green Plains Bluffton  

  50% of profit, net of income taxes

o

Green Plains Obion  

  40% of profit, net of income taxes

o

Green Plains Shenandoah

  40% of profit, net of income taxes

o

Green Plains Superior  

  40% of profit, net of income taxes

As of March 31, 2009, working capital balances at Green Plains Obion and Green Plains Superior were less than those required by the respective financial covenants in the loan agreements of those subsidiaries. In addition, the tangible net worth balances at Green Plains Bluffton, Green Plains Obion and Green Plains Superior were also less than those required by the respective financial covenants. In April 2009, the Company contributed additional capital to these subsidiaries and as a result, the lenders provided waivers accepting our compliance with the financial covenants for these subsidiaries as of that date.

Bluffton Revenue Bond

·

Bluffton Revenue Bond – Green Plains Bluffton also received $22.0 million in Subordinate Solid Waste Disposal Facility Revenue Bond funds from July 2, 2008the City of Bluffton, IN. The revenue bond requires: (1) semi-annual interest only payments of $825,000 through September 1, 2009, (2) semi-annual principal and interest payments of approximately $1.5 million during the period commencing on March 1, 2010 through March 31, 2009. Thereafter,1, 2019, and (3) a final principal and interest payment of $3.745 million on September 1, 2019.

·

The revenue bond bears interest at 7.50% per annum.

·

Revenue bond issuance costs have been recorded in financing costs in the principalconsolidated balance sheets.

Capitalized Interest

The Company capitalized $0 and $1.2 million of interest and debt issuance costs during the first three months of 2009 and 2008, respectively.

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Agribusiness Segment

The Green Plains Grain loan is comprised of a $9.0 million amortizing term loan and a $35.0 million revolving term facility (individually and collectively, the “Green Plains Grain Loan Agreement”). Loan proceeds are used primarily for working capital purposes.

Key Loan Information

·

The term loan expires on April 3, 2013 and the revolving loan expires on September 30, 2010.

·

Payments of $225,000 under the term loan are due on the last business day of each calendar quarter, with any remaining amount payable at the expiration of the Revolving Credit Note with FNBO returnsloan term.

·

The loans bear interest at LIBOR plus 3.5%, subject to the original suman interest rate “floor” of $30 million through the maturity date.4.5%.

·

As security for the loans, the lender received a first-position lien on real estate, equipment, inventory and accounts receivable owned by GPGreen Plains Grain.

In accordance with·

Unused commitment fees are 0.375% on the GP Grain Loan Agreements, GP Grain is required to adhere tounused portion.

The loan agreements contain certain financial covenants and restrictions, including the following:

·

GP Grain must maintainMaintenance of working capital of at least $7.0 million. The working capital requirement is increasedmillion through 2009, increasing to $9.0 million in fiscal 2009 and $11.0 million in fiscal 2010.thereafter.

·

GP Grain must maintainMaintenance of tangible net worth of at least $10.0$15.0 million. The tangible net worth requirement is increased to $12.0 million in fiscal 2009 and $15.0 million in fiscal 2010.

·

GP Grain must maintainMaintenance of a Fixed Charge Ratiofixed charge ratio of 1.10x or more and a Senior Leverage Ratiosenior leverage ratio that does not exceed 2.25x. Senior Leverage Ratio is debt, excluding amounts under the Revolving Credit Note, divided by EBITDAR as defined.

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·

Capital expenditures for GPGreen Plains Grain are restricted to $2.5$2.0 million during fiscal 2008. That amount is reduced to $1 million for subsequent years; provided, however, thatper year. However, any unused portion from any fiscal year may be added to the limit for the next succeeding year.

Concurrently, the Company entered into a Post-Closing Agreement with FNBO. The Company agreed to invest up to $2.0 million in GP Grain if required for compliance with financial covenants and guaranty certain of GP Grain’s obligations.

As of AugustMarch 31, 2008, GP Grain’s fixed charge ratio was2009, working capital balances at Green Plains Grain were less than the levelthose required by the GP Grain Loan Agreements due to grain market volatility and higher than expected ongoing operating and capital costs. We notifiedfinancial covenants in the lender of this non-compliance in September 2008 and receivedloan agreements. The Company was granted a waiver of our required compliance with the fixed charge ratio as of that date. Although we do not anticipate such non-compliance to be an ongoing occurrence, we will closely monitor adherence toworking capital covenant for the required ratio and communicate with the bank future non-compliance, if any.   period.

GP Grain Equipment Financing AgreementsLoans

On April 3, 2008, GPGreen Plains Grain executedhas two separate equipment financing agreements with AXIS Capital Inc. totaling $1.75 million (individually and collectively, the “GP Grain“Equipment Financing Loans”). The Equipment Financing Agreements”). These GP Grain Equipment Financing AgreementsLoans provide financing for designated vehicles, implements and machinery acquired as a result of the Great Lakes merger.machinery. The Company agreed to guaranty the GP Grain Equipment Financing Agreements.Loans. Pursuant to the terms of the agreements, GPGreen Plains Grain is required to make 48 monthly principal and interest payments totaling of $43,341, each.which commenced in April 2008.

On March 31, 2009, Green Plains Superior entered into a capital lease for equipment, financed through AXIS Capital. The first payments were made at the time of closingpresent value of the Great Lakes merger.lease payments total $0.3 million, and no payments had been made as of March 31, 2009. Green Plains Superior is required to make 60 monthly payments of $6,150, which begin in April 2009. Gordon F. Glade, President and Chief Executive Officer of AXIS Capital, is a member of our Board of Directors.

8.10.  STOCK-BASED COMPENSATION

We accountThe Company accounts for all share-based compensation transactions pursuant to SFAS No. 123R, “Share-Based Payment,” which requires entities to record noncash compensation expense related to payment for employee services by an equity award in their financial statements over the requisite service period.

The Green Plains Renewable Energy, Inc. 2007 Equity Incentive Plan (the “Equity(“Equity Incentive Plan”) provides for the granting of stock-based compensation. The maximum number ofcompensation, including options to purchase shares of common stock, that may be grantedstock appreciation rights tied to any employee during any year is 50,000.the value of common stock, restricted stock and restricted stock unit awards to eligible employees, non-employee directors and consultants. We have reserved a total of 1.0 million shares of common stock for issuance under the Equity Incentive Plan. Additionally, outstanding stock options were assumed as part of the Merger. The maximum number of shares of common stock that can be granted to any employee during any year under the Equity Incentive Plan is 50,000.

17

Grants under the Equity Incentive Plan may include:

·

Options– Stock options may be granted that are currently exercisable, that become exercisable in installments, or that are not exercisable until a fixed future date. Certain options that have includedbeen issued are exercisable during their term regardless of termination of employment while other options have been issued that terminate at a designated time following the date employment is terminated. Options issued to date may be exercised immediately and/or at future vesting dates, and must be exercised no later than five to eight years after the grant date or they will expire.

·

Stock Awards– Stock awards may be granted to directors and key employees with ownership of the common stock vesting immediately or over a period determined by the Compensation Committee and stated in the award. Stock awards granted to date vested in some cases immediately and at other times over a period determined by the Compensation Committee and were restricted as to sales for a specified period. Compensation expense was recognized upon the grant award. The stock awards options to purchase shares of common stock, and stock in lieu of cash compensationare measured at fair value on the grant date, adjusted for certain officers.estimated forfeitures.

ForThere were no stock options granted during the first nine monthsquarter of fiscal 2008, the fair value of options granted was estimated on the date of grant using the Black-Scholes option-pricing model, a pricing model acceptable under SFAS No. 123R, with the following weighted-average assumptions:

The expected life of options granted represents the period of time in years that options granted are expected to be outstanding. The interest rate represents the annual interest rate a risk-free investment could potentially earn during the expected life of the option grant. Expected volatility is based on historical volatility of our common stock and other companies within our industry. We currently use a forfeiture rate of zero percent for all existing share-based compensation awards since we have no historical forfeiture experience under our share-based payment plans.

2009. All of our existing share-based compensation awards have been determined to be equity awards. We recognize compensation costs for stock option awards which vest with the passage of time with only service conditions on a straight-line basis over the requisite service period.

A summary of stock options as of AugustMarch 31, 20082009 and changes during the first nine months of fiscal 2008three-month period then ended are as follows: