Quarterly report pursuant to Section 13 or 15(d)

Orange-Co Acquisition

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Orange-Co Acquisition
 3 Months Ended
Dec. 31, 2014
Orange-Co Acquisition [Abstract]  
Orange-Co Acquisition

Note 4. Orange-Co Acquisition

 

 

On December 2, 2014, the Company completed the acquisition of certain citrus and related assets of Orange-Co pursuant to an Asset Purchase Agreement, which we refer to as the Orange-Co Purchase Agreement, dated as of December 1, 2014 and 51% of the ownership interests of Citree Holdings 1, LLC. The assets Alico purchased include approximately 20,263 acres of citrus groves in DeSoto and Charlotte Counties, Florida, which comprise one of the largest contiguous citrus grove properties in the state of Florida. The purchase price was approximately $282,032,000 including: (1) $147,500,000 in initial cash consideration funded from the proceeds of the sugarcane disposition (see “Note 5. Assets held for sale” in the Notes to the Condensed Consolidated Financial Statements (Unaudited)) and new term debt, subject to adjustment as set forth in the Orange-Co Purchase Agreement; (2) up to $7,500,000 in additional cash consideration to be released from escrow in equal parts, subject to certain limitations, on December 1, 2015 and June 1, 2016; (3) the refinancing of Orange-Co's outstanding debt including approximately $91,200,000 in term debt and a working capital facility of approximately $27,800,000 and (4) the assumption of certain other liabilities. On December 1, 2014, Alico deposited an irrevocable standby letter of credit issued by Rabo Agrifinance, Inc., or Rabo, in the aggregate amount of $7,500,000 into an escrow account to fund the additional cash consideration.

 

The Company acquired Orange-Co to transform our citrus business and meaningfully enhance the Company's position in the citrus industry. The Company has included the financial results of Orange-Co in the consolidated financial statements from the date of acquisition in the Citrus Groves operating segment and includes approximately $7,000,000 in revenue and $1,600,000 in income from operations.

 

This acquisition was accounted for under the acquisition method of accounting. Accordingly, the Company recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values, while transaction and integration costs associated with the acquisition were expensed as incurred. The initial accounting for the business combination is not complete and adjustments to provisional amounts, or recognition of additional assets acquired or liabilities assumed, may occur as more detailed analyses are completed and additional information is obtained about the facts and circumstances that existed as of the acquisition date.

 

The Company expensed $2,579,000 in professional and legal fees in connection with the Orange-Co acquisition.

 

The following table summarizes the consideration paid for the acquired assets and the preliminary acquisition accounting for the fair values of the assets recognized and liabilities assumed in the Condensed Consolidated Balance Sheets at the acquisition date. These balances are subject to change when final asset valuations are obtained and the potential for liabilities has been evaluated.



(in thousands) Amount
   
Assets
Accounts receivable $ 888   
Other current assets    849   
Inventories    30,000   
Property, Buildings and Equipment:     
Equipment and other facilities    5,237   
Land    71,327   
Citrus trees    172,671   
Other assets    1,060   
       
Total assets, net of cash acquired  $ 282,032 
       
Liabilities       
Accounts payable and accrued liabilities  $ 4,200   
Term loan 500 
Payable to seller    7,500   
       
Total liabilities assumed  $ 12,200 
       
Assets acquired less liabilities assumed  $ 269,832 
 
Less: fair value attributable to noncontrolling interest  (4,769)
 
Total purchase consideration  $ 265,063 

 


The fair value of the consideration paid for the acquisition of the net assets was as follows:


 

Cash proceeds from sugarcane disposition $ 97,126   
Working capital line of credit   27,775   
Term loans   140,162   
   
Total purchase consideration  $ 265,063 

 


The unaudited pro-forma information below for the three months ended December 31, 2014 and 2013 gives effect to this acquisition as if the acquisitions had occurred on October 1, 2013. The pro-forma financial information is not necessarily indicative of the results of operations if the acquisition had been effective as of this date.

 

 

December 31,  December 31,
(in thousands except per share amount) 2014 2013
Revenues    $ 16,687     $ 23,530  
Income from operations    $ (2,302 )   $ 568  
Net income (loss) attributable to common shareholder    $ 5,332     $ (467 )
Basic earnings per common share    $ 0.72     $ (0.06 )
Diluted earnings per common share    $ 0.72     $ (0.06 )