Long-Term Debt and Lines of Credit |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-Term Debt and Lines of Credit |
Note 7. Long-Term Debt and Lines of Credit
The following table summarizes long-term debt at September 30, 2024 and September 30, 2023:
The following table summarizes amounts outstanding under lines of credit and related deferred financing costs, net of accumulated amortization at September 30, 2024 and September 30, 2023:
1- Represents deferred financing fees on the RLOC, included within Other non-current assets in the consolidated balance sheets.
Future maturities of long-term debt and lines of credit as of September 30, 2024 are as follows:
Interest costs expensed and capitalized were as follows:
Debt
The Company’s credit facilities originally consisted of fixed interest rate term loans originally in the amount of $125,000 (“Met Fixed-Rate Term Loans”), variable interest rate term loans originally in the amount of $57,500 (“Met Variable-Rate Term Loans”), a $25,000 revolving line of credit (“RLOC”) with Metropolitan Life Insurance Company ( “Met”) and a $70,000 working capital line of credit (“WCLC”) with Rabo Agrifinance, Inc. (“Rabo”).
On September 17, 2024, the Company amended the credit agreement with Met (the "Amended Credit Agreement") and the term loans and RLOC (the "Amended RLOC"). The primary terms of the amendments include an increase in the capacity of the Amended RLOC to $95,000 and an extension of its maturity to May 1, 2034. In connection with entrance into the Amended Credit Agreement, the Company also repaid current borrowings under the WCLC with Rabo and there were no available borrowings under this facility at September 30, 2024, which was cancelled in October 2024. As a result of the Amended Credit Agreement, the credit facilities now include the Met Fixed-Rate Term Loans and the Amended RLOC.
The term loans and RLOC are secured by real property. The security for the term loans and RLOC as of the most recent amendment, consists of approximately 36,800 gross acres of citrus groves.
The Met Fixed-Rate Term Loans are interest-only, with a balloon payment to be paid at maturity on November 1, 2029. The interest rate on these Met Fixed-Rate Term Loans, is 3.85%.
The Met Variable-Rate Term Loans were subject to quarterly principal payments of $406 and bore an interest rate equal to One Month Term Secured Overnight Financing Rate ("SOFR") plus 175 basis points (the “SOFR spread”). The SOFR spread was subject to adjustment by Met every 2 years beginning May 1, 2023, until maturity. Interest on the term loans was payable quarterly. The interest rates on the Met Variable-Rate Term Loans were 7.52% per annum as of September 30, 2023. Effective February 17, 2023, the Company agreed to defer the next three quarterly principal payments which were previously due May 2023, August 2023 and November 2023 to the maturity date of the loan on November 1, 2029. On December 26, 2023, the Company repaid the outstanding balance of $19,094, plus accrued interest, and no further borrowings are possible on these loans.
With respect to the RLOC, for the year ended September 30, 2023, the interest rate was SOFR plus 175 basis points. The SOFR spread was subject to adjustment by lender every 2 years beginning May 1, 2023, until maturity on November 1, 2029 and was subject to an annual commitment fee of 25 basis points on the unused portion of the line of credit, which was available for funding general corporate purposes.
The Amended RLOC bears interest rate at SOFR plus 220 basis points (the "Amended SOFR Spread), with a SOFR floor of 5.00% and a minimum balance of $2,500. The SOFR spread and SOFR floor are subject to adjustment by lender every 2 years beginning January 1, 2026 and every two years thereafter until maturity. The RLOC is subject to an annual commitment fee of 25 basis points on the unused portion of the line of credit and is available for funding general corporate purposes. At September 30, 2024 and 2023, $86,606 and $25,000, was available under the RLOC, respectively, and $— and $45,030 was available under the WCLC, respectively.
The variable interest rate on the Amended RLOC and the RLOC, respectively, was 7.30% per annum and 7.52% per annum as of September 30, 2024 and September 30, 2023, respectively.
The WCLC was a revolving credit facility which is available for funding working capital and general corporate requirements. As of September 30, 2024 no borrowings were available borrowings under the WCLC and the agreement and was terminated in October 2024, once the accrued interest was paid. The WCLC agreement was amended on October 27, 2022 and the primary terms of the amendment were an extension of the maturity to November 1, 2025, and the conversion of the interest rate from LIBOR plus a spread to SOFR plus a spread. This spread was adjusted quarterly, based on the Company’s debt service coverage ratio for the preceding quarter and can vary from 175 to 250 basis points. The variable interest rate was 4.31% per annum as of September 30, 2023. The WCLC provided for Rabo to issue up to $2,000 in letters of credit on the Company’s behalf, of which $248 were issued as of September 30, 2023. The WCLC was collateralized by the Company’s current assets and certain other personal property owned by the Company.
These credit facilities noted above are subject to various covenants, including the following financial covenants: (i) minimum debt service coverage ratio of 1.10 to 1.00; (ii) tangible net worth of at least $160,000 increased annually by 10% of consolidated net income for the preceding years, or $174,628 applicable for the year ended September 30, 2024; (iii) minimum current ratio of 1.50 to 1.00; (iv) debt to total assets ratio not greater than .625 to 1.00; and (v) solely in the case of the WCLC, a limit on capital expenditures of $30,000 per year ended September 30. As of September 30, 2024, the
Company was in compliance with all of the financial covenants. There were no changes to the covenants in the Amended Credit Agreement, except to include a 55% Loan To Value Cap (the "LTV CAP") on the value of the term loans and RLOC capacity. At September 30, 2024, the Company was able to draw the entire amount of the RLOC, less current borrowings, and remain under the LTV Cap.
Credit facilities also include a Met Life term loan collateralized by 1,200 gross acres of citrus grove owned by Citree (“Met Citree Loan”). This is a $5,000 credit facility that bears interest at a fixed rate of 5.28% per annum. Principal and interest payments are made on a quarterly basis. Effective February 17, 2023, the Company agreed to defer the next three quarterly principal payments which were previously due May 2023, August 2023 and November 2023 to the maturity date of the loan. The loan matures in February 2029.
Silver Nip Citrus Debt
There are two fixed-rate term loans, with an original combined balance of $27,550, bearing interest at 5.35% per annum (“Pru Loans A & B”). Principal of $290 is payable quarterly, together with accrued interest. The loans are collateralized by approximately 5,700 acres of citrus groves in Collier, Hardee, Highlands and Polk Counties, Florida and mature on June 1, 2029 and June 1, 2033, respectively.
The Pru Loans A & B are subject to a financial covenant whereby the consolidated current ratio requirement is 1.00 to 1.00. Silver Nip Citrus was in compliance with the current ratio covenant as of September 30, 2024.
Deferred Financing Costs
Costs incurred to obtain financing are deferred and amortized to "Interest expense" in the consolidated statement of operations over the related financing period using the effective interest method. The Company records debt issuance costs as a direct reduction of the carrying value of the related debt. Financing costs related to the undrawn RLOC are included in "Other non-current assets" in the consolidated balance sheets.
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