Business Context and Reporting Period
Company: Limoneira Company
Filing Type: Form 8-K (Current Report)
Date of Report: May 17, 2018
Event: Modification of terms for a Non-Revolving Credit Facility Supplement and Promissory Note originally dated June 19, 2017.
Key Financial Metrics
This filing does not report revenue, profit, cash flow, margins, or general liquidity metrics. It specifically addresses the terms of a debt instrument:
- Debt Instrument: Promissory Note in the original amount of $40,000,000.
- Lender: Farm Credit West, PCA.
- Interest Rate Change: Converted from a LIBOR-based variable rate to a fixed interest rate of 4.77%.
- Effective Date: July 1, 2018.
- Prepayment Terms: Prepayments are now subject to a fee of 0.50% of the amount prepaid plus a prepayment surcharge.
Material Changes Versus Prior Period
The material change involves the conversion of the interest rate calculation method for the $40,000,000 Note. Previously, the rate was variable based on LIBOR. Under the new Conversion Agreement entered on May 17, 2018, the rate is fixed at 4.77%. Additionally, prepayment penalties were introduced or modified to include a 0.50% fee and a surcharge, which were not present or were different under the prior variable rate terms.
Guidance, Outlook, and Risks
Management Commentary: The filing confirms the execution of a Conversion Agreement to lock in a fixed interest rate, likely to mitigate interest rate volatility risks associated with the LIBOR-based calculation.
Risks and Contingencies: The new fixed rate of 4.77% represents a known cost of capital for this debt portion. The introduction of prepayment fees (0.50% plus surcharge) reduces the Company's flexibility to refinance or pay down this specific debt early without incurring additional costs.
Important Facts for Investor Verification
- Verify the total outstanding principal balance of the $40,000,000 Note as of the filing date to confirm the full amount is subject to the new fixed rate.
- Confirm the specific calculation method for the "prepayment surcharge" mentioned in addition to the 0.50% fee.
- Review the Company's overall debt portfolio to assess the impact of fixing this specific tranche at 4.77% relative to current market rates.
- Check subsequent filings for any further amendments to the Note or changes in the Company's hedging strategy.