Business Context and Reporting Period
This Form 8-K is filed by Consolidated-Tomoka Land Co. (the "Company") on June 28, 2011. The report details the entry into a material definitive agreement regarding the Company's credit facilities with SunTrust Bank.
Key Financial Metrics and Debt Structure
The filing focuses on debt restructuring rather than operational performance metrics such as revenue or profit. Key debt terms established in the Fourth Amendment to the Master Loan and Security Agreement include:
- Maximum Loan Amount: Increased to $25,000,000 (previously $15,000,000).
- Maturity Date: Extended to June 27, 2014.
- Interest Rate: Reduced from 310 basis points over 1-month LIBOR to 250 basis points over 1-month LIBOR.
- Fees: Annual commitment fee of $40,750; unused capacity fee of 50 basis points annually on average unused facility.
- Existing Obligations: The agreement secures a promissory note with a current outstanding principal balance of $5,784,649.56.
Material Changes Versus Prior Period
Compared to the previous loan terms, the Company has secured the following material changes:
- Capacity Increase: Borrowing capacity increased by $10,000,000.
- Cost Reduction: Interest rate spread decreased by 60 basis points.
- Covenant Modification: The negative covenant regarding annual new indebtedness was removed, replaced by a provision allowing up to $1,000,000 in additional indebtedness per fiscal year without bank approval.
- New Covenants: Financial covenants regarding debt service coverage were added.
Collateral, Risks, and Contingencies
The amended facility is secured by a Mortgage and Security Agreement and Deeds to Secure Debt covering:
- 11 CVS and Walgreens properties in Florida.
- 2 Walgreens properties in Georgia.
- Security interest extends to land, improvements, tangible property, and income associated with these properties.
Environmental Contingency: The Company and certain affiliates have agreed to indemnify the Bank for environmental costs or liabilities associated with the secured real property under a new Environmental Compliance Agreement.
Investor Verification Checklist
- Verify the current utilization rate of the new $25,000,000 revolving line of credit.
- Review the specific debt service coverage ratio covenants added to the agreement to assess compliance risk.
- Confirm the status of environmental assessments for the 13 secured properties (11 in Florida, 2 in Georgia) given the new indemnification obligations.
- Monitor the Company's ability to maintain the $1,000,000 annual indebtedness threshold without triggering bank approval requirements.