Business Context and Reporting Period
Company: Limoneira Company
Filing Type: Form 8-K (Current Report)
Date of Report: January 29, 2018
Event: Entry into a Material Definitive Agreement regarding a Revolving Credit Facility Supplement with Farm Credit West, PCA.
Key Financial Metrics
This filing details a specific financing arrangement rather than reporting period-end financial performance. Key metrics related to the new facility include:
- Borrowing Capacity: $75,000,000 (increased from $60,000,000 under the prior agreement).
- Initial Interest Rate: 3.41% per annum.
- Interest Rate Structure: One-month LIBOR plus an applicable margin ranging from 1.60% to 2.35%, dependent on the ratio of current assets plus remaining available commitment to current liabilities.
- Maturity Date: July 1, 2022.
- Collateral: First lien on agricultural properties in Tulare and Ventura counties, California, plus building fixtures, improvements, and investments in mutual water companies.
The filing text does not provide clear values for revenue, profit, cash flow, margins, or total debt levels outside of this specific facility.
Material Changes Versus Prior Period
- Capacity Increase: The new Supplement amends and replaces the Prior Revolving Supplement dated June 19, 2017, increasing the available borrowing capacity by $15,000,000.
- Rate Adjustment: The interest rate is set to automatically adjust commencing February 1, 2018, and on the first day of each month thereafter.
- Rate Conversion Option: The Company has the option to convert the interest rate calculation from LIBOR-based to a variable rate (or vice versa) on July 1, 2018, and annually thereafter.
Guidance, Outlook, and Risks
Management Commentary: The filing confirms the execution of the Supplement to secure liquidity but does not provide forward-looking guidance on operations or earnings.
Risks and Contingencies:
- Default Provisions: The Loan Agreement includes customary default provisions. Upon an event of default, the Lender may declare all indebtedness immediately due and payable without demand or notice and terminate the Company's right to draw funds.
- Collateral Risk: The facility is secured by specific agricultural properties and assets; default could result in the loss of these pledged assets.
Important Facts for Investor Verification
- Verify the current utilization of the $75,000,000 facility to assess immediate liquidity needs.
- Monitor the Company's current asset-to-liability ratio to determine the applicable interest margin (1.60% vs. 2.35%).
- Review the specific agricultural properties pledged as collateral to understand asset exposure.
- Confirm whether the Company exercises the option to convert the interest rate calculation on July 1, 2018.