ALICO, INC. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by ALICO, INC. on October 11, 2005. The filing discloses the entry into a material definitive agreement and the creation of a direct financial obligation. The company is incorporated in Florida and operates in the agricultural sector.
Key Financial Metrics and Obligations
- Credit Facility Amount: $175,000,000 revolving line of credit.
- Maturity Date: August 1, 2010, with an option for annual extension at the lender's discretion.
- Interest Rate: LIBOR plus a variable rate between 0.8% and 1.5%, contingent on the Company's debt ratio. Interest payments are quarterly, commencing January 1, 2006.
- Collateral: First mortgage on approximately 7,680 acres of agricultural property in Hendry County, Florida, plus subsequent real estate acquisitions financed under the facility.
- Amortization Schedule: The line of credit must be reduced annually by approximately $14 million (August 2006), $31 million (August 2007), and $31 million (August 2008), leaving a remaining balance of $100 million from August 1, 2008, through maturity.
Material Changes and Covenant Requirements
The Company entered into a Loan Agreement with Farm Credit of Southwest Florida Bank. This facility is intended for general corporate purposes, including normal operating needs, refinancing existing lines of credit, and financing Ginn Receivables. The agreement imposes restrictive covenants requiring the maintenance of minimum net worth levels and specific Debt, Current, and Fixed Charge Coverage Ratios. It also limits the extension of additional loans or borrowings by the Company or its subsidiaries.
Outlook, Risks, and Default Provisions
In the event of default (failure to make payments or fulfill covenants), the interest rate increases by an additional 2%. Alternatively, the lender may terminate the credit commitment and demand immediate payment of the entire unpaid principal, accrued interest, and other obligations. The filing references a press release issued on October 17, 2005, regarding this facility.
Investor Verification Checklist
- Verify the specific definitions of "Ginn Receivables" in the attached Loan Agreement (Exhibit 10.01).
- Confirm the Company's current debt ratio to determine the applicable variable interest rate spread (0.8% vs. 1.5%).
- Review the Company's ability to meet the mandatory annual principal reductions starting August 2006.
- Assess the valuation and encumbrance status of the 7,680 acres of collateral in Hendry County, Florida.
- Examine the specific thresholds for the restrictive covenants regarding net worth and coverage ratios.