Landec Corporation Announces Comprehensive Refinancing of Credit Facilities
January 04 2021 - 8:00AM
Landec Corporation (Nasdaq: LNDC) (the “Company”), a diversified
health and wellness company with two operating businesses, Curation
Foods, Inc. and Lifecore Biomedical, Inc., today announced its
entry into a $245.0 million comprehensive refinancing of its
existing credit facilities on December 31, 2020. The new structure
includes a five-year $170.0 million uni-tranche term loan agented
by Goldman Sachs Specialty Lending Group, L.P. (“Goldman Sachs”)
and split equally with Guggenheim Credit Services, LLC
(“Guggenheim”) and a $75.0 million asset-based line of credit
provided by BMO Harris Bank N.A. (“BMO”), a lender under the
Company’s prior credit facilities, which matures in five years
subject to a springing maturity date described herein.
Brian McLaughlin, the Company’s Chief Financial
Officer, stated, “We launched our value creation program, Project
SWIFT, one year ago to transform our business into an agile,
competitive company. The results of this initiative have yielded an
improved operating cost structure and a more nimble enterprise that
is focused on profitability and generating free cash flow. This
refinancing is a product of those efforts and we are pleased to
close on this transaction, which we believe provides our business
the necessary flexibility to support Lifecore’s long-term strategic
growth plan while we continue to build on the recent positive
momentum our Curation Foods business. We remain confident in growth
across our business portfolio and we look forward to demonstrating
continued improved performance in the quarters ahead, enabling us
to maximize shareholder value.”
The $170.0 million uni-tranche term loan has a
five-year term with an interest rate of LIBOR plus 850 basis
points. Of the $170.0 million of the total borrowings, $150.0
million of the uni-tranche term loan was funded at closing and the
Company has access to an additional $20.0 million in multi-draw
delayed draw term loans from the closing date through the second
anniversary thereof subject to, among other conditions, certain
leverage covenants as defined by the credit agreement. The
uni-tranche term loan provides for interest-only payments for the
first two years. As a result, the Company expects that its annual
interest costs will increase by approximately $6.0 million, but
that the reduction in the Company’s annual principal payments of
approximately $12.0 million under the new credit facilities
compared to the Company’s existing credit facilities will result in
an anticipated net cash flows increase of approximately $6.0
million per year for the first two years.
The $75.0 million asset-based line of credit has
a five-year term, subject to a springing maturity that is ninety
days prior thereto if the uni-tranche term loan remains outstanding
at such time, with an initial interest rate of LIBOR plus 225 basis
points. Total allowable borrowings under the asset-based line of
credit are determined monthly as the lesser of $75.0 million and a
borrowing base as calculated under the credit facility, in each
case, subject to customary reserves. $36.0 million of the
asset-based line of credit was funded at closing.
As a result of refinancing the Company’s
existing credit facilities with these new credit facilities, in the
third quarter of fiscal 2021, Landec expects to record a $1.2
million charge, primarily as a result of the non-cash write off of
unamortized debt issuance costs related to the refinancing under
these new credit facilities.
The Company’s financial advisor for the
comprehensive refinancing was Armory Securities, LLC.
About Landec CorporationLandec
Corporation (Nasdaq: LNDC) is a leading innovator of diversified
health and wellness solutions with two operating businesses:
Curation Foods, Inc. and Lifecore Biomedical, Inc. Landec designs,
develops, manufactures, and sells products for the food and
biopharmaceutical industry. Curation Foods is focused on innovating
and distributing plant-based foods with 100% clean ingredients to
retail, club and foodservice channels throughout North America.
Curation Foods is able to maximize product freshness through its
geographically dispersed family of growers, refrigerated supply
chain and patented BreatheWay® packaging technology. Curation Foods
brands include Eat Smart® fresh packaged vegetables and salads, O
Olive Oil & Vinegar® premium artisan products, and Yucatan® and
Cabo Fresh® avocado products. Lifecore Biomedical is a fully
integrated contract development and manufacturing organization
(CDMO) that offers highly differentiated capabilities in the
development, fill and finish of sterile, injectable pharmaceutical
products in syringes and vials. As a leading manufacturer of
premium, injectable grade Hyaluronic Acid, Lifecore brings 35 years
of expertise as a partner for global and emerging biopharmaceutical
and biotechnology companies across multiple therapeutic categories
to bring their innovations to market. For more information about
the Company, visit Landec’s website at www.landec.com.
Important Cautions Regarding
Forward-Looking StatementsCertain statements in this
communication are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, as amended,
which involve certain risks and uncertainties that could cause
actual results to differ materially, including such factors as,
among others, the timing and expenses associated with the Company’s
operations; the impact of the COVID-19 pandemic on us, our
business, our customers, or the economy generally; the anticipated
success of the Company’s pending strategic initiatives, including
the timing of such initiatives and the Company’s ability to
recognize anticipated annual savings on its anticipated timeline,
or at all, the ability of the Company to negotiate future
amendments to its existing Credit Agreement successfully, or at
all, the ability of the Company to achieve acceptance of new
products in the market place, weather conditions that can affect
the supply and price of produce, government regulations affecting
the Company’s business, the timing of regulatory approvals
necessary to operate the Company’s business, the Company’s ability
to successfully integrate Yucatan Foods into the Curation Foods
business, the mix between domestic and international sales and any
other statements about our future expectations, plans, intentions,
beliefs or prospects expressed by management or the Company. For
additional information about factors that could cause actual
results to differ materially from those described in the
forward-looking statements, please refer to our filings with the
Securities and Exchange Commission, including the risk factors
contained in our most recent Quarterly Report on Form 10-Q and
Annual Report on Form 10-K. Forward-looking statements represent
management’s current expectations and are inherently uncertain.
Except as required by law, we do not undertake any obligation to
update forward-looking statements made by us to reflect subsequent
events or circumstances.
Contact
Information:Investor RelationsJeff
Sonnek(646) 277-1263jeff.sonnek@icrinc.com
Landec (NASDAQ:LNDC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Landec (NASDAQ:LNDC)
Historical Stock Chart
From Sep 2023 to Sep 2024