Goldman Sachs agented and split equally with Guggenheim Credit Services a $170 million unitranche term loan and Bank of Montreal provided a $75 million asset-based line of credit to refinance health and wellness company Landec Corporation’s previous credit facilities.
“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 [of] 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,” Brian McLaughlin, CFO of Landec, said.
The $170 million unitranche term loan has a five-year term with an interest rate of LIBOR plus 850 basis points. Of the $170 million of the total borrowings, $150 million of the unitranche term loan was funded at closing. The company has access to an additional $20 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 unitranche term loan provides for interest-only payments for the first two years.
The $75 million asset-based line of credit has a five-year term, subject to a springing maturity that is 90 days prior thereto if the unitranche 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 million and a borrowing base as calculated under the credit facility, in each case, subject to customary reserves. Of the total line of credit, $36 million was funded at closing.
Armory Securities served as Landec’s financial advisor.
