Farmer Bros. finalized a new $127.5 million, four-year financing arrangement, which includes an $80 million asset-backed revolving credit facility and a $47.5 million term loan due April 2025. The financing was led by Wells Fargo Bank.
This arrangement replaces Farmer Bros.’ existing revolving credit facility that was scheduled to mature November 2023 and provides more borrowing capacity over the term of the arrangement at a lower overall cost of borrowing. Additionally, the new arrangement reduces and/or eliminates several negative covenants in Farmer Bros.’ existing credit facility.
“We’re pleased to enter into this new financing arrangement, which provides greater flexibility in leveraging our significant real estate holdings and equipment in addition to our traditional ABL assets and is an important step in preserving our financial liquidity and further solidifying our capital structure,” Scott Drake, CFO of Farmer Bros., said. “This new arrangement also lowers the overall cost structure of our debt while extending maturities and eliminating certain covenants, allowing us to more fully focus on our key initiatives to accelerate growth and innovation and better positioning us for the long term.”
In accordance with the terms of the financing agreement, the proceeds may be used for general corporate purposes and Farmer Bros. may prepay amounts borrowed under the asset-backed revolving credit facility at any time without premium or penalty.
Founded in 1912, Farmer Bros. is a national roaster, wholesaler and distributor of coffee, tea and culinary products.