Gorham Savings Bank provided a $8.6 million debt refinancing package made up of three components for ImmuCell, an animal health company that develops, manufactures and markets health products for dairy and beef cattle.
The first component is a 10-year, $5.1 million mortgage note bearing interest at a fixed rate of 3.50% per annum with monthly principal and interest payments due based on a 25-year amortization schedule. The second component is a seven-year, $3.5 million note bearing interest at a fixed rate of 3.50% per annum with monthly principal and interest payments due based on a seven-year amortization schedule. The proceeds were used to provide some additional working capital but mostly to refinance $8.3 million in outstanding bank debt and pay off a related interest rate swap termination liability of $165,000. The third component is a $1 million line of credit, which bears interest at a variable rate equal to the one-month LIBOR plus 2.15%.
“This is a great opportunity for us to lower our interest rate exposure and extend our loan repayment terms,” Michael F. Brigham, president and CEO of ImmuCell, said. “Given the extreme volatility being experienced in the financial markets right now, I believe we will be well-served with this debt financing over the long term.”
ImmuCell previously had five different loans with interest rates ranging from fixed rates of 4.38% and 6.04% to variable rates of the one-month LIBOR plus 2.25%. Those loans were entered into during different stages of the company’s capital investment programs, including one with a $452,000 balloon principal payment due during Q3/20.
This indebtedness is secured by mortgages and security interests covering substantially all of the company’s assets. By bank debt covenant, the company is required to maintain $1.4 million in an escrow account until certain financial conditions are met based on the company’s performance during 2020 or after and provided adequate collateral values relative to outstanding loan balances are achieved. In comparison, the covenants included in the repaid debt required the company to hold $2 million in otherwise unrestricted cash.
“The Gorham team has been great to work with,” Brigham said. “They are flexible and creative and met our debt financing needs effectively, on a timely basis.”
Headquartered in Gorham, ME since its founding in 1868, Gorham Savings Bank is a depositor-owned community bank delivering financial services tailored to the needs of Southern Maine’s businesses and consumers.
