Item 1.01 Entry into a Material Definitive Agreement.
OnDecember 31, 2020 ,Landec Corporation (the "Company"),Curation Foods, Inc. ("Curation") andLifecore Biomedical, Inc. ("Lifecore"), as borrowers, and certain of the Company's other subsidiaries, as guarantors, entered into (i) that certain credit and guaranty agreement (the "Term Loan Credit Agreement"), datedDecember 31, 2020 , withGoldman Sachs Specialty Lending Group, L.P. ("Goldman Sachs"), as lender, administrative agent and collateral agent, and certain affiliates ofGuggenheim Credit Services, LLC , as lenders, and (ii) that certain credit agreement (the "Revolver Credit Agreement" and, together with the Term Loan Credit Agreement, the "New Credit Agreements"), datedDecember 31, 2020 , withBMO Harris Bank N.A . ("BMO") as lender and administrative agent. The New Credit Agreements refinanced in full all obligations of the Company and its subsidiaries under the Company's existing credit agreement, datedSeptember 23, 2016 , as amended, withJPMorgan Chase Bank, N.A .,BMO andCity National Bank , as lenders. General Terms The Term Loan Credit Agreement provides for up to$170.0 million in total term loan borrowings, consisting of an initial$150.0 million tranche funded in full at closing and a$20.0 million multi-draw delayed term loan tranche available for borrowing untilDecember 31, 2022 , subject to, among other conditions, satisfaction of certain pro forma leverage ratios that are further described in the Term Loan Credit Agreement. The obligations under the Term Loan Credit Agreement mature onDecember 31, 2025 . The Revolver Credit Agreement provides for up to the lesser of (i)$75.0 million less a reserve for certain secured credit products, if any, and (ii) a borrowing base as calculated under the Revolver Credit Agreement (such lesser amount, the "Maximum Borrowing Amount"). The borrowing base is calculated as the sum of (i) 85% of the value of certain eligible accounts of the Company and Lifecore, plus (ii) 85% of the value of eligible developmental service accounts of Lifecore (capped at$3.0 million ), plus (iii) 85% of the value of eligible specified foreign account debtor accounts of Lifecore (capped at$3.5 million ), plus (iv) 90% of eligible credit insured foreign accounts of the Company and Lifecore, plus (v) 80% of the value of certain eligible accounts of Curation, plus (vi) the lesser of (x) 85% of the net orderly liquidation value of certain eligible inventory and (y) 75% of the cost of certain eligible inventory, plus (vii) the lesser of 85% of the net orderly liquidation value of eligible in-transit inventory and 70% of the cost of eligible in-transit inventory, minus (viii) certain customary reserves. The obligations under the Revolver Credit Agreement mature onDecember 31, 2025 or, if any obligations under the Term Loan Credit Agreement remain outstanding as of such date,October 2, 2025 .
Interest Rates and Fees
Borrowings under the Term Loan Credit Agreement have an interest rate of, at the option of the Company, (x) LIBOR (subject to a floor of 100 basis points) plus 850 basis points or (y) base rate (subject to a floor of 300 basis points) plus 750 basis points. Unused multi-draw delayed draw term loan commitments are subject to an undrawn commitment fee equal to 50 basis points per annum. Borrowings under the Revolver Credit Agreement have an interest rate of, at the option of the Company, (x) LIBOR (subject to a floor of 50 basis points) plus between 200 and 250 basis points or (y) base rate (subject to a floor of 150 basis points) plus between 100 and 150 basis points, in each case, based upon average availability under the Revolver Credit Agreement. Unused revolver commitments are subject to an undrawn commitment fee equal to 37.5 basis points per annum. Covenants Each of the New Credit Agreements contains customary affirmative and negative covenants, including, among other things, limitations on incurrence of debt, liens, investments, restricted payments, restricted debt payments, maintenance of existence and affiliate transactions. The Term Loan Credit Agreement also includes the following financial covenants: (i) a minimum fixed charge coverage ratio (that commences onMay 30, 2021 at 1.10 to 1.00 and increases incrementally thereafter to 1.40 to 1.00 onAugust 31, 2024 ), (ii) a maximum leverage ratio (that commences onFebruary 28, 2021 at 7.00 to 1.00 and decreases incrementally thereafter to 4.00 to 1.00 onFebruary 28, 2025 ), (iii) a minimum Lifecore gross profits covenant (that commences onFebruary 28, 2021 at$28.75 million and increases incrementally thereafter to$40.0 million onNovember 30, 2023 ), (iv) a maximum capital expenditures covenant (at various quarterly and trailing four quarter period levels described in the Term Loan Credit Agreement) that does not apply to the extent the unfinanced capital expenditures ratio (EBITDA to unfinanced capital expenditures) is greater than or equal to 1.0 to 1.0 and (v) a minimum liquidity covenant (defined as borrowing availability under the Revolver Credit Agreement plus certain qualified cash) of$7.5 million . The Revolver Credit Agreement also includes a springing fixed-charge coverage ratio financial covenant of 1.0 to 1.0, which applies if either (x) an event of default has occurred or (y) borrowing availability under the Revolver Credit Agreement is less than the greater of$7.5 million and 10% of the Maximum Borrowing Amount. 2 --------------------------------------------------------------------------------
Events of Default
Each of the New Credit Agreements is subject to customary events of default, including, among other things, failure to pay principal, interest, fees or other amounts; covenant defaults; material inaccuracy of representations and . . .
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 is incorporated herein by reference.
Item 7.01 Regulation of FD Disclosure.
OnJanuary 4, 2020 , the Company issued a press release announcing the New Credit Agreements, which is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. Exhibit 99.1 shall not be deemed "filed" for purposes of Section 18 of the Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filings. 3 --------------------------------------------------------------------------------
Item 9.01 Financial Statements and Exhibits.
(d) Exhibit.
The following exhibits are furnished as part of this report:
Exhibit No. Description 10.1 Credit and Guaranty Agreement, dated December
31, 2020, by and among Landec
Corporation,Curation Foods, Inc. and Lifecore
certain other subsidiary parties thereto, as
guarantors, Goldman Sachs
Specialty Lending Group, L.P. , as lender,
administrative agent and collateral
agent, and certain affiliates of Guggenheim
lenders . 10.2 Credit Agreement, datedDecember 31, 2020 , by
and among
Curation Foods, Inc. and Lifecore Biomedical,
Inc., as borrowers, certain
other subsidiary parties thereto, as guarantors,
and
N.A., as lender and administrative agent . 10.3 Pledge and Security Agreement, dated December
31, 2020, by and among Landec
Corporation,Curation Foods, Inc. , Lifecore
subsidiary parties thereto, as grantors , and Goldman Sachs Specialty Lending Group, L.P., as collateral agent . 10.4 Pledge and Security Agreement, dated December
31, 2020, by and among Landec
Corporation,Curation Foods, Inc. , Lifecore
subsidiary parties thereto, as grantors ,
and
as administrative agent. 99.1 Press Release datedJanuary 4, 2021 . 104 Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. 4
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