Landec Corporation Announces Comprehensive Refinancing of Credit Facilities

SANTA MARIA, Calif., Jan. 04, 2021 (GLOBE NEWSWIRE) -- 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.