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Long-Term Debt and Lines of Credit | 9 Months Ended
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Jun. 30, 2021
Debt Disclosure [Abstract] |
Long-Term Debt and Lines of Credit | Note 5. Long-Term Debt and Lines of Credit The following table summarizes long-term debt and related deferred financing costs, net of accumulated amortization, at June 30, 2021 and September 30, 2020:
|  | June 30, 2021 |  |  | September 30, 2020 |
(in thousands) |  | Principal |  |  | Deferred Financing Costs, Net |  |  | Principal |  |  | Deferred Financing Costs, Net |
Long-term debt, net of current portion: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Met Fixed-Rate Term Loans |  | $ | 70,000 |  |  | $ | 548 |  |  | $ | 83,438 |  |  | $ | 621 |
Met Variable-Rate Term Loans |  |  | 38,813 |  |  | 252 |  |  |  | 40,969 |  |  |  | 286 |
Met Citree Term Loan |  |  | 4,325 |  |  | 33 |  |  |  | 4,512 |  |  |  | 36 |
Pru Loans A & B |  |  | 14,227 |  |  | 194 |  |  |  | 15,097 |  |  |  | 207 |
Pru Loan E |  |  | 4,070 |  |  |  | — |  |  |  | 4,235 |  |  |  | 1 |
|  |  | 131,435 |  |  |  | 1,027 |  |  |  | 148,251 |  |  |  | 1,151 |
Less current portion |  |  | 8,355 |  |  |  | — |  |  |  | 9,145 |  |  |  | — |
Long-term debt |  | $ | 123,080 |  |  | $ | 1,027 |  |  | $ | 139,106 |  |  | $ | 1,151 |
The following table summarizes lines of credit and related deferred financing costs, net of accumulated amortization, at June 30, 2021 and September 30, 2020:
|  | June 30, 2021 |  |  | September 30, 2020 |
(in thousands) |  | Principal |  |  | Deferred Financing Costs, Net |  |  | Principal |  |  | Deferred Financing Costs, Net |
Lines of Credit: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
RLOC |  | $ | — |  |  | $ | 130 |  |  | $ | — |  |  | $ | 141 |
WCLC |  |  | — |  |  |  | — |  |  |  | 2,942 |  |  |  | — |
Lines of Credit |  | $ | — |  |  | $ | 130 |  |  | $ | 2,942 |  |  | $ | 141 |
Future maturities of long-term debt at June 30, 2021 are as follows:
(in thousands) |  |  |  |
|  | June 30, 2021 |
Due within one year |  | $ | 8,355 |
Due between one and two years |  |  | 4,285 |
Due between two and three years |  |  | 4,285 |
Due between three and four years |  |  | 4,285 |
Due between four and five years |  |  | 4,285 |
Due beyond five years |  |  | 105,940 |
Total future maturities |  | $ | 131,435 |
Interest costs expensed and capitalized were as follows:
(in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Three Months Ended June 30, |  |  | Nine Months Ended June 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Interest expense |  | $ | 907 |  |  | $ | 1,603 |  |  | $ | 3,185 |  |  | $ | 4,599 |
Interest capitalized |  |  | 389 |  |  |  | 320 |  |  |  | 1,050 |  |  |  | 892 |
Total |  | $ | 1,296 |  |  | $ | 1,923 |  |  | $ | 4,235 |  |  | $ | 5,491 |
Debt The Company's credit facilities consist of fixed interest rate term loans originally in the amount of $125,000,000 (“Met Fixed-Rate Term Loans”), variable interest rate term loans originally in the amount of $57,500,000 (“Met Variable-Rate Term Loans”), a $25,000,000 revolving line of credit (“RLOC”) with Metropolitan Life Insurance Company and New England Life Insurance Company (collectively “Met”), and a $70,000,000 working capital line of credit (“WCLC”) with Rabo Agrifinance, Inc. (“Rabo”). The term loans and RLOC are secured by real property. The security for the term loans and RLOC initially consisted of approximately 38,200 gross acres of citrus groves and 5,800 gross acres of ranch land. In April 2021, the 5,800 gross acres of ranch land was released as security against the term loans and RLOC and only the 38,200 gross acres of citrus groves remain as security for the term loans and RLOC. The WCLC is collateralized by the Company’s current assets and certain other personal property owned by the Company. Initially, the Met Fixed-Rate Term Loans, were subject to quarterly principal payments of $1,562,500, and bore interest at 4.15% per annum. Effective May 1, 2021, the Company modified its Met Fixed-Rate Term Loans, which, in the aggregate after the prepayment of $10,312,500 made in April 2021, have a balance of $70,000,000 to be interest only with a balloon payment to be paid at maturity on November 1, 2029. The interest rate on these Met Fixed-Rate Term Loans, which were bearing interest at 4.15%, has been adjusted to 3.85%. As part of this modification, the Company no longer has the prepayment option previously allowed under the arrangement. The Met Variable-Rate Term Loans are subject to quarterly principal payments of $718,750 and bear interest at a rate equal to 90-day LIBOR plus 165 basis points (the “LIBOR spread”). The LIBOR spread is subject to adjustment by Met beginning May 1, 2017 and is subject to further adjustment every two years thereafter until maturity. No adjustment was made at May 1, 2019 or at May 1, 2021. Interest on the term loans is payable quarterly. The interest rates on the Met Variable-Rate Term Loans were 1.84% per annum and 1.91% per annum as of June 30, 2021 and September 30, 2020, respectively. The Met Variable-Rate Term Loans mature on November 1, 2029. The RLOC bears interest at a floating rate equal to 90-day LIBOR plus 165 basis points, payable quarterly. The LIBOR spread was adjusted by Met on May 1, 2017 and is subject to further adjustment every two years thereafter. No adjustment was made at May 1, 2019 or at May 1, 2021. In October 2019, the RLOC agreement was modified to extend the maturity to November 1, 2029. The RLOC is subject to an annual commitment fee of 25 basis points on the unused portion of the line of credit. The RLOC is available for funding general corporate needs. The variable interest rate was 1.84% and 1.91% per annum as of June 30, 2021 and September 30, 2020, respectively. Availability under the RLOC was $25,000,000 as of June 30, 2021 and September 30, 2020, respectively. The WCLC is a revolving credit facility and is available for funding working capital and general corporate requirements. The interest rate on the WCLC is based on the one-month LIBOR, plus a spread, which is adjusted quarterly, based on the Company's debt service coverage ratio for the preceding quarter and can vary from 175 to 250 basis points. The rate is currently at LIBOR plus 175 basis points. The variable interest rate was 1.85% and 1.90% per annum as of June 30, 2021 and September 30, 2020, respectively. The WCLC agreement was amended on August 25, 2020, and the primary terms of the amendment were an extension of the maturity to November 1, 2023. There were no changes to the commitment amount or interest rate. The WCLC agreement provides for Rabo to issue up to $2,000,000 in letters of credit on the Company’s behalf. As of June 30, 2021, there was approximately $236,000 in outstanding letters of credit, which correspondingly reduced the Company's availability under the line of credit. The WCLC is subject to a quarterly commitment fee on the daily unused availability under the line computed as the commitment amount less the aggregate of the outstanding loans and outstanding letters of credit. The commitment fee is adjusted quarterly based on Alico's debt service coverage ratio for the preceding quarter and can vary from a minimum of 20 basis points to a maximum of 30 basis points. Commitment fees to date have been charged at 20 basis points. There were no amounts outstanding on the WCLC at June 30, 2021 and approximately $2,942,000 outstanding on the WCLC as of September 30, 2020. Availability under the WCLC was approximately $69,764,000 and $66,659,000 as of June 30, 2021 and September 30, 2020, respectively. In 2014, the Company capitalized approximately $2,834,000 of debt financing costs related to the refinancing and approximately $339,000 of costs related to the retired debt. Additionally, financing costs of approximately $23,000 were incurred in the fiscal year ended September 30, 2020 in connection with the letters of credit. All costs are included in deferred financing costs and being amortized to interest expense over the applicable terms of the obligations. The unamortized balance of deferred financing costs related to the financing above was approximately $930,000 and approximately $1,048,000 at June 30, 2021 and September 30, 2020, respectively. These credit facilities noted above are subject to various covenants including the following financial covenants: (i) minimum debt service coverage ratio of 1.10 to 1.00, (ii) tangible net worth of at least $160,000,000 increased annually by 10% of consolidated net income for the preceding years, or approximately $169,730,000 for the year ended September 30, 2020, (iii) minimum current ratio of 1.50 to 1.00, (iv) debt to total assets ratio not greater than .625 to 1.00, and, (v) solely in the case of the WCLC, a limit on capital expenditures of $30,000,000 per fiscal year. As of June 30, 2021, the Company was in compliance with all of the financial covenants. Credit facilities also include a Met Life term loan collateralized by 1,200 gross acres of citrus grove owned by Citree ("Met Citree Loan"). This is a $5,000,000 credit facility that bears interest at a fixed rate of 5.28% per annum. Principal and interest payments are made on a quarterly basis. At June 30, 2021 and September 30, 2020, there was an outstanding balance of $4,325,000 and $4,512,000, respectively. The loan matures in February 2029. The unamortized balance of deferred financing costs related to this loan was approximately $33,000 and $36,000 at June 30, 2021 and September 30, 2020, respectively. Transition from LIBOR On July 27, 2017, the United Kingdom's Financial Conduct Authority (“FCA”), which regulates LIBOR, announced that it intends to phase out LIBOR. On November 30, 2020, ICE Benchmark Administration (“IBA”), the administrator of LIBOR, with the support of the United States Federal Reserve and the Financial Conduct Authority of the United Kingdom, announced plans to consult on ceasing publication of LIBOR on December 31, 2021 for only the one week and two-month LIBOR tenors, and on June 30, 2023 for all other LIBOR tenors. On March 5, 2021, the FCA confirmed that all LIBOR settings will either cease to be provided by any administrator or no longer be representative: (a) immediately after December 31, 2021, in the case of the one week and two-month U.S. dollar settings; and (b) immediately after June 30, 2023, in the case of the remaining U.S. dollar settings. The Alternative Reference Rate Committee, a committee convened by the Federal Reserve that includes major market participants, has proposed an alternative rate to replace U.S. Dollar LIBOR: the Secured Overnight Financing Rate (SOFR). The outcome of these reforms is uncertain and any changes in the methods by which LIBOR is determined or regulatory activity related to LIBOR’s phaseout could cause LIBOR to perform differently than in the past. The Company is currently evaluating the impact of the transition from LIBOR as an interest rate benchmark to other potential alternative reference rates. Currently, the Company has debt instruments in place that reference one-month and three-month LIBOR-based rates. The transition from LIBOR, as mentioned above is estimated to take place in fiscal 2023 and management will continue to actively assess the related opportunities and risks involved in this transition. Silver Nip Citrus Debt There are two fixed-rate term loans, with an original combined balance of $27,550,000, bearing interest at 5.35% per annum (“Pru Loans A & B”). Principal of $290,000 is payable quarterly, together with accrued interest. On February 15, 2015, 734 Citrus Holdings, LLC d/b/a Silver Nip Citrus (“Silver Nip Citrus”) made a prepayment of $750,000. In addition, the Company made prepayments of approximately $4,453,000 in the second fiscal quarter of 2018 with proceeds from the sale of certain properties, which were collateralized under these loans. The Company may prepay up to $5,000,000 of principal without penalty. As such, the Company exceeded the allowed $5,000,000 prepayment by approximately $203,000 and was required to make a premium payment of approximately $22,000. The loans are collateralized by approximately 5,700 acres of citrus groves in Collier, Hardee, Highlands and Polk Counties, Florida and mature on June 1, 2029 and June 1, 2033, respectively. Silver Nip Citrus entered into two additional fixed-rate term loans with Prudential to finance the acquisition of a 1,500 acre citrus grove on September 4, 2014. Each loan (“Pru Loan E” and “Pru Loan F”) was in the original amount of $5,500,000 with principal of $55,000 per loan being payable quarterly, together with accrued interest. In November 2019, the Company prepaid Pru Loan F in full in the amount of $4,455,000. As a result of this prepayment, the Company’s required annual principal payments on its Pru Loans was reduced by $220,000 per annum. Pru Loan E, which matures September 1, 2021, bears interest at 3.85% per annum. The interest rate on Pru Loan E is subject to adjustment on September 1, 2019 and every year thereafter until maturity. No adjustment was made at September 1, 2019 or at September 1, 2020. This loan is collateralized by approximately 1,500 gross acres of citrus groves in Charlotte County, Florida. The remaining Silver Nip Citrus credit agreements are subject to a financial covenant whereby the consolidated current ratio requirement is 1.00 to 1.00. Silver Nip Citrus was in compliance with the current ratio covenant as of June 30, 2021. The unamortized balance of deferred financing costs related to the Silver Nip Citrus debt was approximately $194,000 and $208,000 at June 30, 2021 and September 30, 2020, respectively.

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