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Long-Term Debt and Lines of Credit | 6 Months Ended
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Mar. 31, 2023
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 March 31, 2023 and September 30, 2022:
|  | March 31, 2023 |  |  | September 30, 2022 |
(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 |  |  | $ | 392 |  |  | $ | 70,000 |  |  | $ | 435 |
Met Variable-Rate Term Loans |  |  | 19,094 |  |  |  | 102 |  |  |  | 19,906 |  |  |  | 113 |
Met Citree Term Loan |  |  | 3,888 |  |  |  | 25 |  |  |  | 4,013 |  |  |  | 27 |
Pru Loans A & B |  |  | 12,197 |  |  |  | 165 |  |  |  | 12,777 |  |  |  | 173 |
|  |  | 105,179 |  |  |  | 684 |  |  |  | 106,696 |  |  |  | 748 |
Less current portion |  |  | 1,629 |  |  |  | — |  |  |  | 3,035 |  |  |  | — |
Long-term debt |  | $ | 103,550 |  |  | $ | 684 |  |  | $ | 103,661 |  |  | $ | 748 |
The following table summarizes lines of credit and related deferred financing costs, net of accumulated amortization at March 31, 2023 and September 30, 2022:
|  | March 31, 2023 |  |  | September 30, 2022 |
(in thousands) |  | Principal |  |  | Deferred Financing Costs, Net |  |  | Principal |  |  | Deferred Financing Costs, Net |
Lines of Credit: |  |  |  |  |  |  |  |  |  |  |  |
RLOC |  | $ | — |  |  | $ | 104 |  |  | $ | — |  |  | $ | 110 |
WCLC |  |  | 21,122 |  |  |  | — |  |  |  | 4,928 |  |  |  | — |
Lines of Credit |  | $ | 21,122 |  |  | $ | 104 |  |  | $ | 4,928 |  |  | $ | 110 |
Future maturities of long-term debt and lines of credit as of March 31, 2023 are as follows:
(in thousands) |  |  |  |  |  |  |
|  |  |  |  |  | March 31, 2023 |
Due within one year |  |  |  |  |  | $ | 1,629 |
Due between one and two years |  |  |  |  |  |  | 3,035 |
Due between two and three years |  |  |  |  |  |  | 24,157 |
Due between three and four years |  |  |  |  |  |  | 3,035 |
Due between four and five years |  |  |  |  |  |  | 3,035 |
Due beyond five years |  |  |  |  |  |  | 91,410 |
Total future maturities |  |  |  |  |  | $ | 126,301 |
Interest costs expensed and capitalized were as follows:
(in thousands) |  |  |  |  |  |  |  |  |  |  |  |
|  | Three Months Ended March 31, |  |  | Six Months Ended March 31, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Interest expense |  | $ | 1,274 |  |  | $ | 870 |  |  | $ | 2,422 |  |  | $ | 1,771 |
Interest capitalized |  |  | 333 |  |  |  | 328 |  |  |  | 614 |  |  |  | 631 |
Total |  | $ | 1,607 |  |  | $ | 1,198 |  |  | $ | 3,036 |  |  | $ | 2,402 |
Debt The Company's credit facilities consist of (i) fixed interest rate term loans originally in the amount of $125,000,000 (“Met Fixed-Rate Term Loans”), (ii) prior to the satisfaction of one such loan, variable interest rate term loans originally in the amount of $57,500,000 (“Met Variable-Rate Term Loans”), (iii) a $25,000,000 revolving line of credit (“RLOC”) with Metropolitan Life Insurance Company and New England Life Insurance Company (collectively “Met”), and (iv) 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 consists of approximately 38,200 gross acres of citrus groves. 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, have a balance of $70,000,000 after the prepayment of $10,312,500 made in April 2021, 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%, was 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 $406,250 and historically bore an interest rate equal to 90-day LIBOR plus 165 basis points (the “LIBOR spread”). Effective February 17, 2023, the Company agreed to defer the next three quarterly principal payments which were previously due May 2023, August 2023 and November 2023 to the maturity date of the loan. For the fiscal year ended September 30, 2022, the LIBOR rate was effective from October 1, 2021 through July 31, 2022.The LIBOR spread was subject to adjustment by Met beginning May 1, 2017 and was subject to further adjustment every two years thereafter until maturity. No adjustment was made at May 1, 2019, or at May 1, 2021. Effective August 1, 2022, the interest rate was renegotiated to the One Month Term Secured Overnight Financing Rate (SOFR) plus 175 basis points (the “SOFR spread”). The SOFR spread is subject to adjustment by Met every 2 years beginning May 1, 2023, until maturity. Interest on the term loans is payable quarterly. The interest rates on the Met Variable-Rate Term Loans were 6.42% per annum and 4.27% per annum, as of March 31, 2023 and September 30, 2022, respectively. The Met Variable-Rate Term Loans mature on November 1, 2029. With respect to the RLOC, for the fiscal year ended September 30, 2022, the LIBOR-based rate was effective from October 1, 2021 through July 31, 2022 and bore interest at a floating rate equal to 90-day LIBOR plus 165 basis points, payable quarterly. Effective August 1, 2022, the LIBOR-based rate was renegotiated to SOFR plus 175 basis points. The SOFR spread is subject to adjustment by lender every 2 years beginning May 1, 2023, until maturity. The LIBOR spread was adjusted by Met on May 1, 2017 and was subject to further adjustment every two years thereafter. No adjustment was made on May 1, 2019 or on 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 6.42% per annum and 4.27% per annum as of March 31, 2023 and September 30, 2022, respectively. Availability under the RLOC was $25,000,000 as of March 31, 2023 and September 30, 2022, 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 was based on the one-month LIBOR, plus a spread, which was adjusted quarterly, based on the Company’s debt service coverage ratio for the preceding quarter and can vary from 175 to 250 basis points. T he WCLC agreement was amended on October 27, 2022, and the primary terms of the amendment were an extension of the maturity to November 1, 2025, and the conversion of the interest rate from LIBOR plus a spread to SOFR plus a spread, which spread 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. There were no changes to the commitment amount. The variable interest rate was 6.42% at March 31, 2023 (representing the rate based on SOFR) and the interest rate at September 30, 2022 was 4.31% per annum (representing the rate based upon LIBOR plus 175 basis points). The WCLC agreement provides for Rabo to issue up to $2,000,000 in letters of credit on the Company’s behalf, of which $248,000 was outstanding as of March 31, 2023, 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 was approximately $21,122,000 and $4,928,000 outstanding on the WCLC at March 31, 2023 and September 30, 2022, respectively. Availability under the WCLC was approximately $48,630,000 and $64,762,000 as of March 31, 2023 and September 30, 2022, respectively. In 2014, the Company capitalized approximately $2,834,000 of debt financing costs related to a 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. During the three months ended June 30, 2022, the Company expensed approximately $94,000 in deferred financing costs related to the Met Variable-Rate Term Loan prepayment of approximately $15,625,000 on April 29, 2022. All costs are included in deferred financing costs and are 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 $597,000 and approximately $658,000 at March 31, 2023 and September 30, 2022, 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 $174,462,000 for the year ended September 30, 2022; (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 March 31, 2023, the Company was in compliance with all of the financial covenants, except for the minimum debt service coverage ratio of 1.10 to 1.00, for which the Company obtained a waiver from the lender, Rabo, for the second quarter ended March 31, 2023. 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. Effective February 17, 2023, the Company agreed to defer the next three quarterly principal payments which were previously due May 2023, August 2023 and November 2023 to the maturity date of the loan. At March 31, 2023 and September 30, 2022, there was an outstanding balance of $3,888,000 and $4,013,000, respectively. The loan matures in February 2029. The unamortized balance of deferred financing costs related to this loan was approximately $25,000 and $27,000 at March 31, 2023 and September 30, 2022, respectively. Transition from LIBOR On July 27, 2017, the United Kingdom’s Financial Conduct Authority (“FCA”), which regulates LIBOR, announced that it intended 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). On March 15, 2022, President Biden signed the Consolidated Appropriations Act, 2022, which contains as part of its many provisions the Adjustable Interest Rate (LIBOR) Act providing for a transition from LIBOR to a SOFR based rate for certain legacy contracts which lack adequate fallback provisions. However, the LIBOR Act does not affect the Company because the Company has amended its LIBOR based loan documents to include benchmark replacement provisions (i.e., provisions based on SOFR). Silver Nip Citrus Debt Silver Nip Citrus entered into two initial fixed-rate term loans with Prudential Mortgage Capital Company (“Prudential”), 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. 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. The Pru Loans A & B are subject to an annual 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 March 31, 2023. The unamortized balance of deferred financing costs related to the Silver Nip Citrus debt was approximately $165,000 and $173,000 at March 31, 2023 and September 30, 2022, respectively.

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