Alico changes creditors

Alico Inc. entered into a credit agreement with Rabo Agrifinance Inc. worth $100 million that will reduce its quarterly payment and improve its cash flow.

The company also ended its relationship with Farm Credit of Southwest Florida shortly thereafter.

Similar to its previous arrangement, Alico's deal with Rabo include a $60 million revolving line of credit and a $40 million term note. But the amount of collateral required by the lender is reduced in both cases, and Alico's new term note offers it much more cash flow flexibility.

Alico's term note with Farm Credit required quarterly principal payments of $1.25 million, and accumulated interest at an annual rate of 6.79%. The new note requires just $500,000 in principal payment each quarter, and the interest rate has been reduced to LIBOR — what banks charge each other for loans — plus 2.50%.

The creditor switch cost Alico more than $4 million, a release said, but CEO JD Alexander says his company expects the change to pay off in the future.

“While we incurred substantial costs related to this restructure,” Alexander said, “we see substantial incremental value in the Rabobank Credit Agreement. Furthermore, the long-term nature of the RLOC and extended grace period related to the debt service coverage ratio provides the company needed flexibility in light of the volatile nature of agricultural profits.”

Alico Inc. owns approximately 135,500 acres of land in Florida. The company is headquartered in LaBelle.