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KeyBank, S&W Seed Close $20MM ABL Facility

September 24, 2015, 07:39 AM
Filed Under: Agriculture
Related: Asset Based, KeyBank

S&W Seed Company has signed and closed a $20 million asset-based credit facility with KeyBank National Association. The new credit facility is being utilized to refinance the company's existing Export-Import Bank-backed senior debt and provides additional borrowing capacity and financial flexibility to support S&W's growth objectives, including increasing seed production to expand revenue.  KeyBank acted as sole lender.

Key terms of the agreement include:

  • Expands S&W's working capital facility for its United States operations to $20 million from $14 million under its previous facility.
  • The new facility has a variable interest rate based on a margin above short-term market rates (approximately 2.2% per annum at current market rates). A 75 basis point reduction in interest rate margin compared to the previous facility.
  • The new facility does not rely on credit support from the EX-IM Bank.
  • Provides a borrowing base equal to 85% of S&W's eligible accounts receivable (90%, if insured) and 65% of eligible inventory, subject to lender reserves.
  •  Provides a commitment period that extends through September 22, 2017.

The facility is secured by all of S&W's assets, subject to certain existing security interests and exceptions.

Mark Grewal, chief executive officer of S&W Seed Company, commented, "This expanded working capital facility with KeyBank enables us to execute on a number of growth initiatives, including expansion of our contracted grower base, which will result in revenue growth opportunities. The agreement does not rely on the EX-IM Bank, provides for a borrowing base structure that efficiently uses our AR and inventory assets, while simultaneously allowing us to reduce our cost of borrowing by 75 basis points. We appreciate the commitment from KeyBank to be a strategic partner with S&W and support our growth into the future."

Founded in 1980, S&W Seed Company is a global agricultural company, headquartered in Fresno, California.

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