Farmer Brothers’ credit facility cut to $125 million via amendment

By Rebecca Melvin

New York, March 11 – Farmer Bros. Co.’s credit facility due November 2023 has been reduced to $125 million from $150 million, among other changes made to the facility in an amendment effective March 5, according to an 8-K filing with the Securities and Exchange Commission.

While the facility size was reduced, the sublimit on letters of credit and swingline loans of $15 million each was retained. Other modifications of the credit agreement between the company and administrative agent JPMorgan Chase Bank, NA include removing the option to extend the maturity date with lender approval and removing its accordion feature.

The commitment fee rate was modified to range from 20 basis points to 50 bps, and the interest rate was modified to a range of Libor plus 150 bps to 350 bps.

Revolving commitments have been reduced upon the occurrence of certain asset dispositions and incurrence of other debt. But it increased the company’s debt basket for acquisitions, construction or improvement of fixed or capital assets to $40 million from $20 million and modified some of the company’s other covenant-related baskets.

In addition, the amendment added a minimum EBITDA financial covenant until the quarter ending Dec. 31, 2021 and increased the maximum net debt to EBITDA ratio financial covenant until the quarter ending Dec. 21, 2021.

The company plans to use the increased flexibility afforded by the amendment to draw down on the credit facility to fund future capital improvements and expenditures such as continued rebalancing of volume across the company’s manufacturing and distribution network, and other strategic projects.

The coffee foodservice company is based in Northlake, Tex.

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