CHASKA, Minn. - Lifecore Biomedical, Inc. (NASDAQ: LFCR), a contract development and manufacturing organization, has announced a series of financial maneuvers aimed at increasing its liquidity by approximately $18.5 million. These measures, detailed in recent 8-K filings, are part of the company's strategy to meet its business objectives for the fiscal year ending May 2024.
On May 2, 2024, Lifecore entered into an amendment with its term lender, receiving a $5.5 million prepayment as an advance on future purchases. This cash is to be applied against invoices within the scope of their manufacturing agreement during the 2026 calendar year.
Additionally, on May 10, 2024, the company executed the Seventh Amendment to the ABL Loan Agreement, introducing a "first-in, last-out" tranche that provides up to $2.5 million of incremental revolving loan capacity, without increasing the overall revolver commitment of $40 million or altering the collateral. The amendment raises the margin rate of the FILO loans to SOFR plus 4.25%, potentially increasing annual cash interest expense by approximately $44,000 based on a $2.5 million borrowing.
Lifecore also disclosed the assignment for the benefit of creditors for its subsidiary, Curation Foods, Inc., on May 15, 2024. This move is intended to monetize remaining assets and settle liabilities, aiding in the winding down of the entity.
The company's financial status as of April 21, 2024, showed total term and ABL revolver debt at $178.9 million, with cash holdings of $3.0 million. With the new liquidity improvements, pro forma cash would have been $11.0 million.
In an executive compensation update, Lifecore's Compensation Committee and Board approved an amendment on May 1, 2024, to the 2024 Annual Incentive Plan for executive officers James G. Hall and John D. Morberg. Instead of cash incentives, they will receive fully vested, unrestricted common stock.
Lifecore specializes in the development, fill, and finish of complex sterile injectable pharmaceutical products. The company's forward-looking statements indicate plans to maintain borrowing capacity, complete public filings promptly, and expand customer relationships.
The information in this article is based on a press release statement from Lifecore Biomedical, Inc.
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