Lifecore Biomedical Completes Incremental Liquidity Initiatives
Lifecore Biomedical (NASDAQ: LFCR) has announced several initiatives to improve liquidity, resulting in an additional $8 million of non-dilutive liquidity. This brings the total non-dilutive incremental liquidity to $18.5 million for fiscal year 2024. Key measures include amendments with lenders and the winding down of subsidiary Curation Foods.
On May 2, 2024, Lifecore secured a $5.5 million prepayment from a term lender. Additionally, a 'first-in, last-out' tranche amendment with an ABL lender added $2.5 million in revolving loan capacity, though it will increase annual interest expenses by $44,000.
The company also finalized an assignment for the benefit of creditors for Curation Foods. As of April 21, 2024, Lifecore reported total debt and cash of $178.9 million and $3.0 million, respectively, which would be $178.9 million and $11.0 million on a pro forma basis.
Moreover, amendments to the 2024 Annual Incentive Plan will see executives compensated in fully vested shares rather than cash.
- Lifecore Biomedical secured $8 million in non-dilutive incremental liquidity.
- Total non-dilutive incremental liquidity for fiscal year 2024 now stands at $18.5 million.
- A $5.5 million prepayment from a term lender will advance future purchases.
- A 'first-in, last-out' tranche amendment with an ABL lender adds $2.5 million in revolving loan capacity.
- Assignment for the benefit of creditors to finalize the winding down of Curation Foods.
- Pro forma cash position improved to $11.0 million as of April 21, 2024.
- Executives' annual incentives will be paid in fully vested shares, aligning their interests with shareholders.
- Annual cash interest expense expected to increase by approximately $44,000 due to the FILO Amendment.
- Total debt remains high at $178.9 million as of April 21, 2024.
- Decrease in reported cash from $3.2 million in Q3 2024 to $3.0 million as of April 21, 2024.
- Reduction in maximum capacity of permitted borrowings from the FILO Amendment starting October 1, 2025.
Insights
Lifecore Biomedical's recent liquidity initiatives are significant for the company's financial health. The addition of
The prepayment of
In summary, these measures help stabilize the company's finances, giving it breathing room to focus on growth and operational efficiency. However, the increased interest expenses and future obligations need careful management.
From a market perspective, Lifecore’s initiatives indicate proactive steps to improve liquidity without diluting shareholder value. This is a positive signal to the market, showing management’s commitment to financial stability.
The prepayment agreement with the term lender underscores a strong relationship with key stakeholders, which can be beneficial in future negotiations. The FILO Amendment, although increasing costs slightly, expands borrowing capacity, providing additional flexibility.
The winding down of Curation Foods, Inc. indicates a strategic focus on core operations, which can streamline resources and improve overall efficiency. This move could enhance investor confidence in the company's strategic direction.
Overall, these initiatives are likely to be well-received by the market, as they reflect a well-thought-out approach to liquidity management.
Recent Initiatives Provide Approximately
CHASKA, Minn., May 16, 2024 (GLOBE NEWSWIRE) -- Lifecore Biomedical, Inc. (NASDAQ: LFCR) (“Lifecore” or the “Company”), a fully integrated contract development and manufacturing organization (“CDMO”), announced certain incremental liquidity measures and housekeeping matters related to divested businesses through a series of 8-K filings over the past week.
James G. Hall, President and Chief Executive Officer of Lifecore, commented, “We believe these incremental liquidity improvements will provide Lifecore with additional financial resources to continue to achieve its business objectives. During fiscal year 2024, and with the approximately
Lender Updates
On May 2, 2024, the Company entered into an amendment related to its contract manufacturing agreement with its term lender and customer, in which the lender made a prepayment in the amount of
On May 10, 2024, the Company also entered into the Seventh Amendment to the ABL Loan Agreement with its ABL lender to execute a “first-in, last-out” tranche of revolving loans under the ABL Loan Agreement (the “FILO Amendment”). While not increasing the overall revolver commitment of
Subsidiary Assignment for the Benefit of Creditors
On May 15, 2024, the Company entered into an assignment for the benefits of creditors related to the remaining assets and liabilities of its wholly owned subsidiary, Curation Foods, Inc, to facilitate the finalization of the winding down of that entity. Pursuant to the terms of the assignment, the assignee will seek to monetize any remaining assets of Curation Foods, Inc., and settle any remaining liabilities of that entity.
Liquidity Update
As of April 21, 2024, the end of the Company’s period 11 fiscal month, the Company’s total term and ABL revolver debt (excluding debt discount and issuance costs) and cash was
Incentive Plan Amendment
On May 1, 2024, the Compensation Committee and the Board approved an amendment to the Company’s 2024 Annual Incentive Plan as it relates to James G. Hall and John D. Morberg, the Company’s executive officers. Under the terms of the amendment, any cash incentive amount that would have been earned by Mr. Hall and Mr. Morberg under the 2024 Annual Incentive Plan will be paid in fully vested, unrestricted shares of common stock of the Company.
About Lifecore Biomedical
Lifecore Biomedical, Inc. is a fully integrated contract development and manufacturing organization (CDMO) that offers highly differentiated capabilities in the development, fill and finish of complex sterile injectable pharmaceutical products in syringes and vials. As a leading manufacturer of premium, injectable grade Hyaluronic Acid, Lifecore brings more than 40 years of expertise as a partner for global and emerging biopharmaceutical and biotechnology companies across multiple therapeutic categories to bring their innovations to market. For more information about the Company, visit Lifecore’s website at www.lifecore.com.
Important Cautions Regarding Forward-Looking Statements
This press release contains forward-looking statements regarding future events and our future results that are subject to the safe harbor created under the Private Securities Litigation Reform Act of 1995 and other safe harbors under the Securities Act of 1933 and the Securities Exchange Act of 1934. Words such as “anticipate”, “estimate”, “expect”, “project”, “plan”, “intend”, “believe”, “may”, “might”, “will”, “should”, “can have”, “likely” and similar expressions are used to identify forward-looking statements. In addition, all statements regarding our preliminary estimates of historical financial data for the Historical Periods, current operating and financial expectations in light of historical results, anticipated capacity and utilization, anticipated liquidity, and anticipated future customer relationships usage are forward-looking statements. All forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially, including such factors among others, as the Company’s results from operations and ability to maintain its borrowing capacity, the competition of the Company’s financial closing procedures, the Company’s ability to successfully enact its business strategies, including with respect to installation, capacity generation and its ability to attract demand for its services, the Company’s ability to become current with its reports with the Securities and Exchange Commission (the “SEC”), and the timing thereof, the Company’s ability to regain compliance with applicable listing standards under Nasdaq, and its ability expand its relationship with its existing customers or attract new customers, the impact of inflation on the Company’s business and financial condition, indications of a change in the market cycles in the CDMO market; changes in business conditions and general economic conditions both domestically and globally including rising interest rates and fluctuation in foreign currency exchange rates, access to capital; and other risk factors set forth from time to time in the Company’s SEC filings, including, but not limited to, the Annual Report on Form 10-K for the year ended May 28, 2023 (the “2023 10-K”). For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to our filings with the Securities and Exchange Commission, including the risk factors contained in the 2023 10-K. Forward-looking statements represent management’s current expectations as of the date hereof and are inherently uncertain. Except as required by law, we do not undertake any obligation to update forward-looking statements made by us to reflect subsequent events or circumstances.
Lifecore Biomedical, Inc. Contact Information:
Jeff Sonnek
(646) 277-1263
jeff.sonnek@icrinc.com
FAQ
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