S&W Secures New $25 Million Working Capital Facility

Rhea-AI Summary

S&W Seed Company (SANW) has secured a new $25 million revolving credit agreement with ABL OPCO (Mountain Ridge), replacing their existing CIBC Bank USA facility. The company's largest shareholder, MFP Partners L.P., provided a $13 million letter of credit as collateral support.

The company has recently implemented strategic initiatives focusing on core U.S.-based operations, particularly their high-margin sorghum trait portfolio with Double Team, while optimizing cost structure for near-term profitability. Additionally, S&W repurchased 200,000 shares directly from MFP in a private transaction, and granted MFP rights to designate a non-voting board observer.

Positive

• Secured new $25M revolving credit facility
• Strategic focus on high-margin sorghum trait portfolio
• Cost structure optimization for near-term profitability
• Support from largest shareholder through $13M letter of credit
• Share repurchase of 200,000 shares reducing outstanding shares

Negative

• Dependency on major shareholder for credit facility support

Insights

Financial Analyst

The new $25 million credit facility marks a important financial restructuring for S&W Seed Company. The deal structure, backed by MFP Partners through a $13 million letter of credit, demonstrates strong shareholder support while providing essential working capital flexibility. This refinancing comes at a strategic inflection point as S&W streamlines operations to focus on its U.S.-based high-margin sorghum trait business.

The concurrent share repurchase of 200,000 shares from MFP, while adding a board observer right, indicates a deeper strategic alignment between the company and its largest shareholder. This arrangement suggests MFP's increased commitment to S&W's turnaround strategy. For a company with a market cap of just $13.3 million, securing a facility nearly twice that size is noteworthy and provides significant operational runway.

The replacement of the CIBC facility with Mountain Ridge as the new lender likely offers more flexible terms aligned with S&W's restructuring goals. This refinancing should help support the company's transition toward profitability, though careful monitoring of cash burn and execution of strategic initiatives remains critical given the company's small size.

Agricultural Market Analyst

The strategic pivot to focus exclusively on U.S.-based operations, particularly the Double Team sorghum trait portfolio, represents a significant shift in S&W's business model. Sorghum's growing importance in sustainable agriculture and its drought-resistant properties position it well in the current climate-conscious market. The high-margin nature of trait technology, compared to traditional seed production, could substantially improve profitability metrics if executed properly.

The streamlined focus on sorghum traits aligns with broader agricultural trends toward resource-efficient crops and value-added genetics. This specialized approach, backed by new working capital, positions S&W to potentially capture a larger share of the expanding sorghum market, particularly as climate challenges drive demand for drought-tolerant crops.

LONGMONT, Colo., Dec. 23, 2024 /PRNewswire/ -- S&W Seed Company (Nasdaq: SANW) today announced it has closed a new $25 million revolving credit agreement with ABL OPCO LLC ("Mountain Ridge") which replaces an existing facility with CIBC Bank USA.

In connection with the Company's entry into the Mountain Ridge credit agreement, MFP Partners L.P. ("MFP"), S&W Seed Company's largest shareholder, provided a letter of credit with a face amount equal to $13 million. The MFP letter of credit is being used as collateral to support S&W's obligations under the Mountain Ridge credit agreement providing the Company with borrowing base credit under the Mountain Ridge credit facility.

"S&W has implemented a number of strategic initiatives over the past few months to exclusively focus on its core U.S.-based operations, led by our high margin sorghum trait portfolio with Double Team, while at the same time aligning our cost structure to drive the business toward near-term profitability," commented Vanessa Baughman, S&W's Chief Financial Officer. "I believe today's announcement is a strong endorsement from both our largest shareholder and new strategic banking partner in the future of S&W and the opportunity it represents going forward. I look forward to the continued execution of our growth and profitability initiatives as we enter calendar 2025."

S&W also entered into a stock purchase agreement with MFP pursuant to which the Company repurchased 200,000 shares of the Company's common stock directly from MFP in a private, non-underwritten transaction. The Repurchased Shares were retired and restored to the status of authorized but unissued shares of the Company. The Company also granted MFP the right to designate one individual, who shall be a representative of MFP reasonably acceptable to the Company, to attend all meetings of the Company's Board of Directors and all committees of the Board in a non-voting, observer capacity, subject to certain exceptions.

Full details of the Mountain Ridge and associated agreements is available on Form 8-K to be filed with the SEC available at www.sec.gov.

About S&W Seed Company

Founded in 1980, S&W is a global multi-crop, middle-market agricultural company headquartered in Longmont, Colorado. S&W's vision is to be the world's preferred proprietary seed company which supplies a range of sorghum, forage and specialty crop products that supports the growing global demand for animal proteins and healthier consumer diets. S&W is a global leader in sorghum seeds with significant research and development, production and distribution capabilities. S&W also has a commercial presence in proprietary alfalfa, and through a partnership, is focused on sustainable biofuel feedstocks primarily within camelina. For more information, please visit www.swseedco.com. 

Safe Harbor Statement

This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" describe future expectations, plans, results, or strategies and are generally preceded by words such as "may," "future," "plan" or "planned," "will" or "should," "expected," "anticipates," "draft," "eventually" or "projected." Forward-looking statements in this release include, but are not limited to, statements regarding the expected benefits of the Mountain Ridge credit facility, our success in executing our growth and profitability initiatives, including our success in aligning our cost structure to drive our business toward near-term profitability, and our go forward business plan. You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risk that the Mountain Ridge credit facility may not provide the anticipated benefits; the risk that our go forward business plan may not be successful and our strategic initiatives may not achieve the expected results; and the risks associated with our ability to successfully optimize and commercialize our business. These and other risks are identified in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the year ended June 30, 2024 and in other filings subsequently made by the Company with the Securities and Exchange Commission. All forward-looking statements contained in this press release speak only as of the date on which they were made and are based on management's assumptions and estimates as of such date. We do not undertake any obligation to publicly update any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events or otherwise.

Company Contact:
Mark Herrmann, Chief Executive Officer 
S&W Seed Company
Phone: (720) 593-3570
www.swseedco.com                                                                                                                                                                             

Investor Contact:
Robert Blum
Lytham Partners, LLC
Phone: (602) 889-9700
sanw@lythampartners.com
www.lythampartners.com

View original content to download multimedia:https://www.prnewswire.com/news-releases/sw-secures-new-25-million-working-capital-facility-302338615.html

SOURCE S&W Seed Company

FAQ

What is the size of S&W Seed Company's (SANW) new credit facility?

S&W Seed Company secured a new $25 million revolving credit agreement with ABL OPCO (Mountain Ridge).

How many shares did SANW repurchase from MFP Partners in December 2024?

S&W Seed Company repurchased 200,000 shares of common stock directly from MFP Partners in a private transaction.

What rights did SANW grant to MFP Partners regarding board representation?

S&W granted MFP Partners the right to designate one representative to attend board meetings and committee meetings as a non-voting observer.

What is S&W Seed Company's (SANW) current strategic focus?

S&W is focusing on core U.S.-based operations, particularly their high-margin sorghum trait portfolio with Double Team, while optimizing cost structure for near-term profitability.

How much collateral support did MFP Partners provide for SANW's new credit facility?

MFP Partners provided a letter of credit with a face amount of $13 million as collateral support for S&W's obligations under the Mountain Ridge credit agreement.