Annual report pursuant to section 13 and 15(d)

Long-Term Debt

Long-Term Debt
12 Months Ended
Sep. 30, 2013
Long-Term Debt [Abstract]  
Long-Term Debt

Note 10. Long-Term Debt


Outstanding debt under the Company's various loan agreements is presented in the table below:


(in thousands) Revolving Line
of Credit
  Term Loan   Mortgage Note   Total Credit
September 30, 2013                              
Principal balance outstanding $ -     $ 36,000     $ -     $ 36,000  
Remaining available credit $ 60,000     $ -     $ -     $ 60,000  
Effective interest rate   2.43%       2.68%                  
Scheduled maturity date    October 2020        October 2020                  
Collateral    Real Estate        Real Estate                  
September 30, 2012                              
Principal balance outstanding $ -     $ 38,000     $ 1,900     $ 39,900  
Remaining available credit $ 60,000     $ -     $ -     $ 60,000  
Effective interest rate   2.48%       2.73%       6.68%          
Scheduled maturity date    October 2020        October 2020        March 2014          
Collateral    Real Estate        Real Estate        Real Estate          


The Company has a revolving line of credit ("RLOC") and term loan with Rabo AgriFinance, Inc. ("Rabo") totaling $96,000,000. The revolving line of credit and term note are collateralized by 43,991 acres of farmland and 12,280 acres of additional property containing approximately 8,600 acres of producing citrus groves.


The term loan requires quarterly payments of interest at a floating rate of one month LIBOR plus 250 basis points beginning October 1, 2010. Quarterly principal payments of $500,000 began on October 1, 2011 and continue through October 1, 2020 when the remaining principal balance and accrued interest will be due and payable.


The Rabo credit facility includes a ten year $60,000,000 RLOC bearing interest at a floating rate on the outstanding balance payable quarterly beginning October 1, 2010. Thereafter, quarterly interest is payable on the first day of January, April, July and October until the revolving line of credit matures on October 1, 2020 and the remaining principal balance and accrued interest shall be due and payable. Proceeds from the revolving line of credit may be used for general corporate purposes including: (i) the normal operating needs of Alico and its operating divisions, (ii) the purchase of capital assets; and (iii) the payment of dividends.


The interest rate on the revolving line of credit was initially established at one month LIBOR plus 250 basis points. Beginning on February 1, 2011, and on each subsequent January 1 through 2020, the interest rate spread over LIBOR is adjusted pursuant to a pricing grid based on our debt service coverage ratio for the immediately preceding fiscal year. The spreads may range from 225 to 275 basis points over one month LIBOR. The rate was not adjusted during fiscal year 2011 and remained at LIBOR plus 250 basis points through December 31, 2011, but was adjusted to LIBOR plus 225 basis points on January 1, 2012. On October 1, 2015, Rabo may adjust the interest rate spread to any percentage. Rabo must provide a 30 day notice of the new spreads; at that time the Company has the right to prepay the outstanding balance.


Loan origination fees incurred as a result of entry into the Rabo credit facility loan agreement, including appraisal fees, document stamps, legal fees and lender fees of approximately $1,202,000 were capitalized in fiscal year 2010 and are being amortized over the term of the loan agreement.


At September 30, 2013, and 2012, the Company was in compliance with the debt covenants and terms of the Rabo loan agreement. The Rabo credit facility contains the following significant covenants: (i) minimum current ratio of 1.50:1, (ii) debt to assets ratio no greater than 60%, (iii) tangible net worth of at least $80 million, and (iv) minimum debt coverage of 1.15:1.


The Company uses a cash management program with Rabobank designed to minimize the outstanding balance on the RLOC. Our various Rabobank accounts are swept daily into a concentration account. Funds in excess of a target balance are automatically applied to pay down the RLOC, if there is an outstanding balance.


Maturities of the Company's debt were as follows at September 30, 2013:


(in thousands)        
Due within one year   $ 2,000  
Due between one and two years     2,000  
Due between two and three years     2,000  
Due between three and four years     2,000  
Due between four and five years     2,000  
Due beyond five years     26,000  
Total   $ 36,000  


Interest costs expensed and capitalized to property, buildings and equipment were as follows:


(in thousands) Fiscal Year Ended September 30,
  2013   2012   2011
Interest expense $ 1,257     $ 1,616     $ 2,020  
Interest capitalized   79       100       127  
Total $ 1,336     $ 1,716     $ 2,147