Below is a brief excerpt from a complimentary research note written by our Consumables analysts Howard Penney and Daniel Biolsi. We are pleased to announce our new Sector Pro Product Consumables Pro. Click HERE to learn more.
Yesterday, STKL announced the completion of the sale of its global ingredients segment (and related assets) to Amsterdam Commodities N.V. (Euronext: ACOMO) for cash consideration of €330 million.
The company also announced a five-year credit agreement for a senior secured asset-based revolving credit facility of $250M, replacing the previous facility set to expire on March 31, 2022.
Additionally, as part of the same facility, the lenders provided a five-year, $75M delayed drawing term loan for general corporate purposes. This is a transformational deal for the company and makes STKL a (near) pure play on the high-growth, plant-based category.
This transaction significantly de-levers the company balance sheet, enabling the acceleration of expansion plans in the plant-based food and beverage segment. Yesterday, the company suggested that they are looking at "synergistic acquisitions" that add to the core plant-based beverage platform.
The press release also stated that the retired in full its 9.5%, $223.5 million second lien notes due in October 2022. The second-lien notes' retirement reduces interest expense by approximately $21 million on an annual basis.
"In total, debt was reduced by approximately $355 million between the payoff of the second lien notes and pay down of the existing credit facility on December 31, 2020. On an annualized basis, interest expense would decrease from approximately $29 million to approximately $4 million based on the weighted-average interest rates as of September 26, 2020."
We continue to see significant upside in STKL from current levels.