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Credit Facility
 6 Months Ended
Nov. 27, 2021
Credit Facility [Abstract]  
Credit Facility
Note 7 – Credit Facility
On
 
November
 
15,
 
2021,
 
we
 
entered
 
into an
 
Amended
 
and
 
Restated
 
Credit
 
Agreement
 
(the
 
“Credit
 
Agreement”)
 
with a
five
-
year
 
term.
 
The
 
Credit
 
Agreement
 
amended
 
and
 
restated
 
the
 
Company’s
 
previously
 
existing
 
credit
 
agreement
 
dated
 
July
 
10,
2018.
 
The
 
Credit
 
Agreement
 
provides
 
for
 
an
 
increased
 
senior
 
secured
 
revolving
 
credit
 
facility
 
(the
 
“Credit
 
Facility”
 
or
“Revolver”),
 
in
 
an
 
initial
 
aggregate
 
principal
 
amount
 
of
 
up
 
to
 
$
250
 
million,
 
which
 
includes
 
a
 
$
15
 
million
 
sublimit
 
for
 
the
issuance
 
of
 
standby
 
letters
 
of
 
credit
 
and
 
a
 
$
15
 
million
 
sublimit
 
for
 
swingline
 
loans.
 
The
 
Credit
 
Facility
 
also
 
includes
 
an
accordion
 
feature
 
permitting,
 
with
 
the
 
consent
 
of
 
BMO
 
Harris
 
Bank
 
N.A.
 
(the
 
“Administrative
 
Agent”),
 
an
 
increase
 
in
 
the
Credit Facility
 
in the
 
aggregate up
 
to $
200
 
million by
 
adding one
 
or more
 
incremental senior
 
secured term
 
loans or
 
increasing
one or more times the revolving commitments under the Revolver.
 
As of November 27, 2021,
no
 
amounts were borrowed under
the Credit Facility and $
4.1
 
million in standby letters of credit were issued under the Credit Facility.
The
 
interest
 
rate
 
in
 
connection
 
with
 
loans
 
made
 
under
 
the
 
Credit
 
Facility
 
is
 
based
 
on,
 
at
 
the
 
Company’s
 
election,
 
either
 
the
Eurodollar
 
Rate
 
plus
 
the
 
Applicable
 
Margin
 
or
 
the
 
Base
 
Rate
 
plus
 
the
 
Applicable
 
Margin.
 
The
 
“Eurodollar
 
Rate”
 
means
 
the
reserve adjusted
 
rate at
 
which Eurodollar
 
deposits in
 
the London
 
interbank market
 
for an
 
interest period
 
of
one
,
two
,
three
,
six
or
twelve
 
months (as
 
selected by
 
the Company)
 
are quoted.
 
The “Base
 
Rate” means
 
a fluctuating
 
rate per
 
annum equal
 
to the
highest
 
of
 
(a)
 
the
 
federal
 
funds
 
rate
 
plus
0.50
%
 
per
 
annum,
 
(b)
 
the
 
prime
 
rate
 
of
 
interest
 
established
 
by
 
the
 
Administrative
Agent, and (c) the Eurodollar Rate for
 
an interest period of
one
 
month plus
1
% per annum, subject to certain interest
 
rate floors.
The
 
“Applicable
 
Margin”
 
means
0.00
%
 
to
0.75
%
 
per
 
annum
 
for
 
Base
 
Rate
 
Loans
 
and
1.00
%
 
to
1.75
%
 
per
 
annum
 
for
Eurodollar
 
Rate
 
Loans,
 
in
 
each
 
case
 
depending
 
upon
 
the
 
Total
 
Funded
 
Debt
 
to
 
Capitalization
 
Ratio
 
for
 
the
 
Company
 
at
 
the
quarterly pricing
 
date. The
 
Company will pay
 
a commitment fee
 
on the unused
 
portion of the
 
Credit Facility
 
payable quarterly
from
0.15
%
 
to
0.25
%
 
in
 
each
 
case
 
depending
 
upon
 
the
 
Total
 
Funded
 
Debt
 
to
 
Capitalization
 
Ratio
 
for
 
the
 
Company
 
at
 
the
quarterly pricing date. The Credit Agreement contains customary provisions
 
regarding replacement of the Eurodollar Rate.
The
 
Credit
 
Facility
 
is
 
guaranteed
 
by
 
all the
 
current
 
and
 
future wholly
 
-owned
 
direct
 
and
 
indirect
 
domestic
 
subsidiaries
 
of
 
the
Company (the
 
“Guarantors”), and
 
is secured
 
by a
 
first-priority perfected
 
security interest
 
in substantially
 
all of
 
the Company’s
and
 
the
 
Guarantors’
 
accounts,
 
payment
 
intangibles,
 
instruments
 
(including
 
promissory
 
notes),
 
chattel
 
paper,
 
inventory
(including farm products) and deposit accounts maintained with the Administrative
 
Agent.
The
 
Credit
 
Agreement
 
for the
 
Credit
 
Facility
 
contains
 
customary
 
covenants,
 
including
 
restrictions
 
on
 
the incurrence
 
of
 
liens,
incurrence of
 
additional debt,
 
sales of
 
assets and
 
other fundamental
 
corporate changes
 
and investments.
 
The Credit
 
Agreement
requires maintenance
 
of two
 
financial covenants:
 
(i) a
 
maximum Total
 
Funded Debt
 
to Capitalization
 
Ratio tested
 
quarterly of
no greater than
50
%; and (ii) a requirement
 
to maintain Minimum Tangible
 
Net Worth
 
at all times of $
700
 
Million plus
50
% of
net
 
income
 
(if
 
net
 
income
 
is
 
positive)
 
less
 
permitted
 
restricted
 
payments
 
for
 
each
 
fiscal
 
quarter
 
after
 
November
 
27,
 
2021.
Additionally,
 
the Credit Agreement
 
requires that Fred
 
R. Adams Jr.’s
 
spouse, natural children,
 
sons-in-law or grandchildren,
 
or
any trust,
 
guardianship, conservatorship
 
or custodianship
 
for the primary
 
benefit of any
 
of the foregoing,
 
or any family
 
limited
partnership, similar limited liability
 
company or other entity
 
that
100
% of the voting control
 
of such entity is held
 
by any of the
foregoing, shall maintain
 
at least
50
% of the Company's
 
voting stock. Failure
 
to satisfy any of
 
these covenants will constitute
 
a
default under the terms of
 
the Credit Agreement. Further,
 
under the terms of the Credit
 
Agreement, payment of dividends under
the
 
Company's
 
current
 
dividend
 
policy
 
of
one-third
 
of
 
the
 
Company's
 
net
 
income
 
computed
 
in
 
accordance
 
with
 
GAAP
 
and
payment of other
 
dividends or repurchases
 
by the Company
 
of its capital stock
 
is allowed, as long
 
as after giving
 
effect to such
dividend
 
payments or
 
repurchases no
 
default has
 
occurred and
 
is continuing
 
and
 
the sum
 
of cash
 
and cash
 
equivalents of
 
the
Company and its subsidiaries plus availability under the Credit Facility equals
 
at least $
50
 
million.
The Credit
 
Agreement also
 
includes customary
 
events of
 
default and
 
customary remedies
 
upon the
 
occurrence of
 
an event
 
of
default, including acceleration
 
of the amounts due
 
under the Credit Facility
 
and foreclosure of
 
the collateral securing
 
the Credit
Facility.
At November 27, 2021, we were in compliance with the covenant requirements of
 
the Credit Facility.