Credit Facility

12 Months Ended

Jun. 03, 2023

Credit Facility [Abstract]

Credit Facility

Note 10 - Credit Facility

For fiscal years 2023, 2022 and 2021, interest expense was $

583

 thousand, $

403

 thousand, and $

213

 thousand, respectively,

primarily related to commitment fees on the Credit Facility described below.

On May 26, 2023, we entered into the First Amendment (the “Amendment”) to the Amended and Restated Credit Agreement,

dated November 15, 2021 (as amended, the “Credit Agreement”). The Amendment replaced the London Interbank Offered Rate

interest rate benchmark with the secured overnight financing rate as administered by the Federal Reserve Bank of New York or

a successor administrator of the secured overnight financing rate (“SOFR”). The Credit Agreement has a

five

-year term. The

Credit Agreement provides for a 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.

No

 amounts were borrowed under the facility as of June 3, 2023 or May 28, 2022 or during fiscal 2023 or

fiscal 2022. The Company had $

4.3

 million of outstanding standby letters of credit issued under the Credit Facility at June 3,

2023.

The interest rate in connection with loans made under the Credit Facility is based on, at the Company’s election, either the

Adjusted Term SOFR Rate plus the Applicable Margin or the Base Rate plus the Applicable Margin. The “Adjusted Term SOFR”

means with respect to any tenor, the per annum rate equal to the sum of (i) Term SOFR as defined in the Credit Agreement plus

(ii)

0.10

% (10 basis points); provided, if Adjusted Term SOFR determined as provided above shall ever be less than the Floor,

then Adjusted Term SOFR shall be deemed to be the Floor. The “Floor” means the rate per annum of interest equal to

0.00

%.

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 Adjusted Term SOFR for a

one

-month tenor plus

1.00

%. The “Applicable Margin” means

0.00

% to

0.75

% per annum for Base Rate Loans and

1.00

% to

1.75

% per annum for

SOFR 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 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 June 3, 2023, we were in compliance with the covenant requirements of the Credit Facility.