SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 22, 2017
SANDERSON FARMS, INC.
(Exact name of registrant as specified in its charter)
Mississippi | 1-14977 | 64-0615843 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
127 Flynt Road Laurel, Mississippi |
39443 | |
(Address of principal executive offices) | (Zip Code) |
(601) 649-4030 (Registrants telephone number, including area code) |
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Section 1 Registrants Business and Operations
Item 1.01 Entry into a Material Definitive Agreement.
Credit Agreement Amendment
On November 22, 2017, Sanderson Farms, Inc. (the Registrant) entered into a First Amendment to its Credit Agreement (the Amendment) with BMO Harris Bank N.A., as agent; and BMO Harris Financing, Inc.; AgFirst Farm Credit Bank; Farm Credit Bank of Texas; Farm Credit Services of America, PCA; Regions Bank; Bank of the West; 1st Farm Credit Services, PCA; AgStar Financial Services, PCA; Farm Credit Mid-America, PCA; United FCS, PCA d/b/a FCS Commercial Finance Group; Northwest Farm Credit Services, PCA; GreenStone Farm Credit Services, ACA/FLCA; U.S. Bank National Association; American AgCredit, PCA; Trustmark National Bank; Farm Credit West, PCA and BankPlus, as lenders.
The Amendment amends the Registrants Credit Agreement, dated April 28, 2017 (the Credit Agreement), to exclude certain capital projects in an aggregate of up to $135.0 million from the capital expenditure limitation in the Credit Agreement. The capital projects, which include the construction of a new feed mill, and other expansions, equipment and changes to the Laurel, Collins, McComb, Kinston, Moultrie, Brazos, Palestine, Hazlehurst and Waco processing complexes, are each subject to their own expenditure limitations. The Amendment also provides for an acknowledgment by the Registrants wholly-owned subsidiaries of their guaranty of the Registrants indebtedness, obligations and liabilities under the Credit Agreement, as amended by the Amendment.
A copy of the Amendment is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference. The description above is a summary of the Amendment and is qualified in its entirety by the complete text of the Amendment.
Certain Relationships
From time to time, certain of the lenders under the Credit Agreement and Amendment and their related entities have engaged, and may in the future engage, in commercial, investment banking and financial services transactions with the Registrant in the ordinary course of their business. They have received, and expect to receive, customary compensation and expense reimbursement for these commercial and investment banking transactions. In addition, one of the Registrants directors, Toni D. Cooley, is a director of Trustmark National Bank and its parent company, Trustmark Corporation.
Section 9 Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit |
Description | |
10.1 | First Amendment to Credit Agreement, dated November 22, 2017, by and among Sanderson Farms, Inc., BMO Harris Bank N.A. as agent for the Banks defined therein, and the Banks party thereto. |
EXHIBIT INDEX
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SANDERSON FARMS, INC.
(Registrant)
Date: November 29, 2017 | By: | /s/ D. Michael Cockrell | ||||
D. Michael Cockrell | ||||||
Treasurer and Chief Financial Officer |
EXHIBIT 10.1
SANDERSON FARMs, INC.
FIRST AMENDMENT TO CREDIT AGREEMENT
This First Amendment to Credit Agreement (herein, the Amendment) is entered into as of November 22, 2017, among Sanderson Farms, Inc., a Mississippi corporation (the Company), the Banks party hereto, and BMO Harris Bank N.A., as Agent for the Banks (Agent).
PRELIMINARY STATEMENTS
A. The Company, the Banks, and the Agent are parties to a Credit Agreement dated as of April 28, 2017 (the Credit Agreement). All capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Credit Agreement.
B. The Company has requested that the Required Banks amend the Credit Agreement, and the Required Banks are willing to do so on the terms and conditions set forth in this Amendment.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. | AMENDMENTS. |
Upon satisfaction of all of the conditions precedent set forth in Section 2 hereof, the Credit Agreement shall be amended to read as follows:
1.1. | Section 7.11(a) of the Credit Agreement shall be amended to read as follows: |
(a) The Company will not, and will not permit any Subsidiary to, spend or be obligated to spend during any fiscal year for capital expenditures (as defined and classified in accordance with generally accepted accounting principles as, with respect to the definition and classifications of operating leases, existing on the date of this Credit Agreement, consistently applied, including without limitation any such capital expenditures in respect of Capitalized Leases but excluding (x) any acquisition permitted by Section 7.14(d) which might constitute such a capital expenditure, (y) the capital expenditures permitted by clauses (b) and (c) below and (z) the capital expenditures described in Schedule 7.11(a) attached hereto in an aggregate amount not to exceed $135,000,000) in an aggregate amount for the Company and its Subsidiaries in excess of $100,000,000 during its fiscal year ending October 31, 2017, increasing by $5,000,000 during each fiscal year of the Company ending thereafter to and including fiscal year 2022, commencing with the fiscal year ending October 31, 2018, plus in each case up to $15,000,000 which may be carried over from the fiscal year ending October 31, 2016 into the fiscal year ending October 31, 2017, and $20,000,000 which may be carried over from any fiscal year ending on or after October 31, 2017, into the immediately following
fiscal year (the Carryover Amount) permitted to be spent in the preceding fiscal year but not actually spent therein. For purposes of this Section, any capital expenditures made in any fiscal year shall be applied first to the Carryover Amount, if any, available during such fiscal year.
1.2. The Credit Agreement shall be amended by adding thereto as Schedule 7.11(a) the Schedule 7.11(a) attached to this Amendment.
2. | CONDITIONS PRECEDENT. |
The effectiveness of this Amendment is subject to the satisfaction of all of the following conditions precedent:
2.1. The Company and the Required Banks shall have executed this Amendment.
2.2. Each Guarantor Subsidiary shall have executed the Guarantors Acknowledgment attached hereto.
3. | REPRESENTATIONS AND WARRANTIES. |
3.1. Each of the representations and warranties set forth in Section 5 of the Credit Agreement is true and correct.
3.2. The Company is in full compliance with all of the terms and conditions of the Credit Agreement and no Event of Default or Potential Default has occurred and is continuing thereunder or shall result after giving effect to this Amendment.
4. | MISCELLANEOUS. |
4.1. Reference to this specific Amendment need not be made in any note, document, letter, certificate, the Credit Agreement itself, the Notes, or any communication issued or made pursuant to or with respect to the Credit Agreement or the Notes, any reference to the Credit Agreement being sufficient to refer to the Credit Agreement as amended hereby.
4.2. This Amendment may be executed in any number of counterparts, and by the different parties on different counterparts, all of which taken together shall constitute one and the same agreement. Any of the parties hereto may execute this Amendment by signing any such counterpart and each of such counterparts shall for all purposes be deemed to be an original. This Amendment shall be governed by the internal laws of the State of Illinois.
[SIGNATURE PAGES TO FOLLOW]
-2-
This Amendment is entered into as of the date and year first above written.
SANDERSON FARMS, INC. | ||
By: | /s/ D. Michael Cockrell | |
Its: | CFO and Treasurer |
Accepted and agreed to as of the date and year first above written.
BMO HARRIS BANK N.A., as Agent and an L/C Issuer | ||
By: | /s/ David J. Bechstein | |
Its: | Director |
Signature Page
Sanderson Farms, Inc.
First Amendment to Credit Agreement
LENDERS | ||
BMO HARRIS FINANCING, INC. | ||
By: | /s/ David J. Bechstein | |
Its: | Director |
Signature Page
Sanderson Farms, Inc.
First Amendment to Credit Agreement
AGFIRST FARM CREDIT BANK | ||
By: | /s/ Matt Jeffords | |
Its: | Vice President |
Signature Page
Sanderson Farms, Inc.
First Amendment to Credit Agreement
FARM CREDIT BANK OF TEXAS | ||
By: | /s/ Alan Robinson | |
Its: | Vice President |
Signature Page
Sanderson Farms, Inc.
First Amendment to Credit Agreement
FARM CREDIT SERVICES OF AMERICA, PCA | ||
By: | /s/ Bruce Dean | |
Its: | Vice President |
Signature Page
Sanderson Farms, Inc.
First Amendment to Credit Agreement
REGIONS BANK | ||
By: | /s/ Jim Wild | |
Its: | Vice President |
Signature Page
Sanderson Farms, Inc.
First Amendment to Credit Agreement
BANK OF THE WEST | ||
By: | /s/ Trevor Svoboda | |
Its: | Vice President |
Signature Page
Sanderson Farms, Inc.
First Amendment to Credit Agreement
1ST FARM CREDIT SERVICES, PCA | ||
By: | /s/ Lee Fuchs | |
Its: | Vice President, Capital Markets Group |
Signature Page
Sanderson Farms, Inc.
First Amendment to Credit Agreement
AGSTAR FINANCIAL SERVICES, PCA | ||
By: | /s/ Lee Fuchs | |
Its: | Vice President, Capital Markets Group |
Signature Page
Sanderson Farms, Inc.
First Amendment to Credit Agreement
FARM CREDIT MID-AMERICA, PCA | ||
By: | /s/ Jay Carter | |
Its: | Vice President |
Signature Page
Sanderson Farms, Inc.
First Amendment to Credit Agreement
UNITED FCS, PCA d/b/a FCS COMMERCIAL FINANCE GROUP | ||
By: | /s/ Lisa Caswell | |
Its: | Vice President |
Signature Page
Sanderson Farms, Inc.
First Amendment to Credit Agreement
NORTHWEST FARM CREDIT SERVICES, PCA | ||
By: | /s/ Paul Hadley | |
Its: | Vice President |
Signature Page
Sanderson Farms, Inc.
First Amendment to Credit Agreement
GREENSTONE FARM CREDIT SERVICES, ACA/FLCA | ||
By: | /s/ Curtis Flammini | |
Its: | Vice President |
Signature Page
Sanderson Farms, Inc.
First Amendment to Credit Agreement
U.S. BANK NATIONAL ASSOCIATION | ||
By: | /s/ Brigitte M. Sinclair | |
Its: | Vice President |
Signature Page
Sanderson Farms, Inc.
First Amendment to Credit Agreement
AMERICAN AGCREDIT, PCA | ||
By: | /s/ Dan Hansen | |
Its: | Senior Vice President |
Signature Page
Sanderson Farms, Inc.
First Amendment to Credit Agreement
TRUSTMARK NATIONAL BANK | ||
By: | /s/ William H. Edwards | |
Its: | Senior Vice President |
Signature Page
Sanderson Farms, Inc.
First Amendment to Credit Agreement
FARM CREDIT WEST, PCA | ||
By: | /s/ Robert Stornetta | |
Its: | Vice President |
Signature Page
Sanderson Farms, Inc.
First Amendment to Credit Agreement
BANKPLUS | ||
By: | /s/ Jay Bourne | |
Its: | FVP |
Signature Page
Sanderson Farms, Inc.
First Amendment to Credit Agreement
GUARANTORS ACKNOWLEDGMENT
The undersigned, each of which has executed and delivered to the Banks a Guaranty Agreement dated as of April 28, 2017 (the Guaranty Agreement), hereby acknowledges the amendment of the Credit Agreement as set forth above and agrees that all of the Companys indebtedness, obligations and liabilities to the Banks and the Agent under the Credit Agreement, as amended by the foregoing Amendment, and the Notes are and shall continue to be entitled to the benefits of said Guaranty Agreement. The undersigned further agree that the Acknowledgment or consent of the undersigned to any further amendments of the Credit Agreement shall not be required as a result of this Acknowledgment having been obtained, except to the extent, if any, required by the Guaranty Agreement.
Dated as of November 22, 2017.
SANDERSON FARMS, INC. (FOODS DIVISION) | ||
By: | /s/ D. Michael Cockrell | |
Its: | CFO and Treasurer |
SANDERSON FARMS, INC. (PRODUCTION DIVISION) | ||
By: | /s/ D. Michael Cockrell | |
Its: | CFO and Treasurer |
SANDERSON FARMS, INC. (PROCESSING DIVISION) | ||
By: | /s/ D. Michael Cockrell | |
Its: | CFO and Treasurer |
SCHEDULE 7.11(A)
CERTAIN CAPITAL PROJECTS TO BE EXCLUDED FROM THE
CAPITAL EXPENDITURE LIMITATION
Location |
Description |
Amount |
||||||
1. | To Be Determined | Construct New Feed Mill | $ | 45,000,000 | ||||
2. | Laurel Processing | Building Expansion | $ | 6,800,000 | ||||
New Evisceration Equipment | $ | 4,550,000 | ||||||
Changes to Plant Setup in Debone | $ | 3,800,000 | ||||||
Thigh Debone Equipment | $ | 2,150,000 | ||||||
3. | Collins Processing | New Evisceration Equipment | $ | 7,700,000 | ||||
Parts Chillers | $ | 2,500,000 | ||||||
Building Expansion | $ | 1,300,000 | ||||||
Wing Segment Equipment | $ | 450,000 | ||||||
4. | McComb Processing | New Evisceration Equipment | $ | 7,500,000 | ||||
Thigh Debone Equipment | $ | 2,100,000 | ||||||
Pre-Chiller | $ | 750,000 | ||||||
8th Cone Line | $ | 550,000 | ||||||
5. | Kinston Processing | New Evisceration Equipment | $ | 7,500,000 | ||||
Pre-Chiller | $ | 750,000 | ||||||
Thigh Debone | $ | 650,000 | ||||||
8th Cone Line | $ | 600,000 | ||||||
6. | Moultrie Processing | New Evisceration Equipment | $ | 7,500,000 | ||||
Pre-Chiller | $ | 750,000 | ||||||
8th Cone Line | $ | 550,000 | ||||||
7. | Brazos Processing | New Evisceration Equipment | $ | 7,500,000 | ||||
Pre-Chiller | $ | 750,000 | ||||||
8. | Palestine Processing | New Evisceration Equipment | $ | 6,500,000 | ||||
9. | Hazlehurst Processing | New Evisceration Equipment | $ | 4,200,000 | ||||
Building Expansion | $ | 1,500,000 | ||||||
10. | Waco Processing | New Evisceration Equipment | $ | 5,500,000 |