FIVE POINTS, Calif., Jan. 26, 2015 /PRNewswire/ -- S&W Seed Company (Nasdaq: SANW) today announced the Company has entered into agreements to sell 759 acres of farmland in Calipatria, California, as well as 30 acres of farmland in Five Points, California, for $7.3 million combined. Concurrently, the Company has signed an agreement with the purchaser of the Calipatria farmland for continued alfalfa seed production of the Company's proprietary alfalfa seed varieties on a contracted basis. Following the repayment of the existing $2.3 million mortgage on the Calipatria farmland, the Company will utilize the remaining proceeds to prepay $5.0 million of the convertible debentures recently issued in connection with the Company's acquisition of DuPont Pioneer's alfalfa seed production and research assets, reducing interest expense and potential dilution associated with the convertible debentures.
Mark Grewal, chief executive officer of S&W Seed Company, commented, "The farmland sale, grower contracting, and debt retirement is precisely in line with the plans we laid out to further grow S&W and place it on a path to drive continued shareholder value going forward. The sale of farmland allows us to retire $7.3 million of total debt from the Company's balance sheet, reduce potential dilution from the convertible debentures and reduce interest expense while allowing for the continued utilization of the farmland to produce our proprietary alfalfa seed varieties. We look forward to the further execution of our strategic business plan to capitalize on the opportunities ahead of us as the largest and most diversified alfalfa seed company in the world."
The farmland sales are expected to close during the Company's third quarter ending March 31, 2015. The Company will receive net cash proceeds from the farmland sales of approximately $5.0 million following the repayment of the existing $2.3 million mortgage on the Calipatria farmland, and will record an estimated one-time charge of $500,000 for unrecovered stand establishment and growing crop costs that were incurred on the farmland being sold prior to farming revenues being received. This one-time charge will be recognized in the Company's second quarter. The Company will also record a $126,000 gain on the sale of the farmland in Five Points during the third quarter ending March 31, 2015. Additionally, the reduction of debt is estimated to reduce interest expense by approximately $460,000 over the next 12 months.
About S&W Seed Company
Founded in 1980, S&W Seed Company is a global agricultural company, headquartered in the Central Valley of California. The Company's vision is to be the world's preferred proprietary seed company which supplies a range of forage and specialty crop products that supports the growing global demand for animal proteins and healthier consumer diets. The Company is the global leader in alfalfa seed, with unrivaled research and development, production and distribution capabilities. S&W's capabilities span the world's alfalfa seed production regions with operations in the San Joaquin and Imperial Valleys of California, five other U.S. states, Australia, and three provinces in Canada, and S&W sells its seed products in more than 25 countries around the globe. Additionally, the Company is utilizing its research and breeding expertise to develop and produce stevia, the all-natural, zero calorie sweetener for the food and beverage industry. For more information, please visit www.swseedco.com.
Safe Harbor Statement
This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" describe future expectations, plans, results, or strategies and are generally preceded by words such as "may," "future," "plan" or "planned," "will" or "should," "expected," "anticipates," "draft," "eventually" or "projected." You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors and other risks identified in the Company's 10-K for the fiscal year ended June 30, 2014, and other filings made by the Company with the Securities and Exchange Commission.
SOURCE S&W Seed Company