Parks America, Inc. (OTCPink:PRKA) has announced the completion of a new financing agreement, which has led to the termination of a previous loan arrangement. The company's subsidiary, Aggieland-Parks, Inc., secured a $2.5 million term loan with Cendera Bank, N.A. on September 30, 2024, aiming to refinance existing debt.
The new loan, which has a 10-year term with a 15-year amortization schedule, carries an initial interest rate of 7.5%, based on the current Prime Rate of 8.0%. Monthly payments for the loan are estimated at $23,200, with a balloon payment of the remaining principal due on September 30, 2034.
To facilitate the loan, Parks America incurred approximately $56,500 in associated fees and expenses. Additionally, a cash collateral reserve of $2.5 million has been established by Focus Compounding Fund, LP to secure the loan.
The proceeds from the new term loan were used to pay off the previous loan with First Financial Bank, N.A., which had an outstanding balance of $2.39 million. This previous loan was part of the financing for the acquisition of Aggieland Wild Animal Safari by Parks America on April 27, 2020, and was secured by the assets of Aggieland Wild Animal Safari and guarantees from Parks America and its subsidiaries.
In other recent news, Parks America has undergone substantial changes in its executive and board positions. The company's Chief Financial Officer, Todd R. White, has announced his resignation effective at the end of the year. White also stepped down from the company's Board of Directors and sold a substantial number of shares to Focused Compounding Fund, LP, a firm whose principals are on Parks America's board.
Moreover, Parks America's board member, Lisa Brady, also tendered her resignation due to concerns over strategic decisions and potential breaches of fiduciary duties. In addition, seven new board members were elected during the company's annual meeting. These include Jon M. Steele, Geoffrey Gannon, Andrew Kuhn, Jacob McDonough, and Ralph Molina, among others.
Shareholders also ratified GBQ LLC as the company's independent registered accountants for the fiscal year ending September 29, 2024. However, the executive compensation proposal was not passed, indicating a significant level of shareholder involvement in the company's governance.
InvestingPro Insights
Parks America's recent refinancing move aligns with its financial profile as revealed by InvestingPro data. The company's market cap stands at $33.32 million, reflecting its small-cap status. Despite the new loan, InvestingPro Tips indicate that Parks America "operates with a moderate level of debt" and "liquid assets exceed short term obligations," suggesting the company maintains a balanced financial position.
The refinancing decision appears prudent given the company's revenue growth. InvestingPro data shows a revenue growth of 5.23% over the last twelve months, with a more impressive 21.0% growth in the most recent quarter. This growth trajectory may have influenced the company's ability to secure favorable loan terms.
Parks America's gross profit margin is notably high at 86.19%, which an InvestingPro Tip describes as "impressive gross profit margins." This strong profitability metric could provide comfort to lenders and potentially contribute to the company's ability to service its new debt obligations.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for Parks America, providing deeper insights into the company's financial health and market performance.
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