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SANW: The early retirement of the convertible debentures used to finance the Pioneer acquisition improves financials.

03/02/2017
By Ian Gilson, PhD, CFA

NASDAQ:SANW

On March 02, 2017 the company (NASDAQ:SANW) announced that it has retired the remaining amount of the convertible debentures issued in 2014 that were partially used to acquire the DuPont Pioneer alfalfa seed operation.

Some of these debentures have been retired in each quarter as excess cash flow and lines of credit have been sufficient retire them. The combination of interest expense and amortization of debt discount charges have declined from over $0.5 million a month to $0.2 a month and is now down to zero.

Our forecasts had assumed that the expenses from the debentures would end this fiscal year and so we have not changed our estimates. Since the company has assumed a significant amount of short term debt under the current line of credit ($22 million as of Dec. 31, 2016) we have not reduced the interest expense to zero. However, on a quarter to quarter basis 2018 fiscal year will  show a significant improvement in non-operating expenses.

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