S&W Seed Co., a leader in the development of non-dormant alfalfa seed varieties, today announced it has closed on the previously announced purchase agreement to acquire 640 acres of high quality farmland in Calipatria, Calif., located in California's Imperial Valley. Additionally, the Company finalized a lease agreement to farm on an adjacent 1,240 acres of farm land. The total of 1,880 acres of land will be primarily utilized for the production of the Company's proprietary alfalfa seed varieties.
Mark Grewal, chief executive officer of S&W Seed Company commented, "S&W Seed Company is dedicated to increasing alfalfa seed production to meet the increased demands of our customers. The acquisition and leasing of farm land in Imperial Valley allows us not only to increase seed production, but to do so by diversifying ourselves geographically. Additionally, by having direct oversight over farming operations, we maintain production controls while having the potential to improve overall operating margins. The closing of this land deal is the continuance of a number of important strategic steps we are taking to position S&W for growth into the future."
The purchase price of the 640 acres of land and associated water rights was approximately $5.5 million. The Company conventionally financed $2.625 million of the purchase with a long-term mortgage with Wells Fargo, while the remaining portion was funded in part by the proceeds of the company's recently closed public offering. The initial lease term will be five years, with 920 acres available for production in year one, and 1,240 total acres available in years two through five. The Company intends to contract out the farming to existing S&W growers in the Imperial Valley.