(7)	SHORT-TERM AND LONG-TERM DEBT and lease obligations

Short-Term Debt – Revolving Credit Facility

As of the indicated dates, the Partnership had the following short and long-term debt outstanding (in thousands):

	December 31,		December 31,
	2015		2014
Short-Term Debt
Current portion of long-term debt	$	2,202	$	1,050
Total short-term debt outstanding	$	2,202	$	1,050
Long-Term Debt
Revolving Credit Facility (due 2017)	$	5,000	$	-
2015 Bridge Loan (due 2017) (1)		2,835		-
2010 Term Loan (due 2020)		4,725		5,775
2015 6-Year Term Loan (due 2021)		4,594		-
2015 20-Year Term Loan (due 2045)		5,133		-
Other		20		-
Total principal amount of long-term debt		22,307		5,775
Less: current portion of long-term debt		2,202		1,050
Total long-term debt outstanding	$	20,105	$	4,725

(1)

Maturity date for the 2015 Bridge Loan may be earlier than 2017. See description of the 2015 Bridge Loan below.

The following table summarizes the Partnership’s principal maturities of its debt (in thousands):

	Payments Due by Period
	Total		2016		2017		2018		2019		2020		Remaining
Debt	$	22,307	$	2,202	$	10,029	$	2,188	$	2,188	$	1,664	$	4,036

Credit Agreement with AgCredit PCA

Pursuant to the Fourth Amended and Restated Credit Agreement, dated July 15, 2010 (as amended, the “Prior PCA Credit Agreement”), by and between the Partnership and the Partnership’s wholly owned subsidiary Royal, as the borrowers, and American AgCredit, PCA, as lender (“AgCredit PCA”), the Partnership had a revolving credit facility for $5 million (the “Revolving Credit Facility”) and an existing term loan of $10.5 million dollars (the “2010 Term Loan”). The Prior PCA Credit Agreement was amended on various dates in 2011 through February 27, 2015, to extend the maturity date of the Revolving Credit Facility.

On March 27, 2015, the Partnership and each of its wholly owned subsidiaries RHR, Royal and RHS, as the borrowers (the “Borrowers”), and AgCredit PCA, as lender and as agent for such other persons who may be added as lenders from time to time, entered into an Amended and Restated Credit Agreement that amended and restated the terms of the Partnership’s outstanding borrowings with AgCredit PCA (as amended by the First PCA Credit Agreement Amendment, the Second PCA Credit Agreement Amendment, the Third PCA Credit Agreement Amendment and the Fourth PCA Credit Agreement Amendment (each defined below), the “Amended PCA Credit Agreement”). The Amended PCA Credit Agreement (i) increased the amount of the Revolving Credit Facility from $5 million to $9 million and extended its maturity from March 31, 2015, to March 27, 2017; (ii) reduced the interest rate of the 2010 Term Loan; and (iii) added a new term loan of $5.25 million that matures on March 27, 2021 (the “2015 6-Year Term Loan”).

Pursuant to the Amended PCA Credit Agreement, the Revolving Credit Facility, the 2010 Term Loan, the 2015 6-Year Term Loan and the 2015 Bridge Loan (as defined below) are collateralized by all of the personal and real property assets of the Borrowers. The Amended PCA Credit Agreement contains certain restrictions associated with partner distributions, further indebtedness, sales of assets, and maintenance of certain financial covenants.

In connection with the Becker Property Acquisition, the Partnership and its subsidiaries entered into the First Amendment to Amended and Restated Credit Agreement with AgCredit PCA, effective as of June 15, 2015 (the “First PCA Credit Agreement Amendment”). On June 29, 2015, the Partnership and its subsidiaries entered into a Second Amendment to Amended and Restated Credit Agreement with AgCredit PCA (the “Second PCA Credit Agreement Amendment”) to delete a financial covenant for the quarter ended June 30, 2015. On September 22, 2015, the Borrowers and its subsidiaries entered into a Third Amendment to Amended and Restated Credit Agreement with AgCredit PCA (the “Third PCA Credit Agreement Amendment”) to delete a financial covenant for the quarter ended September 30, 2015.

As of December 31, 2015, the Partnership was not in compliance with the financial covenants in the Amended PCA Credit Agreement, which non-compliance was waived by AgCredit PCA pursuant to the terms of the Fourth Amendment to Amended and Restated Credit Agreement and Waiver (the “Fourth PCA Credit Agreement Amendment”) among the Borrowers and AgCredit PCA executed on March 11, 2016. See Note 15 –

Subsequent Events

for a more detailed description of the Fourth PCA Credit Agreement Amendment.

Revolving Credit Facility.

The Amended PCA Credit Agreement increased the Revolving Credit Facility from $5 million to $9 million and extended the maturity from March 31, 2015, to March 27, 2017. Advances under the Revolving Credit Facility bear interest based on an election made by the Partnership at the time of the advance at either LIBOR rates or at the base rate of the higher of (a) one-half of one percent (0.50%) per annum in excess of the latest Federal Funds Rate (as defined in the Amended PCA Credit Agreement); and (b) the prime rate of interest in effect for such day as published from time to time in

The Wall Street Journal

. The Partnership is required to pay a fee of 0.375% per annum on the daily unused portion of the Revolving Credit Facility. The interest rate on the Revolving Credit Facility at December 31, 2015, was 4.25% per annum.

As of December 31, 2015, the outstanding balance on the Revolving Credit Facility was $5.0 million, compared with no balance outstanding as of December 31, 2014.

2010 Term Loan.

The Prior PCA Credit Agreement provided for the 2010 Term Loan of $10.5 million, which matures on July 1, 2020. The Amended PCA Credit Agreement left the 2010 Term Loan in place but reduced the fixed interest rate under the 2010 Term Loan from 6.5% per annum to 6.0% per annum. As of December 31, 2015, and December 31, 2014, the outstanding balance on the 2010 Term Loan was $4.725 million and $5.775 million, respectively.

2015 6-Year Term Loan.

The Amended PCA Credit Agreement provided for the 2015 6-Year Term Loan of $5.25 million, which matures on March 27, 2021. The 2015 6-Year Term Loan bears interest at a fixed rate of 4.01% per annum. The Partnership used the proceeds of the 2015 6-Year Term Loan to replace working capital used to construct Phase 1 of the Partnership’s drying plant and to finance the construction of Phase 2 of its drying plant. As of December 31, 2015, the outstanding balance on the 2015 6-Year Term Loan was $4.594 million.

2015 Bridge Loan.

The First PCA Credit Agreement Amendment provided for a bridge loan of $2.835 million (the “2015 Bridge Loan”), which was to mature on the earlier of (a) March 15, 2016, or (b) the date that the Partnership or any of its wholly subsidiaries receives net proceeds from any issuance of equity, subject to certain exceptions. Subsequent to year end, the fixed maturity date trigger for the 2015 Bridge Loan was extended from March 15, 2016, to January 15, 2017. See Note 15 –

Subsequent Events

. The 2015 Bridge Loan bears interest at the base rate plus three quarters of one percent (0.75%) where the base rate (“Base Rate”) is the higher of (i) one half of one percent (0.5%) per annum in excess of the latest Federal Funds Rate, and (ii) the prime rate of interest in effect for such day as published from time to time in

The Wall Street Journal

. As of September 1, 2016, the interest rate on the 2015 Bridge Loan will increase to the Base Rate plus 1.00%. See Note 15 –

Subsequent Events

. The 2015 Bridge Loan is collateralized by all personal and real property assets of the Borrowers

including a second priority interest in the properties acquired in the Becker Property Acquisition. The proceeds of the 2015 Bridge Loan were used by the Partnership on June 16, 2015, for the Becker Property Acquisition. As of December 31, 2015, the outstanding balance on the 2015 Bridge Loan was $2.835 million

2015 20-Year Term Loan.

Also in connection with the Becker Property Acquisition, the Partnership entered into a Credit Agreement, effective June 15, 2015 (the “FLCA Credit Agreement”), with American AgCredit, FLCA (“AgCredit FLCA”), providing for a $5.265 million, 20-year term loan (“2015 20-Year Term Loan”). The 2015 20-Year Term Loan bears interest at a fixed rate of 5.29% per annum and requires quarterly payments, with fixed principal reductions, over the term. The 2015 20-Year Term Loan matures on July 1, 2035. The Partnership used the proceeds of the 2015 20-Year Term Loan for the Becker Property Acquisition. The 2015 20-Year Term Loan is secured by a mortgage on the properties acquired in the Becker Property Acquisition. As of December 31, 2015, the outstanding balance on the 2015 20-Year Term Loan was $5.133 million.

See Note 15 –

Subsequent Events

for a discussion of an amendment to the FLCA Credit Agreement entered into between the Partnership and AgCredit FLCA on March 11, 2016, in connection with a cross-default covenant in the FLCA Credit Agreement related to the default of the financial covenants in the Amended PCA Credit Agreement described above.

Long-Term Debt – Fair Value

The estimated fair values of the Partnership’s financial instruments have been determined through a discounted cash flow model using an estimated market rate of 4.00% in 2015 and 4.25% in 2014 with similar terms and remaining maturities to that of the current financial instruments. The Partnership has not considered the lender fees in determining the estimated fair value.

The estimated fair values of the Partnership’s financial instrument are as follows at December 31, 2015 and 2014 (in thousands):

	2015				2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt	$	17,307	$	18,023	$	5,775	$	6,110
Revolving credit facility	$	5,000	$	5,000	$	-	$	-
	$	22,307	$	23,023	$	5,775	$	6,110

The inputs used in determining the fair value of the long-term debt and revolving credit facility are based on the lowest level of input that is significant to the fair value measurement and classified as Level 3 within the fair value measurement hierarchy. The Partnership’s policy is to recognize transfers in and/or out of a fair value hierarchy as of the end of the reporting period in which the event or change in circumstances causing a transfer occurred. The Partnership has consistently applied the valuation technique discussed in all periods presented.

Both the revolving credit loan and the term debt are collateralized by all personal and real property assets of the Partnership. The Credit Agreement contains certain restrictions associated with partner distributions, further indebtedness, sales of assets, and maintenance of certain financial covenants.

At December 31, 2015, the Partnership’s working capital was $8.6 million and its current ratio was 2.73-to-1 as compared to the Partnership’s working capital of $4.6 million and its current ratio of 2.43-to-1 at December 31, 2014.

As of December 31, 2015 and December 31, 2014, the Partnership was not in compliance with the terms and conditions of the Amended PCA Credit Agreement and the Prior PCA Credit Agreement, respectively. In each case the non-compliance was waived by AgCredit PCA.

Land Lease Obligations

The Partnership leases the land underlying 1,601 acres of its orchards under long-term operating leases and one month-to-month lease, all of which expire through various dates between 2019 and 2045. Operating leases provide for changes in minimum rent based on fair value at certain points in time. Some of the land leases provide for additional lease payments based on USDA-reported macadamia nut price levels. The USDA-reported nut price for the crop year ended June 30, 2015 is $0.87 per WIS pound. Additional payments resulting from the USDA farm price for nuts were made to lessors in the aggregate amount of $54,000 in 2015 and $103,000 in 2014. The 2014 payment included additional lease accrual for crop year 2014 and crop year 2013 in the amount of $54,000 and $49,000, respectively. The USDA had not published the final crop year 2013 nut price as of December 31, 2013; therefore, the Partnership did not issue the additional lease payment in 2013. The Partnership issued the payment in 2014 based on the $0.80 per pound price for crop year 2013 as provided by the USDA in 2014. Total lease rent recorded for all land operating leases was $155,000 in 2015 and $197,000 in 2014. One lease, which terminates in 2034, allows the lessor to purchase the trees from the Partnership in 2019, and if exercised, the lease would terminate.

Operating leases for the Partnership as of December 31, 2015 are detailed in the following table (in thousands):

	Total		2016		2017		2018		2019		2020		Remaining
Operating leases (1)		792		251		219		141		128		53		-
Total	$	792	$	251	$	219	$	141	$	128	$	53	$	0

)

Lease rents for four leases expiring in 2028 or later will be renegotiated from 2018 through 2021 per current lease agreements.