Decisive Dividend Corporation Announces Closing of New Syndicated Credit Facility
KELOWNA, BC, March 13, 2024 /CNW/ - Decisive Dividend Corporation (TSXV: DE) ("Decisive" or the "Corporation") is pleased to announce that it has it has closed its previously announced $175 million syndicated credit facility. In closing, Decisive has increased its overall debt capacity by $107 million through a committed $100 million senior secured revolving credit facility and a $75 million accordion facility (the "Credit Facility"). The syndicate includes National Bank of Canada, through National Bank Financial Markets ("National Bank") and Canadian Western Bank, through its wholly-owned division CWB Maxium Financial Inc. ("CWB"), who together acted as co-lead arrangers and joint bookrunners, as well as Royal Bank of Canada ("RBC") and Fédération des caisses Desjardins du Québec ("Desjardins") (collectively the "Syndicate"). National Bank acts as administrative agent on behalf of the Syndicate.
The Credit Facility replaces the Corporation's previous credit agreement with CWB and represents an increase in overall debt capacity from $68 million to $175 million, providing Decisive with considerable additional liquidity to fund growth in its existing operations as well as through acquisition opportunities, at borrowing costs consistent with the effective interest rates under its previous credit agreement.
The Credit Facility provides for more flexibility as a single senior secured revolving credit facility that can be utilized to fund working capital, capital expenditures, and acquisitions, compared to the three separate loan tranches included in the previous credit agreement. In addition, the Credit Facility includes a $75 million accordion facility, which the Corporation can request as an increase, in whole or in part, to the total amount available under the Credit Facility. As with the previous credit agreement, there are no required principal repayments during the committed three-year term of the Credit Facility and all drawn amounts will mature in March 2027. In addition, the Corporation can request to extend the term of the loan annually.
Comparative details of the Credit Facility and the previous credit agreement are as follows:
Syndicated Credit Facility
(Stated in thousands of dollars) | Effective | Revised | |||||||||
Interest | Interest | Authorized | |||||||||
Rate | Rate | Debt | |||||||||
Senior secured revolving credit facility | see below | 8.2 % | $ | 100,000 | |||||||
Accordion facility | see below | - | 75,000 | ||||||||
$ | 175,000 | ||||||||||
Previous Credit Agreement | |||||||||||
(Stated in thousands of dollars) | Effective | Previous | |||||||||
Interest | Interest | Authorized | |||||||||
Rate | Rate | Debt | |||||||||
Revolving term acquisition facility | P+2.5% | 9.7 % | $ | 25,000 | |||||||
Revolving term operating facility | P+1.0% | 8.2 % | 15,000 | ||||||||
Non-amortizing term facility | 6.9 % | 6.9 % | 28,000 | ||||||||
8.2 % | $ | 68,000 | |||||||||
"P" in the table above denotes Canadian prime rate | |||||||||||
Borrowings under the Credit Facility may be made by way of Canadian prime rate, U.S. base rate, CORRA or SOFR advances. The Credit Facility bears interest at the Canadian prime rate or U.S. base rate plus 0.75% to 2.25%, or at the Canadian overnight repo rate average ("CORRA") or the U.S. Federal reserve secured overnight financing rate ("SOFR") plus 2.00% to 3.50%. These interest rate ranges are dependent on certain financial ratios of the Corporation. In addition, standby fees ranging from 0.40% to 0.70% per annum are paid quarterly on the unused portion of the Credit Facility depending on certain financial ratios of the Corporation. There are no fees paid on the accordion facility until amounts are made available to the Corporation.
The Credit Facility is secured by a general security agreement, assignment of insurance, and unlimited corporate cross guarantees. Additionally, the Corporation has agreed to maintain the following financial ratios (as defined in the credit agreement) on a consolidated trailing twelve-month basis:
Maximum total debt to adjusted EBITDA of 3.25:1
Minimum interest coverage ratio of 1.50:1
Simon Tobin, Market Lead - National Client Group, BC at National Bank of Canada, noted:
"National Bank is proud to embark on this partnership with Decisive and lead the Corporation's inaugural syndicated financing. Decisive has demonstrated impressive growth during its first 9 years of operations and as an acquisition-oriented company the new facilities will provide increased debt capacity and flexibility to support the future growth of the business."
John Cherian, Managing Director & Head, Corporate Banking, Loan Syndications & Agency at CWB, noted:
"Canadian Western Bank is thrilled to continue the partnership with Decisive in their next phase of growth and co-lead the Syndicate. This milestone reflects the dedication of Decisive' s management team in achieving remarkable success. The facility will provide additional access to capital to support the growth of the Corporation".
The terms of the Credit Facility set forth in this press release are subject to the terms set forth in the definitive documentation representing the Credit Facility and ancillary matters.
About Decisive Dividend Corporation
Decisive Dividend Corporation is an acquisition-oriented company, focused on opportunities in manufacturing. The Corporation's purpose is to be the sought-out choice for exiting legacy-minded business owners, while supporting the long-term success of the businesses acquired, and through that, creating sustainable and growing shareholder returns. The Corporation uses a disciplined acquisition strategy to identify already profitable, well-established, high quality manufacturing companies that have a sustainable competitive advantage, a focus on non-discretionary products, steady cash flows, growth potential and established, strong leadership.
Cautionary Statements
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of the contents of this News Release.
This press release contains forward-looking statements. These statements relate to the potential benefits of the Credit Facility to the Corporation. Forward-looking statements are necessarily based upon a number of expectations and assumptions that, while considered reasonable by management at the time the statements are made, are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies, many of which are beyond the Corporation's control and many of which are subject to change. Readers are cautioned not to place undue reliance on forward-looking statements which only speak as to the date they are made. Although management believes that the expectations and assumptions underlying such forward-looking statements are reasonable, there can be no assurance that such expectations or assumptions will prove to be correct. A number of factors could cause actual future results, performance, achievements and developments of the Corporation to differ materially from anticipated results, performance, achievements and developments expressed or implied by such forward-looking statements. The forward-looking statements contained in this press release are made as of the date hereof and the Corporation is not obligated to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information.
SOURCE Decisive Dividend Corporation
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