CTI Industries Concludes Working Capital Financing With BMO
CTI Industries Corporation announced that it completed an enhancement to its senior loan facility with BMO Harris and entered into a $5 million subordinated term loan agreement with BMO Equity. The enhancement to the BMO Harris senior loan facility increases the amount available under the revolving loan facility from $9 million to $12 million and also extends the term of the senior loan facility to July 17, 2017.
The subordinated loan agreement with BMO Equity provides for a $5 million loan to the company for a term of five years and a ten-year warrant to be issued to BMO Equity for the purchase of 140,048 shares of common stock of CTI, representing four percent of the outstanding shares of CTI common stock, at the price of one cent per share. Interest is payable on the outstanding balance of the loan on a fully diluted basis at the rate of 11.5% per annum. The principal amount of the loan is due July 17, 2017 and may be pre-paid at any time subject to prepayment penalties. The loan is subordinated to the senior loan of the company with BMO Harris and is secured by junior security interests in assets of CTI. At the time of maturity of the loan (or prepayment), BMO Equity has the right to put the warrant to CTI at the fair market value of the warrant at the time. BMO Equity also has the right to exercise the warrant at any time during its term.
Stephen M. Merrick, EVP and CFO of the company, said, “This enhancement to our senior loan facility and subordinated loan provide up to $8 million in additional working capital to CTI and we believe will be extremely important in providing capital to support our growth. This additional working capital will help to finance increased levels of inventory and receivables and general working capital needs as well as anticipated investments in production equipment and facilities.”
CTI Industries Corporation, based in suburban Chicago, manufactures and distributes consumer storage pouches, devices and systems, novelty foil and latex balloons, and manufactures printed, specialty and laminated films for packaging, consumer and commercial uses.