MCU, Diamond Estates Enter into Credit Agreement
Diamond Estates Wines & Spirits announced it signed a new credit agreement with Meridian Credit Union (MCU). The new credit agreement continues to provide a revolving line of credit of up to $13 million but is now subject to increased margin limits on inventory of $11 million, up from $10 million. The limit on A/R remains at $2 million.
The interest rate on the term loan for the Beamsville winery has been reduced 50 basis points to Prime + 2.50%. Enhancements to the covenants include the inclusion of the winery licenses (an intangible asset) at 50% in the calculation of net effective worth, the debt to effective net worth ratio falling to 3.251 on March 31, 2016, maintaining at least three product listings with the Liquor Control Board of Ontario.
MCU continues to hold term loans on the winery facilities at Niagara-on-the-Lake and Beamsville totaling $10,382,086. MCU holds collateral mortgages on the properties in addition to a general security agreement. All other key terms remain substantially the same as in the previous credit agreement.
J. Murray Souter, president and CEO stated, “The new agreement gives the company more flexibility in optimizing its revolving line of credit to finance working capital requirements. This is another positive step in improving the company’s financial position, which we believe will continue with the previously announced merger of our agency operations with The Kirkwood Group. MCU has been a supportive partner and the changes to our credit agreement are indicative of the progress that the company has made in the past year.”