Marine technology company Kraken Robotics entered into a credit agreement with the Bank of Nova Scotia for credit facilities that are expected to provide added financial flexibility to support the company’s growth.
The credit facilities consist of a revolving three-year term facility of up to $35 million (subject to meeting certain borrowing base requirements based on eligible receivables and inventory), a $10 million revolving capital expenditure line of credit, a $10 million uncommitted letter of credit facility and an uncommitted accordion facility of up to $30 million. The credit facilities replace in its entirety the company’s existing credit facilities with Royal Bank of Canada, which were paid out using funds drawn from the new credit facilities, effective April 19.
The credit facilities bear interest at bank prime interest rates plus a margin of between 1% and 1.75%. The credit facilities contain standard financial and negative covenants for a normal course operating facility and are secured by security over substantially all of the company’s assets and are guaranteed by its material subsidiaries. Subject to credit and risk approval by the Bank of Nova Scotia at the time of any request, Kraken Robotics has the ability to increase the amount that can be drawn under the credit facilities pursuant to the accordion for up to an additional $30 million. The company has no plans to draw on the accordion at this time.
Kraken Robotics expects to use the credit facility to facilitate its long-term strategy, including to further strengthen the company’s balance sheet in anticipation of the continued growth in the company’s business, including upcoming customer and partner decisions on additional new program and contract opportunities. The company will also use the credit facilities to fund capital expenditures and for working capital and general corporate purposes.
“We are pleased to announce the execution of our new credit facilities,” Joe MacKay, CFO of Kraken Robotics, said. “Our ability to complete this transaction reflects the strong momentum we have experienced and the solid outlook we have for our business. With our strong EBITDA growth outlook, our capital structure can comfortably support increased debt while still maintaining significant financial flexibility.”
“The successful negotiation of the credit facilities provides us with greater financial flexibility to execute on our growth strategy that consists of investing in our business to drive organic growth and in pursuing accretive strategic acquisitions,” Greg Reid, president and CEO of Kraken Robotics, said.
