NFI Group, an independent bus and coach manufacturer and a provider of electric mass mobility solutions, amended its existing $1.25 billion senior revolving credit facility and £50 million ($61 million) revolving UK credit facility.

The amendments provide covenant relief and additional flexibility to reflect NFI’s trailing 12-month financial results and its expected financial performance for the remainder of 2022 and 2023.

“We are pleased to announce amendments to our credit facilities that will allow us to move forward and capitalize upon increasing customer demand and backlog growth that are expected to drive results in 2023 and beyond,” Pipasu Soni, CFO at NFI, said. “These amendments come after detailed discussions with all of our banking partners, who provided their unanimous consent. Their support comes following detailed reviews of our long-term financial projections and the benefits we expect to realize as we move beyond current supply chain headwinds. We want to thank our partners for their strong commitment to NFI and look forward to a future of strong cash flow generation and liquidity as we execute upon our strategic plans and lead the ZEvolution to zero-emission mobility.”

Under the terms of the amended Credit Facilities, the Company’s banking partners have relaxed the total leverage ratio (TLR) and interest coverage ratio (ICR) for the remainder of 2022 and fiscal 2023. In addition, NFI will have to meet three additional covenants: minimum cumulative adjusted EBITDA, minimum liquidity and net debt to capitalization, within different time frames.

NFI’s current total liquidity is approximately $540 million ($290 million higher than the minimum liquidity covenant) and the company continues to believe that, with the amended credit facilities, the company’s cash position and capacity under the credit facilities, combined with anticipated future cash flows and access to capital markets, will be sufficient to fund operations, meet financial obligations as they come due and provide the funds necessary for capital expenditures, dividend payments and other operational needs, including the temporary build-up of work-in-process inventory from supply chain disruptions.

While NFI has demonstrated strong access to capital markets, given its existing liquidity position and amendments to the credit facilities, the company does not currently have any plans to raise additional external capital.

The terms of the amended credit facilities will not restrict the payment of dividends, provided the company is in compliance with the financial covenants, a cumulative free cash flow test that begins in 2023 Q2, and the dividend payments remain at the current level for the remainder of the agreements (matures in August 2024). The terms of the amended credit facilities do not permit any acquisitions until 2024 and permit a maximum of $50 million in annual capital expenditures. Copies of the amendments to the revolver and the UK facility, which will include additional details regarding the covenants and other terms and conditions, will be posted on SEDAR in due course.

The Bank of Nova Scotia is the administrative agent for the revolver, and The Bank of Nova Scotia, BMO Capital Markets and National Bank Financial are the joint bookrunners. The revolver syndicate also includes The Canadian Imperial Bank of Commerce, Bank of America, Wells Fargo Bank, TD Bank, HSBC Bank Canada, MUFG Bank, Export Development Canada and ICICI Bank Canada.

For the UK facility, HSBC UK acts as administrative agent and HSBC UK and the Bank of America are the two co-lenders and mandated lead arrangers.