WesternOne entered into an asset-based credit agreement with Canadian Imperial Bank of Commerce for a three-year $35 million secured revolving credit facility.
Upon closing, WesternOne expects to draw funds under the ABL facility to fully repay the outstanding balance of its currently existing $20 million demand facility.
Under the ABL agreement, drawn amounts under the ABL facility will be limited by a borrowing base, the calculation of which will include certain eligible assets of WesternOne. The ABL facility will be supported by security in favor of the bank over all of the assets of WesternOne and its material subsidiaries. Interest rates on borrowings will be, at WesternOne’s option, based on banker’s acceptances, LIBOR or the bank’s Canadian prime rate or U.S. base rate, plus in each case an applicable margin.
The ABL agreement contains restrictive covenants, including restrictions on the incurrence of indebtedness, financial maintenance covenants and restrictions on payments to affiliates, debenture holders and shareholders, as well as events of default and representations and warranties.
As part of the process, WesternOne engaged an external appraisal company to perform an equipment inspection and appraisal of its rental fleet and vehicles in July 2017. The appraised fair market value of the related assets was $87.0 million, based on a net book value for accounting purposes of $62.1 million as of May 31, 2017.
“We are also very pleased with the execution of the ABL agreement, which is expected to enhance our financial flexibility at a relatively conservative asset leverage ratio. We would also expect the ABL facility to provide us with additional liquidity to manage working capital and execute on growth mandates including rental fleet expenditures and acquisitions as opportunities arise,” said Peter Blake, CEO of WesternOne.
WesternOne provides construction heat services and aerial equipment rentals to businesses in the construction, infrastructure, film and television industries in Western Canada.