CareRx Corporation entered into a binding commitment for a comprehensive refinancing transaction with a syndicate of lenders led by a Canadian Schedule I chartered bank and arranged and managed by Crown Private Credit Partners.

“Crown Private Credit has been an extremely valued partner and we are excited to advance our relationship with this refinancing,” Puneet Khanna, president and CEO of CareRx, said. “This refinancing represents a major milestone for the company as we continue to strengthen our balance sheet, lower our overall cost of capital and improve our cash generation in order to better position the company to capitalize on future growth and margin-expansion opportunities.”

Under the terms of the Refinancing:

The lenders will provide a $20 million senior secured revolving operating loan and a $50 million senior secured term loan.

The company intends to use the proceeds of the credit facilities, plus available cash on hand, to repay $78 million of existing debt, including its existing $58 million term loan with Crown Private Credit and $20 million of subordinated debt.

$47 million of the Term Loan and a portion of the operating loan will initially be drawn at closing, with future draws on the Term Loan available to fund certain capital expenditures.

The credit facilities have a five-year term, with a floating interest rate that will initially accrue at the rate of prime plus 2.75% at closing, with downward adjustments to as low as prime plus 2.00% as the company’s net senior debt to trailing-twelve-month EBITDA declines.

Compared to its existing term loan and subordinated debt, the company expects to initially save up to $1 million annually in interest charges.

“Expanding our relationship with supportive lenders including Crown Private Credit and a Canadian bank is an important step in our evolution as Canada’s largest provider of pharmacy services to seniors living communities,” Andrew Mok, CFO of CareRx, said. “As a result of the refinancing, the company will benefit from a more simplified and strengthened capital structure, a unified syndicate of lenders and, importantly, the addition of a revolving operating loan which will allow the company to utilize its cash on hand to reduce the company’s debt servicing costs and provide it with significantly greater financial flexibility.”

The refinancing is subject to customary closing conditions and is anticipated to close on or before Dec. 31, 2023. However, there is no guarantee that closing will occur on such timeline, if at all.