National Bank Financial led a banking syndicate on an upsized $300 million revolving credit agreement for North American Construction Group (NACG). The revolver was closed concurrent with NACG’s acquisition of the Aecon Group’s assets.
“The acquisition of the heavy equipment fleet of Aecon is an exciting milestone event for NACG and we were pleased to work with our supportive syndicate members to finance this important opportunity,” said Jason Veenstra, NACG chief financial officer. “The credit facility is consistent with existing terms, maintains attractive rates and provides sufficient flexibility to allow for the $199 million asset transaction to close immediately.”
The credit facility more than doubled NACG’s borrowing capacity and included the ability to increase the maximum borrowings by an additional $50 million, subject to certain customary conditions. The company’s equipment financing limit was also increased to $150 million from $100 million allowing for additional borrowing flexibility.
The term of the facility is committed for three years and matures on November 23, 2021, with an option to extend on an annual basis.
The facility has no scheduled repayments and is not governed by a borrowing base that limits available borrowings. Financial covenants are consistent with the previous agreement and are tested quarterly on a trailing four quarter basis. The covenants were in full compliance at time of closing and have been established in consideration of the asset purchase agreement with Aecon.
Additionally, NACG entered into a 25-year $19.9 million mortgage with Business Development Bank of Canada, which will be drawn upon to cover costs already incurred in relation to the recent acquisition of land and construction of a maintenance facility and head office complex in Acheson, Alberta.
The increased facility and additional equipment financing limit will provide the borrowing capacity will be used to support NACG’s strategic priorities while providing the ability to expand its liquidity in line with its growth objectives.
Founded over 60 years ago, North American Construction Group provides heavy construction and mining services to large oil, natural gas and resource companies in Canada.