NFI amended its existing $1.25 billion senior revolving credit facility and its £50 million ($67.6 million) revolving UK credit facility. The Bank of Nova Scotia is the administrative agent for the $1.25 billion revolver and HSBC UK is the administrative agent for the UK credit facility.
The amended facilities provide NFI with relaxed covenants as it recovers from the impacts of the COVID-19 pandemic.
In addition to amending the facilities, NFI cancelled the unused $250 million unsecured credit facility it entered into in April 2020 (the sidecar). The sidecar was intended to provide additional liquidity, if required, which the company believes it no longer requires.
NFI management believes the company’s cash position, anticipated future revenues and the liquidity from credit facilities are sufficient to support current operations, dividends and strategic initiatives.
“NFI is moving forward from the challenging impacts of COVID-19 in a stronger position following the amendments to our credit facilities, which were made possible by the continued confidence and support of our banking partners,” Pipasu Soni, CFO and executive vice president of finance for NFI, said. “The need to amend our credit facilities was primarily a calculation challenge driven by our trailing financial results that reflect the effect COVID-19 has had on our markets and customers. We anticipate stronger cash flow generation and liquidity in fiscal years 2021 and 2022 as we execute upon our strategic plan and lead the ongoing transition to a zero-emission future.”
Under the terms of the amended facilities, NFI’s banking partners have relaxed the total leverage and interest coverage ratios for 2021 and 2022. For 2021, NFI has received a waiver on previous total leverage covenants and will instead need to comply with a total leverage ratio that is based on a conservative downside financial projection for the company’s 2021 fiscal year. During the waiver period, NFI will have to comply with a $50 million minimum liquidity covenant and a net debt to capitalization covenant of 70%. Through the amendments, NFI has provided the lenders security on certain of its assets, including a general security agreement on NFI’s personal property but excluding security on real property, until April 3, 2023.
The terms of the amended facilities do not restrict the payment of dividends, provided NFI is in compliance with the financial covenants and the dividend payments remain at the current level.
The Bank of Nova Scotia, BMO Capital Markets and National Bank Financial are the joint bookrunners for the $125 million revolver. The syndicate for the $125 million revolver also includes The Canadian Imperial Bank of Commerce, Bank of America, Wells Fargo, TD Bank, HSBC Bank Canada, MUFG Bank, Export Development Canada and ICICI Bank Canada.
For the UK facility, HSBC UK and Bank of America were the two co-lenders and mandated lead arrangers.
NFI is a bus manufacturer.