CRH Medical (CRH), a North American medical company that provides physicians with products and services for the treatment of gastrointestinal diseases, has entered into an agreement with The Bank of Nova Scotia (Scotiabank) for a $33 million senior secured revolving credit facility.

CRH said the facility will replace existing debt and will be used to assist in the financing of potential future acquisitions. The facility has initially been used to repay in full CRH’s senior secured credit facility with Knight Therapeutics in the amount of $22 million, and to repay an unsecured subordinated loan to the Bloom Burton Healthcare Structured Lending Fund II in the amount of $2 million.

The interest rate on the loans repaid was 10% and 12%, respectively. The company’s outstanding indebtedness to Crown Capital Partners in the amount of C$22.5 million will remain in place. CRH plans to use the facility as a revolving facility, keeping cash balances low to further reduce interest expense. The approximate financing expense savings for 2016 is expected to be $2.5 million.

The interest for the facility is calculated using a set formula with a base rate plus 2.5% to 3.0%, depending on the company’s total debt to EBITDA ratio. Under the facility, using the current base rate, CRH has an expected total interest cost of approximately 3.5% per annum. The facility matures on April 30, 2018 and is self-amortizing with fixed quarterly repayments of approximately 5% of the outstanding balance each quarter.

“For many years, CRH has focused on both growth and strong financial discipline, which is why we are proud to announce that our underlying business fundamentals and financial strength have enabled us to partner with Scotiabank. We have now secured a low cost of capital that will further augment our cash flow and which is also accretive to earnings per share,” stated Richard Bear, chief financial officer.