DXP Enterprises closed on raising incremental $105 million Senior Secured Term Loan B borrowings that will be added to the initial $330 million Term Loan B raised in December of 2020. Including the new borrowings, DXP will have $417.2 million in Senior Secured Term Loan B borrowings. The existing and new Term Loan B borrowings mature in 2027 and are priced at Term SOFR plus an applicable margin of 5.25%.
DXP intends to use the proceeds to repay borrowings under DXP’s asset-based loan, and the remaining for general corporate purposes, potential acquisitions and transaction fees and expenses. The transaction provides DXP with operational and financial flexibility to reinvest in the business and pursue its strategy around organic and targeted acquisition growth.
The Term Loan B and incremental borrowings are 5.25% over Term SOFR and continues to include a secured leverage covenant ranging from 5.75:1 to 4.75:1. The new loan under the credit agreement is secured by the company’s consolidated assets.
“We are pleased with the successful execution of raising this incremental financing,” David R. Little, Chairman and CEO of DXP, said. “We will take this positive momentum and close out the year strong and look to drive growth in 2023. This successful capital raising demonstrates the confidence lenders have in our current and long-term plans. As we navigate changing market conditions, this financing will support us in executing our strategy and funding both working capital and acquisition growth. Our capital allocation strategy at this point in the cycle includes a mix of continuing to fund growth, applying excess cash flow to debt service, when appropriate and supporting DXP in the market. We plan on maintaining liquidity and flexibility while pursuing growth opportunities and reinvesting in the business.”
“We are pleased to announce the completion of raising an incremental $105 million to our existing Term Loan B,” Kent Yee, CFO of DXP, said. “This accomplished several important objectives, including paying down existing borrowings under the ABL and creating liquidity and flexibility going forward. We are proactively putting DXP in a position to take advantage of market opportunities on behalf of all our stakeholders. DXP continues to be well-positioned to support its disciplined growth strategy well into the future. We experienced strong market interest and demand for this transaction, demonstrating the confidence that existing and new lenders, investors and other financial participants have in DXP. We appreciate the support from our advisors and lender group. Based on the transaction closing at the end of the third quarter, DXP’s net debt to EBITDA was 2.86:1”
Additional detail regarding the incremental Term Loan B borrowings will be available in DXP’s current report on form 8-K to be filed with the Securities and Exchange Commission by November 29th.
