DXP Enterprises closed on refinancing existing senior secured term loan B (TLB) borrowings and raising an incremental $105 million in TLB borrowings. Including the new borrowings, DXP will have $649.5 million in senior secured TLB borrowings. The TLB borrowings mature on Oct. 13, 2030, and are priced at term SOFR plus an applicable margin of 3.75%.
DXP intends to use the proceeds to repay borrowings under DXP’s existing senior secured term loan B, and the remaining for general corporate purposes, potential acquisitions and transaction fees and expenses. The transaction provides DXP with continued operational and financial flexibility to reinvest in the business and pursue its organic and acquisition growth strategy.
The term loan B borrowings are priced at 3.75% over term SOFR and continue 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 substantially all of the company’s consolidated assets.
“We are pleased with another successful refinancing. Like last year at this time, we will take this positive momentum, close out the year strong and look to drive growth in 2025,” David R. Little, chairman and CEO of DXP, said. “Our capital allocation strategy includes a mix of continuing to fund growth; applying excess cash flow to debt service, when appropriate; reinvesting in the business through our facilities, equipment and software; and supporting DXP in the market. We plan to maintain liquidity and flexibility while pursuing growth opportunities and reinvesting in the business.”
“We are pleased with another successful refinancing of $649.5 million, consisting of our existing $544.5 million in TLB borrowings plus raising an incremental $105 million. This accomplished several objectives, including repricing our existing TLB borrowings, saving an estimated six million in annual interest expense and creating liquidity and flexibility going forward as we look to accelerate growth via acquisitions and strategically reinvest in the business,” Kent Yee, chief financial officer of DXP, said. “DXP continues to be well-positioned to support its disciplined growth strategy. DXP continues to diversify and transform the business as evidenced by sales growing from $1.0 billion in 2020 to $1.7 billion for the last twelve months ending June 30, 2024, and covenant compliance adjusted EBITDA growing from $64.9 million in 2020 to over $187.6 million through the twelve months ending June 30, 2024. We appreciate the support from our advisors and lender group. Based on the transaction closing at the end of the second quarter, DXP’s pro forma net debt to EBITDA was 2.75:1.”
