Kontrol Technologies, a provider of smart buildings and cities through IoT, Cloud and SaaS technology, entered into a credit agreement with a schedule 1 bank for up to $50 million in senior secured credit facilities.
The facilities will consist of the following: a term loan facility of up to $20 million, a revolving credit facility of up to $10 million, subject to borrowing base requirements based on eligible receivables and inventory, and an accordion feature of up to $20 million. Upon closing of the facilities, the company expects to have drawn approximately $6 million on the term loan.
The facilities will bear interest on a monthly basis at bank prime rate plus a margin (between 1.25% and 2.0%) with principal repayments under the term loan equal to 1.25% of the drawn amount, payable in quarterly installments. The facilities are secured by a general security agreement and company guarantees.
The term loan is intended to pay off the existing operating line and refinance the company’s unsecured debentures, which are maturing in the fourth quarter of the current fiscal year. The revolver will provide added liquidity whenever necessary to manage working capital needs. The accordion will support the company’s M&A growth strategy.
“These facilities will streamline the balance sheet by consolidating debt and lowering the company’s cost of capital. It will also add capacity for M&A that provides financial flexibility to allow capital deployment in a timely manner as we execute on potential acquisitions,” Paul Ghezzi, CEO of Kontrol, said.
Echelon Capital Markets acted as the exclusive financial advisor to Kontrol in the arrangement of the facilities.
