Dominion Lending Centres closed new credit facilities with TD Bank, including three senior term credit facilities totaling $35 million and a junior term credit facility totaling $32 million.
The senior credit facilities provide Dominion Lending Centres with a $5 million revolving working capital credit line, a $10 million revolving acquisition credit line and a $20 million term loan to fund the company’s issuer bid dated Dec. 1 (the offer) and a pro rata (40%) dividend to preferred shareholders.
The senior credit facilities have a three-year term and are secured by a first charge over all of Dominion Lending Centres’ core business assets. Interest on the senior credit facilities is based on the prime borrowing rate plus an additional amount determined based on Dominion Lending Centres’ total leverage. On closing of the senior credit facilities, the interest rate is anticipated to be equal to the prime borrowing rate. Upon completion of the offer, any amounts undrawn on the $20 million credit line will be cancelled.
The junior credit facility provides Dominion Lending Centres with a $32 million term loan to facilitate the repayment of all indebtedness of the company under its current Sagard credit facility and to terminate all existing foreign currency forward contracts.
The junior credit facility has a three-year term and will be secured by a first charge over all of Dominion Lending Centres’ non-core business assets and a junior security interest over the company’s core business assets (subject to certain security-sharing rights of the preferred shareholders). Interest on the junior credit facility is based on the prime borrowing rate plus an additional amount determined based on Dominion Lending Centres’ total leverage. On closing of the junior credit facility, the interest rate is anticipated to be prime plus 75 basis points and any undrawn amount under the facility will be cancelled.
“We are pleased to announce the closing of the TD financing, the full repayment of the Sagard (USD) credit facility and closure of our foreign exchange forward contracts,” Gary Mauris, executive chairman and CEO of Dominion Lending Centres, said. “Replacing our high yield debt with conventional bank financing is another step to further simplify our business. Given the meaningful reduction in our cost of capital, the new TD credit facilities provide significant savings to our shareholders and also provide DLCG with financial flexibility to pursue our growth objectives over fiscal 2022 and beyond.”
On closing, the acquisition credit facility (forming part of the senior credit facilities) had a drawn balance of $6.2 million and the junior credit facility had a drawn balance of $31 million.
