NANAIMO – Atlas Engineered Products is pleased to announce that they have signed a new credit and banking agreement with TD Canada Trust. All following amounts mentioned are presented in Canadian dollars.
Dirk Maritz
“We are excited with this new financing and credit partnership with TD Canada Trust of up to $14.3 million. With this agreement we replace our current, more restrictive, credit facilities with increased financing options, a group of credit products and a structure that is tailored to our high growth business needs. It replaces the bulk of our current debt, supports our day-to-day banking, while meeting the demands of our future financing needs that will support our growth. The Company has good liquidity, and this agreement positions AEP to continue our M&A activities, as well as allows for our continued focus on plant upgrades, automation, and product expansion,” said AEP CEO & President, Dirk Maritz.
The new credit facilities include a $2.0 uncommitted million revolving line of credit, a $4.8 million reducing term loan, a $5.5 million committed revolving line of credit and a $2.0m non-revolving equipment leasing line.
The LOC will be available to finance the Company’s working capital needs, small capital expenditures, and for general corporate purposes. Repayment will be on demand and interest will be payable monthly. The Term Loan will be used to refinance existing debt and will be amortized over 7 years with monthly payments of principal and interest.
The Revolver will be a credit facility available to the Company for general corporate purposes and acquisitions as needed. This Revolver has a term of 3 years which can be extended by agreement of the parties and interest will be payable monthly. The Equipment LOC is a facility available to the company that will be available to finance new assets, upgrading existing assets and/or could be used in combination for equipment in acquisitions. Amounts advanced under the Equipment LOC will be amortized for up to 84 months depending on the class of asset, with principal and interest payable monthly.
The new agreement will have updated financial covenants which include a maximum total debt to adjusted EBITDA and a minimum fixed charge coverage ratio. Both covenants will be tested quarterly on a twelve month rolling basis. The Total Leverage Ratio will be stepping down as follows: less than or equal to 3.00x on December 31, 2020, less than or equal to 2.75x on December 31, 2021. The FCC Ratio must be greater than or equal to 1.15x.
Interest on the Term Loan and the Revolver will be at a variable rate tied to the Total Leverage Ratio, current prime rates, and LIBOR. Based on the current Canada prime rate, the interest will be between 3.7 per cent and 5.95 per cent per annum on drawn amounts and between 0.25 per cent and 0.50 per cent per annum on any undrawn amounts of the Revolver. These credit facilities are secured by a General Security Agreement in all undertakings, property, and assets of the Company, and a guarantee and pledge of shares from the Company and all subsidiaries. The Company is also subject to other terms, reporting covenants, fees, and cost reimbursements standard and customary for similar agreements.
In addition to the new credit facilities, TD Canada Trust will also provide the Company with day-to-day banking and access to their other services as required.
Atlas Engineered Products Ltd.