Dollarama has leverage in comfort zone; green loan facilities a boon

By Devika Patel

Knoxville, Tenn., Sept. 12 – Dollarama Inc. management was pleased with the company’s July amendment of its credit facilities, which converted the facilities into sustainability-linked credit facilities.

The company also reported that leverage was within management’s targeted zone as of the end of the last quarter.

“We amended our credit facilities in July, increasing the limit from C$800 million to C$1.05 billion and extending all tranches by an additional year,” chief financial officer Jean Philippe Towner said on the company’s second quarter ended July 31 earnings conference call on Sept. 9.

“At the same time, we made the strategic decision to convert to sustainability-linked credit facilities tied to two performance targets related to our overall ESG strategy.

“This is a concrete example of our continued efforts to meaningfully integrate ESG into everyday decision-making.

“We are proud to be among the first Canadian retailers to integrate ESG targets to its credit facilities,” he said.

The company’s leverage ratio is within management’s “comfort zone.”

“At quarter end, our adjusted net debt to EBITDA ratio was 2.79x, within our comfort zone of 2.75x to 3x adjusted net debt to EBITDA,” Towner said.

On July 7, the company announced that it had amended its existing syndicated credit facilities to convert them to a sustainability-linked loan with available credit of C$1.05 billion.

The sustainability-linked loan is tied to two sustainability performance targets related to climate change and energy management and increasing female gender representation in management positions.

RBC Capital Markets and CIBC acted as co-sustainability structuring agents.

Concurrently, Dollarama extended the term of each syndicated credit facility and upsized the credit available under all facilities from C$800 million.

The facility A now matures on July 5, 2027, facility B and C mature on July 5, 2025 and facility D matures on July 5, 2023. Each extension represents one year.

Dollarama may request increases to its committed facilities up to a total amount of C$1.5 billion.

Dollarama operates discount retail stores and is based in Montreal.

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