By Susanna Moon
Chicago, May 31 – Founders Advantage Capital Corp. entered into a $75 million five-year senior secured credit facility with Sagard Holdings ULC.
Interest on the loans will be Libor plus 700 basis points with a 1% Libor floor, payable quarterly.
The facility will be secured by a first priority lien on all present and after-acquired assets of the company, according to a company announcement.
The borrowings under the facility are denominated in dollars, and the company expects to implement a foreign-currency hedging program to reduce currency risk, the release noted.
In return, the company also agreed to issue Sagard Holdings 2,078,568 non-transferable common share purchase warrants equal to 5% of the company’s fully diluted common shares.
For 1,039,284 warrants, each warrant is exercisable for five years at a strike price of $3.508, which is a 15% premium to the 30-day VWAP of the common shares. For the remaining 1,039,284 warrants, the exercise price is $3.965, which is a 30% premium to the 30-day VWAP of the common shares.
Proceeds will be used to repay debt, to close acquisitions and for general corporate purposes.
The initial draw at closing is $42 million.
“After considering various capital alternatives, we believe we have found a strategic partner that will be transformational for our long-term growth and success,” Stephen Reid, the company’s president and chief executive officer, said in the company press release.
“The strategic relationship with Sagard Holdings provides us with the liquidity and financial flexibility required to prudently execute our business plan of investing in scalable and defensive founder-run companies.”
The company plans to repay its credit facility with Alberta Treasury Branches with the proceeds of the new senior facility.
Founders is an investment issuer based in Calgary, Alta.
| Issuer: | Founders Advantage Capital Corp.
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| Issue: | Common shares
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| Amount: | $75 million
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| Maturity: | Five years
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| Coupon: | Libor plus 700 bps with 1% Libor floor
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| Investor: | Sagard Holdings ULC
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| Warrants: | 2,078,568
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| Warrant strike price: | $3.508 for 1,039,284 warrants, $3.965 for 1,039,284 warrants
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| Warrant expiration: | Five years
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| Settlement date: | June 16
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| Stock symbol: | TSX Venture: FCF
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| Stock price: | C$3.60 at close May 30
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| Market capitalization: | C$136.49 million
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