Ritchie Bros. closes $1 billion credit facilities ahead of acquisition

By Wendy Van Sickle

Columbus, Ohio, Oct. 27 – Ritchie Bros. Auctioneers Inc. closed a new five-year $1 billion credit agreement, according to a Thursday press release.

The agreement provides for a $675 million revolving credit facility and a $325 million delayed-draw term loan facility to finance the previously announced acquisition of IronPlanet.

Bank of America Merrill Lynch and RBC Capital Markets acted as joint lead arrangers and joint bookrunners, Bank of America, NA as administrative agent and Royal Bank of Canada as syndication agent.

The facilities will remain unsecured until the closing of the IronPlanet acquisition, after which they will be secured by assets of Ritchie Bros. and certain of its subsidiaries in Canada and the United States.

The facilities are expected to revert to being unsecured once Ritchie Bros. meets specified credit ratings or leverage ratio conditions.

Ritchie Bros. said it plans to pay down its debt levels following the close of the acquisition with expected cash flows, which it expects should facilitate the release of the security on the debt.

“Our new debt arrangements provide us with increased financial flexibility relative to our prior debt arrangements, and will help us achieve future growth initiatives including our previously announced acquisition of IronPlanet,” Sharon Driscoll, Ritchie Bros. chief financial officer, said in the release.

“Ritchie Bros.' strong and unique cash flow profile will drive a fairly rapid de-levering of our balance sheet following the acquisition of IronPlanet, which will return our debt ratios to more conservative levels within a relatively short period of time.”

In connection with the new credit agreement, Ritchie Bros. terminated about $600 million of its pre-existing revolving bi-lateral credit facilities and private notes, providing the company “with more suitable covenants and financial flexibility,” the release states.

Ritchie is a Vancouver, B.C.-based industrial auctioneer and an equipment distributor. IronPlanet is a Pleasanton, Calif.-based online marketplace for used heavy equipment and other durable asset sales.

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