NFI Group amends, downsizes revolvers to $1 billion and £40 million

By William Gullotti

Buffalo, N.Y., Dec. 29 – NFI Group Inc. has amended and downsized its senior revolving credit facility with Bank of Nova Scotia as administrative agent and its revolving credit facility with HSBC UK as administrative agent, according to a press release on Thursday.

The amendments lowered the dollar-denominated revolver’s capacity to $1 billion from $1.25 billion and the U.K. revolver to £40 million from £50 million.

In addition to the diminished capacities, the £40 million U.K. revolver’s maturity was pushed to June 30, 2023 from May 1, 2023. The maturity date for the dollar-denominated revolver was unchanged, remaining Aug. 2, 2024.

The amendments provide covenant relief for the fourth quarter of 2022 and the first two quarters of 2023, including waiving the total leverage ratio and interest coverage ratio covenants.

During the waiver period, NFI will be subject to two temporary covenants. Starting January 2023, NFI must maintain a total net debt to capitalization ratio no greater than 0.62 to 1.0. Starting March 2023, NFI will also be subject to a minimum adjusted EBITDA covenant. The total net debt to capitalization ratio and minimum adjusted EBITDA covenants will not apply starting in Q3 of 2023.

When the waiver period ends on June 30, 2023, the total leverage ratio and interest coverage ratio covenants will be reinstated. The total leverage ratio must not exceed 4.5 to 1.0 for Q3 of 2023, dropping to 4.0 to 1.0 for Q4 of 2023 and to 3.75 to 1.0 in Q1 of 2024. The interest coverage ratio must be greater than 2.0 to 1.0 for Q3 of 2023, increasing to 2.5 to 1.0 for Q4 of 2023 and to 3.0 to 1.0 in Q1 of 2024.

In addition to the revised covenants and during the waiver period, NFI is also required to comply with some other reporting requirements and a borrowing base calculation, the company is not permitted to pay any dividends or complete any acquisitions, and capital expenditures cannot exceed $50 million per annum.

Also amended was the dollar-denominated revolver’s minimum liquidity requirement, shrinking to $25 million from $250 million.

According to the press release and in addition to the aforementioned amendments, NFI expects to finalize two additional agreements in January 2023. The first is a C$50 million debt facility, via the government of Manitoba, for working capital and general corporate purposes. The second is for facilities totaling up to $150 million via Export Development Canada, with $50 million to support supply chain financing and the remaining $100 million earmarked for surety and performance bonding requirements for new contracts.

Bank of Nova Scotia, BMO Capital Markets and National Bank Financial Inc. are the joint bookrunners for the $1 billion revolver.

The two co-lenders and mandated lead arrangers on the £40 million revolver were HSBC UK and Bank of America, Canada Branch.

NFI Group is a bus manufacturer based in Winnipeg, Man.

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