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JPMorgan Chase Agents Term Loan Refinance for Daseke

March 12, 2021, 07:00 AM
Filed Under: Transportation

Daseke refinanced its existing $484 million Term Loan B due February 2024 with a new $400 million Term Loan B and available cash. The new Term Loan B, maturing in March 2028 has a floating interest rate of LIBOR + 400 basis points, which is reduced from LIBOR + 500 basis points (the LIBOR floor was also reduced from 100 basis points to 75 basis points). The transaction closed on March 9, 2021. In addition, the Company will seek an amendment to its ABL credit agreement to increase maximum commitments thereunder from $100 million to $150 million, with a $50 million uncommitted accordion.

JPMorgan Chase Bank served as exclusive arranger and sole bookrunner for Daseke in executing this transaction.

Transaction Highlights:

  • Company to utilize $84 million of its $176 million cash and cash equivalents balance as of December 31, 2020 to pay down debt, which was driven by excess cash generated from operations over the course of the previous year
  • Significantly reduced cash interest expense under new Term Loan
  • Extends maturity on the Company’s debt from 2024 to 2028
  • Creates additional financial flexibility through improved covenant-lite structure
  • Further strengthens the balance sheet and provides capacity for organic and strategic growth investments
  • Upon close, the Company’s estimated net debt leverage ratio as defined by its credit agreement will be approximately 2.7x based on the terms of the credit agreement

“We are pleased with the improved terms of the new Term Loan B, which were supported by the Company’s improved economic performance and unique competitive positioning,” commented Jason Bates, Chief Financial Officer of Daseke. “Execution against our strategic plan over the last six quarters has significantly enhanced our operational and financial performance, and helped us fortify our balance sheet and meaningfully improve credit metrics. Given the attractive market backdrop, we believe now was the opportune time to utilize our strong cash position to reduce the Company’s funded leverage. Additionally, Daseke’s strengthening credit profile has been recognized by ratings agencies, and the completion of this refinancing further extends our financial flexibility, particularly given the improved pricing and covenant-lite structure. The better cost of debt capital and greater financial flexibility under the new Term Loan will help serve strategic needs and the pursuit of accretive growth opportunities. We remain committed to further advancing our business transformation and driving sustainable top-line and profitability growth.”

In connection with the refinancing, on February 23, 2021, Moody’s Investment Services (“Moody’s”) upgraded Daseke’s corporate family and senior secured ratings to “B2” from “B3,” and S&P Global (“S&P”) provided a one-notch upgrade Daseke’s issuer credit family and term loan ratings to “B”.

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