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CRH Secures $33MM Credit Facility From Scotiabank

November 30, 2015, 07:46 AM
Filed Under: Medical

CRH Medical Corporation has entered into an agreement with The Bank of Nova Scotia ("Scotiabank") for a U.S. $33 million senior secured revolving credit facility. The facility will replace existing debt and will be used to assist in the financing of potential future acquisitions. The facility has initially been used to repay in full CRH's senior secured credit facility with Knight Therapeutics Inc. ("Knight") in the amount of U.S. $22 million, and to repay an unsecured subordinated loan to the Bloom Burton Healthcare Structured Lending Fund II in the amount of U.S. $2 million. The interest rate on the loans repaid was 10% and 12%, respectively. The company's outstanding indebtedness to Crown Capital Partners ("Crown") in the amount of CAD $22.5 million will remain in place. CRH plans to use the facility as a revolving facility, keeping cash balances low to further reduce interest expense. The approximate financing expense savings for 2016 is expected to be U.S.$2.5. million.

The interest for the facility is calculated using a set formula with a base rate plus 2.5% - 3.0%, depending on the company's total debt to EBITDA ratio. Under the facility, using the current base rate, CRH has an expected total interest cost of approximately 3.5% per annum. The facility matures on April 30, 2018 and is self-amortizing with fixed quarterly repayments of approximately 5% of the outstanding balance each quarter.

Key benefits of the Scotiabank revolving credit facility:

  • Significantly lowers CRH's cost of capital
  • Accretive to cash flow
  • Accretive to earnings per share (EPS)
  • Establishes a new, low cost source of financing for potential future CRH acquisitions

CRH Medical Corporation is a North American company that provides physicians with innovative products and services for the treatment of gastrointestinal diseases. The Company's product distribution strategy focuses on physician education, patient outcomes, and patient awareness. The Company's first product, the CRH O'Regan System, is a single use, disposable, hemorrhoid banding technology that is safe and highly effective in treating hemorrhoid grades I - IV. CRH distributes the CRH O'Regan System, treatment protocols, operational and marketing expertise as a complete, turnkey package directly to physicians, allowing CRH to create meaningful relationships with the physicians it serves. CRH also operates a full service anesthesia services division serving the gastroenterology community, which provides anesthesia services for patients undergoing endoscopies and colonoscopies.

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