CareRx Corporation (TSX:CRRX) announced that it has entered into a binding commitment for a comprehensive refinancing transaction with a syndicate of lenders led by a Canadian Schedule I chartered bank and arranged and managed by Crown Private Credit Partners Inc, in which the lenders will provide a $20 million senior secured revolving operating loan plus a $50 million senior secured term loan to CareRx.
The pharmacy services provider said it intends to use the proceeds of the credit facilities, plus available cash on hand, to repay $78 million of existing debt, including its existing $58 million term loan with Crown Private Credit and $20 million of subordinated debt.
"This refinancing represents a major milestone for the company as we continue to strengthen our balance sheet, lower our overall cost of capital, and improve our cash generation in order to better position the company to capitalize on future growth and margin-expansion opportunities," CareRx CEO Puneet Khanna said in a statement.
CareRx noted the refinancing is expected to initially save up to $1 million annually in interest charges.
It added that the credit facilities have a five-year term, with a floating interest rate that will initially accrue at the rate of prime plus 2.75% at closing, with downward adjustments to as low as prime plus 2.00% as the company's net senior debt to trailing-12-month earnings before interest, taxes, depreciation, and amortization (EBITDA) declines.
CareRx also stated that $47 million of the term loan and a portion of the operating loan will initially be drawn at closing, with future draws on the term loan available to fund certain capital expenditures.
The refinancing is subject to customary closing conditions and is anticipated to close on or before December 31, 2023.
CareRx is the largest provider of pharmacy services to seniors living in long-term care homes, retirement homes, and other group settings in Canada.
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