Acasta Enterprises Announces $15.5 Million Reduction of Bank Indebtedness and Proposed New Commercial Bank Credit Facilities
Acasta Enterprises Inc. (TSX: AEF) (“Acasta” or the Corporation”) announced today that it: (i) has secured funding for the permanent reduction of its existing bank facility by approximately $15.5 million for a total reduction of debt of $20 million; and (ii) is in the process of establishing a new credit facility with its commercial bank that includes a $50 million asset-based lending facility with a three year term and an $8 million term facility with a one year term. The proposed new facility is planned to be in place by July 31, 2019 and is expected to significantly reduce the operating debt service expenses of the Corporation.
WFI Inc. (“WFI”), a finance company controlled by the co-CEOs of the Corporation, has repaid $15,465,417 of outstanding debt on the Corporation’s existing commercial bank facility (the “WFI Debt Reduction Funding”) which, combined with the recently completed private placement financings in the aggregate amount of $4,534,584, serves to reduce Acasta’s outstanding debt by a total of $20 million. WFI now holds an aggregate of approximately $29.5 million of secured subordinated debt of the Corporation. The additional debt will be advanced on substantially the same terms as the existing subordinated secured debt of the Corporation currently held by WFI except that the WFI Debt Reduction Funding shall be interest-free and fee free for the six month term of the loan. The WFI loans are fully subordinated to the existing commercial bank facility and are secured on the assets of the Corporation and its sole operating subsidiary, Apollo Health and Beauty Care Inc.
The WFI Debt Reduction Funding may be considered a “related party transaction” pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The WFI Debt Reduction Funding was approved by the independent directors of the Corporation, who had the benefit of independent legal advice and is exempt from the formal valuation and minority approval requirements, respectively, of MI 61-101 pursuant to Section 5.5 (f) thereof as being a loan to an issuer with no equity or voting component.
The WFI Debt Reduction Funding and proposed new commercial banking facilities are important steps for Acasta to reduce its ongoing debt service expenses, increase profitability and enhance shareholder value.
Cautions Regarding Future Plans and Forward Looking Information
Certain statements contained in this press release constitute forward-looking statements within the meaning of applicable Canadian securities laws which reflect the Corporation’s current expectations and projections about future results. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “expect”, “intent”, “estimate”, “anticipate”, “believe”, “consider”, “should”, “plans”, “predict”, “estimate”, “potential”, “could”, “likely”, “approximately”, “scheduled”, “forecast”, “variation” or “continue”, or similar expressions suggesting future outcomes or events. The forward-looking statements made in this press release relate only to events or information as of the date on which the statements are made in this press release. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this press release. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect. Specifically, there is no assurance that the Corporation will complete the restructuring of its existing banking facilities on or before July 31, 2019 or at all.
Except as specifically required by applicable Canadian securities law, the Corporation undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. These forward-looking statements should not be relied upon as representing the Corporation’s views as of any date subsequent to the date of this press release. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
Acasta Enterprises Inc.