HLS Therapeutics obtains $107M in credit facilities

Executive Summary

• HLS Therapeutics Inc. has entered into a new credit agreement with National Bank of Canada as administrative agent, replacing its previous facility with JP Morgan Chase Bank NA.
• The new facility provides total committed credit facilities of up to $107 million CAD (approximately $77.5 million USD), with a maturity date of August 19, 2029.
• Proceeds from the new term facility were used to repay the existing credit agreement in full, resulting in improved interest rate spreads and cash flow.

Key Details

• Total Facility Size: Up to $107 million CAD (approx. $77.5 million USD).
• Facility Structure:
  • $79 million term credit facility.
  • $14 million delayed draw facility.
  • $14 million revolving credit facility.
  • Uncommitted $40 million accordion facility available subject to lender agreement.
• Lenders: National Bank of Canada (Administrative Agent and Lead Arranger), Toronto-Dominion Bank, Royal Bank of Canada, and Innovation Federal Credit Union.
• Maturity: August 19, 2029 (replacing the previous maturity of August 11, 2026).
• Interest Rate Terms:
  • Rate per month equals the Canadian Overnight Repo Rate Average (CORRA) plus a spread of 2.25% to 3.50%, depending on the company's leverage ratio.
  • Interest rate spreads are 25 to 50 basis points below the prior credit agreement.
  • Additional interest rate savings of over 100 basis points expected due to the differential between U.S.-dollar and Canadian-dollar base rates.
• Use of Proceeds: Repayment of the existing credit agreement with JP Morgan Chase Bank NA in full.
• Currency: Denominated in Canadian dollars, providing a natural hedge against the company's predominantly Canadian operations.
• Strategic Impact: The agreement provides enhanced financial flexibility and cash flow to support capital allocation priorities, including share buybacks and portfolio expansion.

Notable Quotes

• "We are pleased to finalize this new credit agreement with National Bank and our syndicate partners, which reflects their confidence in our outlook," said John Hanna, chief financial officer of HLS Therapeutics. "The agreement delivers improved terms that reflect our strengthened financial position and provides enhanced financial flexibility and cash flow to pursue our capital allocation priorities such as share buybacks and portfolio expansion."