Hardwoods Distribution Income Fund Announces New Canadian Credit Facility



    Toronto Stock Exchange - HWD.UN

    LANGLEY, BC, Aug. 7 /CNW/ - Hardwoods Distribution Income Fund (the
"Fund") (TSX: HWD.UN) today announced it has entered into a new revolving
credit facility available to the Fund's Canadian operating subsidiary,
Hardwoods Speciality Products LP ("Hardwoods LP"). The Fund owns an 80%
indirect interest in Hardwoods LP. The new credit facility replaces Hardwoods
LP's previous credit facility, which was set to expire in November 2009.

    
    New Canadian Credit Facility Highlights

    -   The new credit facility provides financing of up to $15.0 million
        ($12.0 million previously), and is for a three-year term maturing
        August 7, 2012.

    -   The new credit facility can be drawn down to meet short-term
        financing requirements such as fluctuations in non-cash working
        capital, or to make capital contributions to the Fund's U.S.
        operating subsidiary

    -   The new credit facility permits borrowings up to 85% of the book
        value of certain eligible accounts receivable (80% previously), and
        up to the lesser of 85% of appraised value or 65% of the book value
        of eligible inventory (60% previously)

    -   Hardwoods LP will be subject to one financial covenant under the new
        credit facility: a Fixed Charge Coverage Ratio ("FCCR"). Calculated
        for Hardwoods LP on a trailing 12-month basis, the FCCR is not to be
        less than 1.1. The calculation of the FCCR is as follows:
        (EBITDA - capital expenditures - cash taxes) / (interest expense)

    -   Distributions from Hardwoods LP are permitted to be made to the
        extent that after giving effect to the distribution, the FCCR
        covenant is in compliance, and the amount of distributions made on a
        trailing 12-month basis does not exceed Distributable Cash plus cash
        on hand during the same 12-month period

    -   Interest will be charged at a rate of prime rate plus 2.0% on prime
        rate loans, and Bankers' Acceptances plus 3.5% on BA revolver loans

    -   Hardwoods LP paid the lender a one-time closing fee of $75,000 plus
        closing costs to enter into the new facility. The fee and closing
        costs will be amortized over the three-year term of the credit
        facility.
    

    "We are pleased to have replaced our expiring Canadian bank arrangement
with a new three-year agreement that offers excellent terms," commented
Maurice Paquette, Hardwoods' President and CEO. "The new credit facility
provides competitive lending rates to our business in the current credit
environment, and has fewer and less restrictive financial covenants than our
previous arrangement. Combined with the new U.S. credit facility which we
entered into in 2008, Hardwoods now has committed bank financing in place on
both sides of the border through to late 2011," said Paquette.
    The description of the Canadian credit facility set out above is
qualified in its entirety by the specific terms of the Credit Agreement, a
copy of which will be filed at www.sedar.com.

    About Hardwoods

    Hardwoods Distribution Income Fund is an unincorporated, open-ended,
limited purpose trust established to hold, indirectly, the securities of
Hardwoods Specialty Products LP and Hardwoods Specialty Products USLP
(collectively, "Hardwoods"). Hardwoods is one of North America's largest
distributors of high grade hardwood lumber and sheet goods to the cabinet,
moulding, millwork, furniture and specialty wood products industries.

    %SEDAR: 00020372E




For further information:

For further information: Rob Brown, Chief Financial Officer, Phone:
(604) 881-1990, Fax: (604) 881-1995, Email: robbrown@hardwoods-inc.com

Organization Profile

HARDWOODS DISTRIBUTION INCOME FUND

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