Hardwoods Distribution Income Fund Announces New U.S. Credit Facility



    Trading Symbol: Toronto Stock Exchange - HWD.UN

    LANGLEY, BC, Sept. 30 /CNW/ - Hardwoods Distribution Income Fund (the
"Fund") (TSX: HWD.UN) today announced it has entered into a new $31.0 million
(US$30 million) revolving credit facility available to the Fund's U.S.
operating subsidiary, Hardwoods Speciality Products USLP ("Hardwoods USLP").
The Fund owns an 80% indirect interest in Hardwoods USLP. The new credit
facility replaces Hardwoods USLP's previous credit facility.

    
    New US Credit Facility Highlights

    -   The new credit facility was entered into with Hardwoods USLP's
        existing lender, Bank of America, for a three year term maturing
        September 30, 2011

    -   The new credit facility permits borrowings up to 85% of the book
        value of certain eligible accounts receivable (80% previously) and up
        to 65% of the book value of eligible inventory (55% previously)

    -   Hardwoods USLP will be subject to one financial covenant under the
        new credit facility, a Fixed Charge Coverage Ratio ("FCCR").
        Calculated for Hardwoods USLP on a trailing-twelve-month basis, the
        FCCR shall not be less than 0.75 until June 30, 2009, and not less
        than 1.00 thereafter. The calculation of the FCCR is as follows:

        (EBITDA - capital expenditures - cash taxes)/(interest expenses +
        distributions)

    -   Distributions from Hardwoods USLP are permitted to be made to the
        extent that after giving effect to the distribution, the FCCR
        covenant is in compliance, and at least US$4.0 million of unused
        borrowing capacity is available in Hardwoods USLP

    -   Interest will be charged at a rate of prime rate plus 0.5% on prime
        rate loans, and LIBOR plus 2.00% on LIBOR revolver loans, until
        December 31, 2009. These rate spreads are approximately 25 basis
        points higher than Hardwoods USLP was paying immediately prior to
        entering into the new credit facility. After December 31, 2009, rates
        will be adjusted based upon Hardwoods USLP's FCCR performance

    -   A one-time closing fee was paid to the lender with respect to
        entering into the new facility of US $112,500 plus closing costs,
        which will be amortized over the three year term of the credit
        facility
    

    "We have enjoyed strong support and service from our U.S. bankers, and
are pleased to have entered into a new credit arrangement with them that
provides us with committed U.S. bank financing through to late 2011,"
commented Maurice Paquette, Hardwoods' President and CEO. "The new credit
facility increases our available borrowing base, has fewer and less onerous
covenant requirements, and provides competitive interest rates in the current
challenging credit environment," said Paquette.

    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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