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 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
"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.
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.
For further information:
For further information: Rob Brown, Chief Financial Officer, Phone:
(604) 881-1990, Fax: (604) 881-1995, Email: firstname.lastname@example.org