Canadian powersports manufacturer BRP scored a $500 million term facility, increasing its borrowing capacity and refinancing its outstanding debt amid rising interest rates.
BRP’s new term loan, which comes from new and existing lenders, has an interest rate of Term secured overnight financing rate (SOFR) plus 3.50%, with a Term SOFR floor of 0.5% and a maturity date of Dec. 13, 2029. As of Dec. 21, SOFR was 4.3%.
Canada-based BRP said in a statement it plans to use the new term loan to fully repay its existing $100 million term loan B-2 that is due in 2024. The B-2 loan’s effective interest rate was 7.30%, according to filings with the Securities and Exchange Commission.
The company is expected to use the remaining money to repay the drawn balance under BRP’s revolving credit facility and to pay fees and expenses related to the financing. The move allows BRP to effectively refinance its current debts and adjust its capital, according to the statement.
“Moreover, this incremental term loan strengthens our balance sheet by extending the maturity profile of our capital structure and by replenishing availability on our revolver, positioning us well to continue creating value for our stakeholders,” Sebastien Martel, chief financial officer at BRP, said in a statement.
BRP was not available for additional comment.
The $500 million term loan comes at the end of a busy year for the Canadian powersports manufacturer, which finalized multiple acquisitions, including Great Wall Motor Austria. BRP reported a net income of $366.64 million ($500.3 million CAD) for the nine-month period ended Oct. 31.
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