The senior notes, at a 5.375 percent interest rate will be used to lower the borrowing costs for the company while heightening liquidity.
goeasy (TSX:GSY), an alternative lending company announced that it has closed C$550 million in unsecured senior notes. With a 5.375 percent interest rate due 2024, the notes will be used to pay down its existing credit facility and be used for an early redemption of notes due 2022.
As quoted in the press release:
“The successful refinancing of our unsecured notes marks a significant step toward lowering our cost of borrowing, extending the tenure of our debt and increasing our liquidity. After a strong response from the market, we upsized the transaction to US$550 million, which together with our revolving credit facility, reduces our fully drawn weighted average cost of borrowing from 6.8% to 5.5%,” said Jason Mullins, goeasy’s President & Chief Executive Officer. “We expect there to be a one-time expense in the fourth quarter of 2019 related to the early redemption of the prior notes due 2022. Going forward, the effect of the improved coupon rate related to the refinancing of the existing US$475 million unsecured notes, serves to reduce our annual interest expense by approximately C$0.55 in after-tax earnings per share. After accounting for the incremental financing costs related to the additional capital taken to fund future growth, we would expect savings of approximately C$0.42 in annual after-tax earnings per share.”
“The Board would like to congratulate management on the successful execution of this transaction. The refinancing of the unsecured notes was the next step in our strategy to strengthen the Company’s balance sheet and position the organization for sustained growth,” said David Ingram, goeasy’s Executive Chairman. “With the new unsecured notes and recently amended secured credit facility, we have increased our total funding capacity to approximately C$305 million as adjusted at September 30th, which will fund the growth of our consumer loan portfolio through to the third quarter of 2021.”