Refinancing is immediately accretive to both cash flow and EPS
VANCOUVER, B.C. – November 25, 2015 – CRH Medical Corporation (TSX: CRH) (NYSE MKT:CRHM) (“CRH” or the “Company”), a North American medical company that provides physicians with innovative products and services for the treatment of gastrointestinal diseases, has entered into an agreement with The Bank of Nova Scotia (“Scotiabank”) for a US$33M Senior Secured Revolving Credit Facility (the “Facility”).
The Facility will replace existing debt and will be used to assist in the financing of potential future acquisitions. The Facility has initially been used to repay in full CRH’s senior secured credit facility with Knight Therapeutics Inc. (“Knight”) in the amount of US$22M, and to repay an unsecured subordinated loan to the Bloom Burton Healthcare Structured Lending Fund II in the amount of US$2M. The interest rate on the loans repaid was 10% and 12%, respectively. The Company’s outstanding indebtedness to Crown Capital Partners (“Crown”) in the amount of CAD$22.5M will remain in place. CRH plans to use the Facility as a revolving facility, keeping cash balances low to further reduce interest expense. The approximate financing expense savings for 2016 is expected to be US$2.5M.
The interest for the Facility is calculated using a set formula with a base rate plus 2.5% – 3.0%, depending on the Company’s total debt to EBITDA ratio. Under the Facility, using the current base rate, CRH has an expected total interest cost of approximately 3.5% per annum. The Facility matures on April 30, 2018 and is self-amortizing with fixed quarterly repayments of approximately 5% of the outstanding balance each quarter.
“For many years, CRH has focused on both growth and strong financial discipline, which is why we are proud to announce that our underlying business fundamentals and financial strength have enabled us to partner with Scotiabank, one of North America’s premier financial institutions. We have now secured a low cost of capital that will further augment our cash flow and which is also accretive to earnings per share,” stated Richard Bear, Chief Financial Officer.
Key benefits of the Scotiabank revolving credit facility
CEO of CRH, Edward Wright added “Almost exactly one year ago, we announced a transformative acquisition that was financed by Knight, Crown and Bloom Burton & Co. Their capital enabled CRH to execute on a bold vision that has proven to be successful for all CRH stakeholders. We are thankful to them for their early support and having enabled CRH to become a much bigger, more profitable company. Our financial performance has enabled us to secure financing from Scotiabank, and we now have both the platform and low cost of capital to grow CRH’s business even further.”
About CRH Medical Corporation:
CRH Medical Corporation is a North American company that provides physicians with innovative products and services for the treatment of gastrointestinal diseases. The Company’s product distribution strategy focuses on physician education, patient outcomes, and patient awareness. The Company’s first product, the CRH O’Regan System, is a single use, disposable, hemorrhoid banding technology that is safe and highly effective in treating hemorrhoid grades I – IV. CRH distributes the CRH O’Regan System, treatment protocols, operational and marketing expertise as a complete, turnkey package directly to physicians, allowing CRH to create meaningful relationships with the physicians it serves. CRH also operates a full service anesthesia services division serving the gastroenterology community, which provides anesthesia services for patients undergoing endoscopies and colonoscopies. Performing these procedures under anesthesia makes these procedures more comfortable for patients and allows gastroenterologists to perform more procedures than in the absence of anesthesia. CRH expects to leverage the capabilities it acquired through these gastroenterology anesthesia companies to consolidate the highly fragmented gastroenterology anesthesia provider business. The Company’s goal is to establish CRH as the premier provider of innovative products and essential services to gastroenterologists throughout the United States.
For more information, please contact:
David Matousek, Director of Investor Relations
CRH Medical Corporation
800.660.2153 x1030
dmatousek@crhmedcorp.com