Pivot Technology refinance gets thumbs ups at Cantor Fitzgerald Canada
-- SEPTEMBER 23, 2015 BY NICK WADDELL
The refinancing of its credit facilities gives Pivot Technology Solutions (TSXV:PTG) more flexibility, says Cantor Fitzgerald Canada analyst Ralph Garcea.
Yesterday, Pivot announced it had entered into a (U.S.) $200-million senior, secured, asset-based revolving credit facility agreement with a group of lenders represented by JP Morgan Chase Bank N.A.as agent.
“In replacing the existing facility, we achieve a number of benefits, such as lower interest expense, greater liquidity and additional flexibility in the use of funds drawn down,” said CFO Kerri Brass. “For instance, the new facility allows us to draw down funds for financing international sales, an area we have targeted for growth. The new facility also makes provision to scale up at our discretion in support of overall growth in the business.”
Garcea notes that under the new arrangement, Pivot will save an estimated $1.25 to $1.5-million a year. The analyst noted additional benefits on top of the savings.
“The new facility provides for lower interest expense, greater liquidity, and additional flexibility – including financing international sales and scaling up at the Company’s discretion to support overall growth in the business,” says Garcea. “The loans under the new credit facility bear interest at a rate based on LIBOR + 150-175bps or Canadian Prime Rate + 0-25bps. The new credit facility will mature on September 21, 2020.”
In a research update to clients Tuesday, Garcea maintained his “Buy” rating and one year target price of $1.50 on Pivot Technology Solutions, implying a return of 155% at the time of publication.
