Quorum Information Technologies Inc (TSX-V: QIS), a Calgary-based provider of automotive dealership software and services, has closed a $15 million debt financing facility.
The facility was provided by BDC Capital‘s growth and transition capital group.
The deal’s proceeds will be used to retire a bridge loan facility from Covington Capital.
They will also be used to fund Quorum’s January purchase of Oasis Auto Complete Systems Ltd, a London, Ontario-based provider of automotive dealership software and hardware, as well as potential future acquisitions.
Quorum Announces BDC Capital Facility
CALGARY, Alberta, March 04, 2019 (GLOBE NEWSWIRE) — Quorum Information Technologies Inc. (TSX Venture: QIS) (“Quorum” or the “Corporation”) announced today that it closed a $15 million debt financing facility with BDC Capital (the “BDC Capital Facility”). Quorum will be drawing $8.125 million immediately with the balance of the BDC Capital Facility remaining available for potential future acquisitions.
Key terms of the BDC Capital Facility:
Quorum’s cash interest expense related to the facility has been set at a six-year fixed rate of 7.7% per annum, payable monthly;
There are no principal repayments required under the loan until it matures on January 15, 2025, at which time any principal outstanding must be repaid in full;
Future draws on the loan must be to fund acquisitions, subject to certain conditions and the prior pre-approval of BDC Capital;
Quorum can make partial repayments under the BDC Capital Facility at any time; however, there are repayment penalties of 3%, 2% and 1% of the prepaid amount respectively in year 1, 2 and 3 of the loan; and
At maturity, on January 15, 2025, an additional accrued interest payment is due and payable based on a rate of 4% per annum, calculated on the monthly outstanding balance of the loan over the term of the loan. The effective rate of this interest on an after tax and present value basis is 1.5%.
The $8.125 million initial draw will be used to retire the previously announced bridge loan facility from Covington Capital (the “Bridge Loan”), and to fund the recently announced Oasis acquisition. Quorum acquired Oasis on January 2, 2019 for $485,000 in cash and $100,000 in Quorum shares, as well as a $600,000 cash two year additional compensation earn out provision. The Bridge Loan, with an interest rate of 0% for the first two months and 12% thereafter, was entered into as a temporary measure to fund the purchase of the previously announced DealerMine Inc. acquisition in late 2018.
Maury Marks, Quorum’s President and CEO stated, “The new BDC Capital Facility allows us to retire the Covington Capital bridge loan with a longer-term, and more cost effective strategic facility. The BDC Capital Facility and our partnership with BDC Capital will provide significant financial flexibility to Quorum going forward to fund potential future acquisitions. Growth through acquisitions continues to be on our radar as we look to enhance shareholder value and returns. As always, we will continue to closely evaluate our balance sheet, and the funding requirements of any potential acquisition to prudently determine the correct mix of debt and equity required.”
The Facility was arranged by Brian Whiteway, Director, Growth & Transition Capital, Newfoundland and Labrador, BDC Capital. “We are entering into a long-term, strategic partnership with Quorum by providing the company with flexible financing up front to enable future acquisitions while preserving much of its cash flow,” said Whiteway. “We are very excited to partner with Quorum. We are confident that Quorum’s management has the ability to execute on its growth plan and successfully integrate all of its acquisitions. We look forward to playing a role in their long term success”
About Quorum Information Technologies Inc.
Quorum is a North American company focused on developing, marketing, implementing and supporting its portfolio of software and services for automotive dealerships that includes:
XSellerator™, a Dealership Management System (DMS) that automates, integrates and streamlines key processes across departments in a dealership, and emphasizes revenue generation and customer satisfaction.
DealerMine CRM, a sales and service Customer Relationship Management system and set of Business Development Center services that drives revenue into the critical sales and service departments in a dealership.
Autovance, a sales desking system that increases sales department gross margins and improves customer satisfaction for dealerships.
Advantage, a full showroom system for both franchised and independent dealerships and a comprehensive operating system that includes accounting for the independent market.
Quorum Information Technologies Inc. is traded on the Toronto Venture Exchange (TSX-V) under the symbol QIS. For additional information, please go to www.QuorumDMS.com.
About BDC Capital
BDC Capital is the investment arm of BDC – Canada’s only bank devoted exclusively to entrepreneurs. With $3 billion under management, BDC Capital serves as a strategic partner to the country’s most innovative firms. It offers a full spectrum of risk capital, from seed investments to transition capital, supporting Canadian entrepreneurs who wish to scale their businesses into global champions. Visit bdc.ca/capital.