NeuPath Health, owner and operator of a network of clinics delivering category-leading chronic pain treatment, completed and closed a new credit facility with its existing lender Royal Bank of Canada (“RBC”).
The new Credit Facility provides NeuPath with up to $5.0 million of borrowings structured as a $3.5 million revolving operating line, a $0.5 million lease facility and refinancing of existing term debt up to $1.0 million.
The Revolving Facility permits the Company to draw amounts at any time for working capital and general corporate purposes and is capped by a borrowing base linked to eligible accounts receivable. Amounts borrowed under the Revolving Facility are revolving in nature and bear interest at RBC Prime+1.75%.
The Lease Facility allows the Company to finance new or recently purchased equipment at prevailing interest rates determined at time of drawdown, with payments required over a five-year amortization period. The Term Loan will refinance the remaining long-term debt, assumed as part of the HealthPointe acquisition in February 2021, over a five-year amortization period, bearing interest at RBC Prime+1.80%. The Lease Facility and Term Loan are jointly capped at $1.5 million of borrowings.
The Credit Facility replaces the existing bank loan facilities available to the Company. Under the terms of the Credit Facility, the lenders continue to have security over substantially all the assets of the Company, along with postponement of claims and subordination from all borrowers, including related parties. The terms of the Credit Facility require the Company to meet certain financial tests and to satisfy various affirmative and negative covenants that limit, among other things, the Company’s ability to incur additional indebtedness outside of permitted amounts. The Credit Facility also includes customary events of default, including payment and covenant breaches, bankruptcy events and the occurrence of change of control. Fees incurred in connection with the closing and continued maintenance of the Credit Facility are nominal.
“We are pleased to announce the closing of our updated Credit Facility with our long-time partner RBC; providing access to new, non-dilutive borrowings on competitive terms,” said Jeff Zygouras, Chief Financial Officer of NeuPath. “NeuPath has undergone a series of strategic changes over the past 15 months as we refocus towards our core business and accelerate our growth strategy. The combination of our improved operations, right-sized balance sheet and new, more favourable borrowing facilities provide the flexibility we need to explore and execute on new opportunities.”