easyhome Ltd., the Canadian leader in providing goods and financial services to the cash and credit constrained consumer, has entered into a new $200 million credit facility, replacing the company’s current debt facilities and providing $115 million of additional capital to support the growth of easyhome’s consumer finance business, easyfinancial.
The new credit facility, which expires on October 4, 2018, is comprised of a $180 million term loan and a $20 million revolving operating facility. The term loan is being arranged by Crystal Financial LLC on behalf of a syndicate consisting of Crystal Financial LLC and four other lenders. $105 million of the term loan must be drawn at closing with the balance available in periodic advances until July 31, 2015. Borrowings under the term loan bear interest at the Canadian Bankers’ Acceptance rate plus 722 bps (resulting in the current rate improving by 1.48% from 9.97% to 8.49%). The revolving operating facility is being provided by CIBC and borrowing under the revolving operating facility bear interest at CIBC’s prime rate plus 200 to 300 bps, depending on the company’s total debt to EBITDA ratio (resulting in the current rate improving by 0.5% from 5.5% to 5.0% on a pro-forma basis).
The new credit facility is secured by a first charge over substantially all assets of easyhome and its subsidiaries, contains certain positive, negative and financial covenants, and includes other usual and customary terms and conditions.
“Being able to access additional capital allows us to fund and accelerate our growth plans for easyfinancial,” said David Ingram, easyhome’s President and Chief Executive Officer. “We expect to achieve the metrics we set for our total loan book reaching $250 million a year earlier than anticipated, by the end of 2015.”
The company launched easyfinancial Services in 2006 to provide term financing to consumers who are looking for credit alternatives that are more readily accessible than banks and less costly than payday loans. Over the past 36 months, easyfinancial Services has tripled the size of its consumer loans receivable portfolio to $145 million at June 30, 2014. The additional capital secured today will allow easyfinancial Services to continue its growth and build upon its leadership position as an alternative provider of term financing to consumers.
“The new credit facility will allow us to capture more of the strong demand for alternative sources of consumer financing in the Canadian marketplace and continue growing our high margin easyfinancial business,” said Steve Goertz, easyhome’s Chief Financial Officer. “Crystal Financial, together with the other term lenders and CIBC, our corporate banking partner, have developed a flexible financing package that meets the needs of easyhome by providing additional capital to support the expected growth of our consumer finance business till the end of 2015 while reducing our interest costs.”
“We are pleased to act as administrative agent and lead arranger on this new expanded term loan facility for easyhome,” said Steven Migliero, Senior Managing Director of Crystal Financial. “With this increased financing commitment, we believe the company will continue to grow and maintain their industry leading position.”
Added Christopher Arnold, Senior Managing Director of Crystal Financial, “The increased size and improved terms on the entire facility reflect our confidence in their business and the strength of the easyhome team, systems, operational procedures and risk management practices.”
As a result of the access to additional capital and the strong growth of the easyfinancial consumer loans receivable portfolio, the company has revised its loan book and sales growth targets. The company now anticipates that the loan book will reach $180 - $190 million by the end of 2014. The company also now anticipates that the previous target of a loan book of $250 million by the end of 2016 will be achieved at or before the end 2015 and the company is now targeting the loan book to grow to $320 to $350 million by the end of 2016. Consequently, the company has also revised its revenue growth targets for 2014 to 14% to 16% (from 10% to 12%).
“We are confident that our growth plans for easyfinancial, including our omni-channel strategy for the distribution of new loans, will enable us to achieve our loan book targets,” said Ingram. “This continued growth will enable easyfinancial to achieve its goal of becoming Canada’s largest provider of consumer loans as an alternative to traditional banks and payday lenders.”
easyhome Ltd. is the Canadian leader in providing goods and financial services to the cash and credit constrained consumer. easyhome Ltd. serves its customers through two key operating divisions, easyhome Leasing and easyfinancial. easyhome Leasing is Canada's largest merchandise leasing Company, offering top quality, brand-name household furnishings, appliances and home electronic products to consumers under weekly or monthly leasing agreements through both corporate and franchise stores. easyfinancial is a leading provider of consumer loans as an alternative to traditional banks and payday lenders.
Crystal Financial LLC, a portfolio company of Solar Capital Ltd., is an independent commercial finance company that provides senior and junior secured loans for both asset-based and cash flow financings (minimum of $10 million in fundings) to middle-market companies. Its team of experienced, responsive professionals has underwritten, closed and managed more than $20 billion in secured debt commitments across a wide range of industries.