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Tenon signs $US57.5m debt financing facility

Monday 27th June 2011

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Wood products company Tenon has signed a new $US57.5 million ($NZ71.7m) long term syndicated debt financing facility.

It included a $US50m revolver facility and a $US7.5m amortising term loan, 58 percent-owner Rubicon said today.

The five-year facility included an accordion feature, under which an additional $US12.5m could be drawn upon, taking the total to $US70m, without the need to negotiate a new banking arrangement.

Rubicon chief executive and Tenon chairman Luke Moriarty said the new facility was a standard US asset-based lending facility, where the underlying assets and working capital of Tenon secured the obligations to the bank syndicate and acted as the primary covenant.

It offered much greater operational flexibility than the previous facility, while providing Tenon with the financing capacity to grow its business, Moriarty said.

The new facility had been put in place more than a year ahead of the expiry of its existing facility, taking advantage of a refinancing window developing for asset-based financing in Tenon's segment of the market.

The new facility was the right size for Tenon's future investment and growth agenda, particularly as its net debt today was under $US30m, a long way down from a peak of nearly $US90m of net interest bearing debt plus deferred liabilities when Tenon initially began its debt reduction programme.


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