NFI Group completes refinancing plan to raise $444 million

By Mary-Katherine Stinson

Lexington, Ky., Aug. 25 – NFI Group Inc. announced the completion of its comprehensive refinancing plan to raise total gross proceeds of about $444 million, which closed on Friday, according to a news release.

As previously reported, the comprehensive refinancing plan includes amending its existing senior secured credit facilities, extending its senior unsecured debt facilities with the government of Manitoba and Export Development Canada (EDC) and raising additional funds through the sale of new common shares and a second-lien debt financing.

NFI reports that it is

• Completing amendments, including financial covenant waivers, to the company’s existing North American senior secured credit facility and U.K. senior secured credit facility;

• Completing a $251.2 million permanent repayment to the secured facilities and extending their maturities to April 30, 2026;

• Completing a $180.4 million second-lien debt financing; and

• Extending the maturity of Manitoba Development Corp.’s and EDC’s senior debt facilities to April 30, 2026; and effecting a $25 million permanent repayment of the EDC facility as a temporary financing to support working capital.

Second-lien financing

Following a review process of financial proposals, NFI’s board unanimously approved a $180.4 million second-lien financing with Coliseum Capital Management, LLC.

Terms of the completed second lien-financing include the following:

• A five-year term and a 97% original issue discount, generating net proceeds of $175 million, before fees and commissions;

• An annual coupon of 14.5%; and

• Non-callable for the first 12 months, callable at 106 of face value for months 13 to 24, callable at 103 of face value for months 25 to 36 and callable at par from 36 months onwards.

Refinancing plan

Through the refinancing plan, NFI will add $136,765,000 of additional liquidity consisting of $443,965,000 in total gross proceeds minus fees and commissions, the secured facilities repayment and the EDC facility repayment.

As previously reported, because of the refinancing, the following changes will be made to the secured facilities:

• Converting the $1 billion revolving North American facility to a $400 million first-lien term loan and a $361 million first-lien revolving credit facility with a total combined borrowing capacity of $761 million;

• Extending the maturity of the North American facility to April 30, 2026 from Aug. 2, 2024;

• Converting the £40 million revolving U.K. facility to a £16 million term loan and a £14.4 million revolving credit facility with a total combined borrowing capacity of £30.4 million;

• Extending the maturity of the U.K. facility to April 30, 2026 from June 30, 2023;

• Stipulating that the lenders’ first-lien security interest under the secured facilities will cover all present and future assets of NFI and its subsidiaries including mortgages on select owned manufacturing facilities; and

• Putting in place new financial covenants for the term of the secured facilities, including a waiver of leverage tests through the third quarter of 2024.

The amendments were subject to negotiation of binding documentation and several precedent conditions, including a planned equity sale and second-lien debt financing.

As previously reported, the government of Manitoba and EDC had previously announced their intention to extend the maturity of their respective C$50 million and $50 million senior unsecured debt facilities to April 30, 2026.

In addition, EDC has also made available a $100 million guarantee facility to support NFI’s surety and performance bonding requirements for new vehicle contracts.

All of the financing transactions are mutually conditional.

Banks

BMO Capital Markets acted as the company’s financial advisor related to the equity transaction and second-lien debt financing. Torys LLP was NFI’s legal advisor.

Bank of Nova Scotia is the administrative agent for the North American facility. Bank of Nova Scotia, BMO Capital Markets and National Bank Financial Inc. are the joint bookrunners.

The North American facility syndicate also includes Canadian Imperial Bank of Commerce, Bank of America, Canada Branch, Wells Fargo Bank, NA, Canadian Branch, Toronto Dominion Bank, HSBC Bank Canada, Export Development Canada and Icici Bank Canada.

ATB Financial was expected to join the North American facility syndicate in replacement of MUFG Bank Ltd., Canada Branch, upon execution of the amended agreements.

For the U.K. facility, HSBC U.K. acts as administrative agent, and HSBC U.K. and Bank of America, Canada Branch are the two co-lenders and mandated lead arrangers.

NFI is global provider of sustainable bus and motor coach solutions based in Winnipeg, Man.

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