MISSISSAUGA, ONTARIO--(Marketwired - July 11, 2016) - Smart Employee Benefits Inc. ("SEB" or the "Company") (TSX VENTURE:SEB) is pleased to announce the closing of amended credit facilities totaling approximately $18,100,000. One credit facility is with a major international asset based lender in the amount of up to $12,500,000 (the "First Credit Facility"). The First Credit Facility involves various SEB subsidiaries collectively as borrowers. The amount available under the First Credit Facility is a revolving loan based on a formula calculated on the billed and un-billed accounts receivable of the borrowers.
The First Credit Facility of up to $12,500,000 is an amendment to the existing operating credit facility of up to $7,500,000 previously in place with the same lender. It has a two-year term and a more favourable interest rate, bearing interest at the greater of 0.5% or the one-month U.S. Dollar London Interbank Offered Rate, plus 6.5% per annum. Annual interest cost savings are estimated to exceed $450,000.
The First Credit Facility also replaces an operating credit facility of up to $1,500,000 which certain SEB subsidiaries had in place with a major Canadian Schedule I Chartered Bank.
The First Credit Facility is secured by a first charge over all of the assets of certain subsidiaries of the Company, contains positive, negative and financial covenants, and includes other usual and customary terms and conditions. SEB maintains its guarantee under the First Credit Facility.
The $12,500,000 First Credit Facility is in addition to a revolving credit facility of up to $3,000,000 and a term loan facility of approximately $2,600,000 (collectively the "Second Credit Facility"). This $5,600,000 Second Credit Facility is with a Canadian Schedule I Chartered Bank. The $3,000,000 is insured with interest at prime plus 1.25%. The term loan is being repaid at $87,500 per month, with an interest rate of prime plus 1.00%. The amended First Credit Facility and Second Credit Facility together, totaling approximately $18,100,000, significantly strengthen SEB's capacity to meet its additional working capital demands resulting from new sales growth. The consolidation of the First Credit Facility and Second Credit Facility together increase available credit of up to $3,500,000 on better terms.
Future Financing Plans
To date, the majority of the equity financing has been from insiders and strategic investors. It totals approximately $14,000,000. SEB is negotiating additional convertible notes and equity financing from SEB executive management, SEB directors and strategic investment partners, all of whom are existing shareholders. This planned financing is expected to be sufficient to repay the majority of SEB's and Maplesoft's term debt, other than the operating and term debt noted above.
Smart Employee Benefits Inc.'s global infrastructure is comprised of two operating divisions: Technology and Benefits. The Technology Division currently serves corporate and government clients across Canada and internationally. The Benefits Division focuses on offering SAAS and BPO solutions in the Health Benefits Sector to corporate and government clientele. The Benefits Division operates as a client of the Technology Division. The Technology Division is a critical competitive advantage in supporting the implementation of SEB's benefits processing solutions into client environments. Benefits Processing is a high-growth specialty practice area.
The core expertise of both divisions is data processing. Emphasis is on automating business processes utilizing SEB proprietary software solutions combined with solutions of third parties through joint ventures and partnerships.
Acquisitions, joint ventures, and RFP wins will continue to be dominant influences in driving growth in both divisions. Growth emphasis for fiscal 2016 is in the Benefits Division.
All statements, including statements regarding the Company's areas of focus, other than statements of historical facts, which address the Company's expectations, should be considered as forward-looking statements and therefore subject to various risks and uncertainties. The words "may", "will", "could", "should", "would", "suspect", "outlook", "believe", "plan", "anticipate", "estimate", "expect", "intend", "forecast", "objective", "hope" and "continue" (or the negative thereof), and words and expressions of similar import, are intended to identify forward-looking statements.
Such forward-looking statements are based on knowledge of the environment in which the Company currently operates, but because of factors beyond the Company's control, actual results may differ materially from the expectations expressed in the forward-looking statements. Investors are cautioned not to put undue reliance on forward-looking statements. The Company undertakes no obligation, and does not intend to update, revise or otherwise publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of any unanticipated events, other than as required by applicable law.
For further information about SEB, please visit www.seb-inc.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.