Covalon Technologies said last week it inked a new $17 million banking credit facility with HSBC bank to help fund acquisitions and operations.
The new banking agreement includes a $6.8 million (CAD $9 million) acquisition demand line which is repayable over five years, a $3.8 million (CAD $5 million) revolving operating facility and a $2 million bank guarantee facility.
As part of the agreement, HSBC will also provide Covalon with a foreign currency hedging facility and corporate credit card facility, Ontario-based Covalon said.
“The HSBC credit facility will allow Covalon to fund its acquisitions plans, which are proceeding well, in addition to its inventory and working capital needs as the company grows. For Covalon to have earned the trust of such a major international bank like HSBC is quite an achievement, especially given the large amount of the facility. HSBC is well-known as one of the world’s largest international banks which is a perfect fit for Covalon since most of Covalon’s business is international. This banking agreement is in the best interests of shareholders as it provides growth capital to Covalon without the need for the dilution resulting from the issuance of shares,” Covalon CEO Brian Pedlar said in a prepared statement.
“This major banking facility with HSBC also earned the active support and cooperation of Export Development Canada. Both HSBC and EDC have been a pleasure to deal with offering Covalon much support, expertise, and professionalism,” Covalon CFO Danny Brannagan said in a press release.
In May, Covalon said that it is on the hunt for potential acquisitions alongside releasing its second quarter earnings results.