HOUSTON — DXP Enterprises Inc. announced that it has closed on refinancing existing Senior Secured Term Loan B borrowings and raising an incremental $125 million in TLB borrowings.
Including the new borrowings, DXP will have $550 million in Senior Secured Term Loan B borrowings. The TLB borrowings mature on Oct. 30, 2030, and are priced at Term SOFR plus an applicable margin of 4.75%.
DXP intends to use the proceeds to repay borrowings under DXP’s existing Senior Secured Term Loan B, and the remaining for general corporate purposes, potential acquisitions, and transaction fees and expenses. The transaction provides DXP with operational and financial flexibility to reinvest in the business and pursue its organic and targeted acquisition growth strategy.
The Term Loan B borrowings are priced at 4.75% over Term SOFR and continue to include a secured leverage covenant ranging from 5.75:1 to 4.75:1. The new loan under the credit agreement is secured by the company’s consolidated assets.
“We are pleased with the successful execution of our refinancing," said DXP Chairman and CEO David Little. "We will take this positive momentum, close out the year strong and look to drive growth in 2024.
"This successful capital raising demonstrates the confidence lenders have in our current and long-term plans. This financing will support us in executing our strategy and funding both working capital, acquisition growth and reinvesting in the business. Our capital allocation strategy at this point in the cycle includes a mix of continuing to fund growth, applying excess cash flow to debt service, when appropriate, and supporting DXP in the market. We plan to maintain liquidity and flexibility while pursuing growth opportunities and reinvesting in the business.”
Chief Financial Officer Kent Yee added, “We are pleased to announce the successful completion of our $550 million refinancing, consisting of our existing $425 million in TLB borrowings plus raising an incremental $125 million. This accomplished several important objectives, including repricing our existing TLB borrowings, saving on interest expense and creating liquidity and flexibility going forward as we look to drive growth via acquisitions and strategically reinvest in the business.
"We are proactively putting DXP in a position to take advantage of market opportunities on behalf of all our stakeholders. DXP continues to be well-positioned to support its disciplined growth strategy. We continue to experience strong market interest and demand for DXP in these types of transactions, demonstrating the confidence that existing and new lenders, investors and other financial participants have in DXP and our efforts to diversify and transform the business as evidenced by covenant compliance adjusted EBITDA growing from $64.9 million in 2020 to over $161.9 million through the second quarter of 2023. We appreciate the support from our advisors and lender group. Based on the transaction closing at the end of the second quarter, DXP’s pro forma net debt to EBITDA was 2.65:1”
Additional details regarding the refinanced TLB borrowings are available in DXP’s current report on Form 8-K, filed with the Securities and Exchange Commission by Oct. 17.
