HOUSTON–(BUSINESS WIRE)–DXP Enterprises, Inc. (NASDAQ: DXPE) announced today that it has completed the raising of additional borrowings of $105 million in Senior Secured Term Loan B (“TLB”) which will be in addition to the initial Term Loan B of $330 million raised in December 2020. Including new borrowings, DXP will have $417.2 million of Senior Secured Term Loan B available. TLB’s existing and new borrowings mature in 2027 and are priced at SOFR term plus an applicable margin of 5.25%.
DXP intends to use the proceeds to repay borrowings under DXP’s Asset-Based Lending (“ABL”), and the remainder for general corporate purposes, potential acquisitions and expenses. and transaction expenses. The transaction provides DXP with operational and financial flexibility to reinvest in the business and pursue its strategy around organic growth and targeted acquisitions.
Term Loan B and Additional Borrowings are 5.25% to Term SOFR and continue to include a guaranteed leverage clause ranging from 5.75:1 to 4.75:1. The new loan under the credit agreement is secured by the consolidated assets of the company.
David R. Little, President and CEO, said, “We are delighted with the success of raising this additional funding. We will take advantage of this positive momentum to end the year strong and look to drive growth in 2023. This successful fundraising demonstrates lenders’ confidence in our current and long-term plans. As we navigate changing market conditions, this financing will help us execute our strategy and fund both working capital and acquisition growth. Our capital allocation strategy at this stage of the cycle includes a combination of continued funding for growth, applying excess cash flow to debt service where appropriate, and supporting DXP in the market. We plan to maintain liquidity and flexibility while pursuing growth opportunities and reinvesting in the business.
Kent Yee, Chief Financial Officer, added, “We are pleased to announce the completion of raising an additional $105 million for our existing Term B loan. This achieved several important goals, including repaying existing borrowings under the ABL and creating liquidity and flexibility going forward. We proactively position DXP to take advantage of market opportunities on behalf of all of our stakeholders. DXP continues to be well positioned to support its disciplined growth strategy going forward. We have seen strong market interest and demand for this transaction, demonstrating the confidence that existing and new lenders, investors and other financial participants have in DXP. We appreciate the support of our advisors and our group of lenders. Based on closing the transaction at the end of the third quarter, DXP’s net debt to EBITDA was 2.86:1.
Additional details regarding TLB’s additional borrowings will be available in DXP’s current report on Form 8-K to be filed with the Securities and Exchange Commission by November 29.e.
About DXP Enterprises, Inc.
DXP Enterprises, Inc. is a leading distributor of products and services that adds value and total savings solutions to industrial customers in the United States, Canada, Mexico and Dubai. DXP provides innovative pumping solutions, supply chain services, and maintenance, repair, operations, and production (“MROP”) services that emphasize and utilize the extensive product knowledge and l DXP’s technical expertise in rotating equipment, bearings, power transmission, metalworking, industrial supplies and safety. products and services. The breadth of DXP’s MROP products and service solutions allows DXP to be flexible and customer-focused, creating competitive advantages for our customers. DXP’s business segments include Service Centers, Innovative Pumping Solutions and Supply Chain Services. For more information, visit www.dxpe.com.
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information contained in this press release (as well as information contained in oral or other written statements made or to be made by the Company) contains forward-looking statements. This forward-looking information involves significant risks and uncertainties that could materially affect anticipated results in the future; and accordingly, these results may differ from those expressed in any forward-looking statements made by or on behalf of the Company. These risks and uncertainties include, but are not limited to; ability to obtain necessary capital, dependence on existing management, leverage and debt service, national or global economic conditions and changes in customer preferences and attitudes. In some cases, you can identify forward-looking statements by terminology such as, but not limited to, “may”, “will”, “should”, “intend”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “goal” or “continue” or the negative of these terms or any other comparable terminology. For more information, see the company’s filings with the Securities and Exchange Commission.