MONTREAL, June 10 /PRNewswire-FirstCall/ - Dollarama Inc. ("Dollarama" or the "Corporation") (TSX: DOL) today announced that Dollarama Group L.P. ("Group LP"), a wholly-owned subsidiary of the Corporation, has entered into an agreement providing for a new all-Canadian $600 million syndicated senior secured credit facility (the "New Credit Facility").
Group LP intends to use the proceeds of the New Credit Facility to repay its senior secured credit facility (the "Existing Credit Facility"), to redeem and discharge the senior floating rate deferred interest notes issued by its affiliate, Dollarama Group Holdings L.P. (the "Deferred Interest Notes"), to repay the debt-related hedging obligations, to pay related fees and expenses and the balance for working capital and other general corporate purposes. The New Credit Facility will consist of: (i) a $75 million revolving credit facility, and (ii) a $525 million term loan A facility maturing in June 2014. At Dollarama's current leverage level, the New Credit Facility will accrue interest at BA + 275 bps.
The New Credit Facility will be secured by a security interest encumbering substantially all of existing and future assets of Group LP, as well as its subsidiaries.
"This New Credit Facility will improve our financing terms and eliminate our foreign currency exposure on long-term debt" said Michael Ross, Chief Financial Officer of the Corporation.
As at the end of the quarter ended May 2, 2010, the Existing Credit Facility consisted of: (i) a $237.4 million term loan B facility maturing in November 2011; and (ii) an undrawn $75.0 million revolving credit facility. As at the same date, there was $215.5 million in aggregate principal amount and deferred interest outstanding on the Deferred Interest Notes, as well as $60.1 million of debt-related hedging obligations.
The New Credit Facility has been arranged by RBC Capital Markets, Canadian Imperial Bank of Commerce and The Bank of Nova Scotia.
In 1992, the Dollarama business was founded by our Chief Executive Officer, Larry Rossy, a third generation retailer. We are the leading dollar store operator in Canada with 611 locations across the country. Our stores provide customers with compelling value in convenient locations, including metropolitan areas, mid-sized cities and small towns. All stores are corporate-owned and provide customers with a consistent shopping experience. Each store offers a broad assortment of everyday consumer products, general merchandise and seasonal items. Products are sold in individual or multiple units at select fixed price points between $1.00 and $2.00, with the exception of select candy offered at $0.69.
Forward Looking Statements
Certain statements in this news release may contain forward-looking statements. Forward-looking statements, by their nature, are based on assumptions and are subject to important risks and uncertainties. Any forecasts or forward-looking predictions or statements cannot be relied upon due to, amongst other things, changing external events and general uncertainties of the business and its corporate structure. Many factors could cause our actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the following factors: future increases in operating and merchandise costs, inability to refresh our merchandise as often as in the past, increase in the cost or a disruption in the flow of imported goods, disruption of distribution infrastructure, current adverse economic conditions, high level of indebtedness, inability to generate sufficient cash to service all the Corporation's indebtedness, ability of the Corporation to incur additional indebtedness, significant operating restrictions imposed by our Credit Facility and our Deferred Interest Notes indenture, interest rate risk associated with variable rate indebtedness, no guarantee that our strategy to introduce products between $1.00 and $2.00 will be successfully sustained, market acceptance of our private brands, inability to increase our warehouse and distribution center capacity in a timely manner, weather conditions or seasonal fluctuations, competition in the retail industry, dependence on ability to obtain competitive pricing and other terms from our suppliers, inability to renew store, warehouse and distribution center leases or find other locations on favourable terms, disruption in information technology systems, unsuccessful execution of our growth strategy, inability to achieve the anticipated growth in sales and operating income, inventory shrinkage, compliance with environmental regulations, failure to attract and retain qualified employees, departure of senior executives, fluctuation in the value of the Canadian dollar in relation to the U.S. dollar, litigation, product liability claims and product recalls, unexpected costs associated with our current insurance program, protection of trademarks and other proprietary rights, natural disasters, risks associated with the protection of customers' credit and debit card data, holding company structure, influence by existing shareholders, volatile market price for the common shares of the Corporation (the "Common Shares"), no current plans to pay cash dividends and future sales of Common Shares by our existing shareholders. The forward-looking statements contained in this discussion represent the Corporation's expectations as of June 10, 2010, and are subject to change after such date. However, the Corporation disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.
SOURCE DOLLARAMA INC.