Dorel intends to use the proceeds of the new credit facilities and preferred shares to repay in full Dorel's current senior secured debt in an amount of approximately $180 million, to pay for the restructuring costs of Dorel's Home segment and for working capital.Closing of the two transactions is subject to signing definitive agreements and standard closing conditions. Dorel will issue a press release when closing of the transactions take place. The two proposed transactions were negotiated at arm's length.New Credit FacilityThe new financing agreement to be entered into with TCW, as administrative agent, and a group of lenders will include senior secured credit facilities in an amount up to $310 million, consisting of a $175 million revolving facility subject to a borrowing base, of which $110 million will be drawn at the closing of the transaction, and a $135 million term loan. The new credit facilities will have a term of five years and will be guaranteed by certain of Dorel's subsidiaries. The loans will bear interest at a variable rate based on SOFR (secured overnight financing rate) plus a margin. The financing agreement will contain financial and other customary covenants on the part of Dorel and certain of its subsidiaries. TCW will be entitled to nominate one person to join Dorel's Board of Directors.Preferred SharesThe preferred shares to be issued to AIMCo will have an initial annual dividend yield of 17%. On each of the third and fourth anniversaries of the date of issuance, the annual dividend rate will increase by 1.5%, to a maximum dividend rate of 20%. Dorel may, in its sole discretion, pay accrued and accumulated dividends on the preferred shares by the issuance of additional preferred shares in lieu of cash.
The preferred shares will provide that in the event of a sale of Dorel or the disposition or transfer of any part of Dorel or its assets representing more than 35% of its trailing twelve months' consolidated revenues, all preferred shares will be redeemed for an amount equal to their original issue price plus all accrued and unpaid dividends. From the second anniversary of their date of issuance, the preferred shares will be redeemable at Dorel's option at a price equal to 115% of their original issue price plus all accrued and unpaid dividends. From the fifth anniversary of the date of issuance, the preferred shares will be retractable at any time at the option of AIMCo for an amount equal to their original issue price plus all accrued and unpaid dividends. The preferred shares are non-voting and are not convertible into Dorel's Class A Multiple Voting Shares ("Class A Shares") or Class B Subordinate Voting Shares ("Class B Shares"). AIMCo will be entitled to nominate one person to join Dorel's Board of Directors.
Warrants to Purchase Class B Subordinate Voting Shares
In connection with the new credit facilities, Dorel will issue warrants to TCW and certain ...
