Enterprise Group Closes $12.5 Million Loan Agreement to Fund Growth and Upcoming Acquisitions
Enterprise Group entered into a $12.5 million finance facility with the Canadian branch of PNC Bank, one of the largest banking groups in the United States, to help fund its growth and acquisitions.
The interest rate of the new three-year revolving loan wasn’t disclosed, but the Company did mention that about $4 million will immediately be used to pay down existing bank and other long-term debt. Knowing that these borrowings bear interest rates between lender prime + 1.5% (about 4.75%) and 5.585%, we’re convinced the rate of this loan is lower.
Next to repaying current debt, the loan will also be used to fund the Company’s planned acquisitions. Although Enterprise’s management had already indicated it wouldn’t dilute existing shareholders, it’s reassuring to see that the money is available to finance potential takeovers.
| 06/30/12 | 06/30/11 | |
| Cash and Cash Equivalents | 541,739 | 235,563 |
| Accounts Receivable | 3,153,190 | 2,162,535 |
| Inventories | 512,601 | 735,627 |
| Total Current Assets | 5,062,621 | 3,755,282 |
| Property, Plant and Equipment | 9,415,366 | 8,924,533 |
| Total Assets | 15,193,112 | 13,562,440 |
| | | |
| Bank Indebtedness | 614,671 | 731,862 |
| Trade and Other Liabilities | 881,542 | 978,201 |
| Term Loan Facility | – | 1,465,275 |
| Bank Loan Facility | 1,440,000 | 1,800,000 |
| Other Loans Payable | 726,367 | 425,000 |
| Total Current Liabilities | 4,268,485 | 6,025,659 |
| Long Term Loans | 1,346,807 | 287,430 |
| Total Liabilities | 5,615,292 | 6,313,089 |
| Total Stockholder Equity | 9,577,820 | 7,249,351 |
| Most important balance sheet data for the quarters ending June 30, 2012 and June 30, 2011. Source: Company Press Release | ||
Conclusion
Enterprise Group has been profitable for four consecutive quarters. Strong organic growth and a couple of acquisitions are expected for the remainder of the year.
The Company already signed a Letter Of Intent (LOI) to acquire a utility services & maintenance company, which would be accretive and very complimentary with its T.C. Backhoe & Directional Drilling subsidiary. This acquisition is expected to close any day.
Many investors are starting to take note of the Company. The stock has gone up 40% since our initial recommendation late May, but because the Company’s potential is high it isn’t too late. So, if you haven’t bought any shares of Enterprise Group yet, make sure to do so now.
| Smallcaps.us Advice: Buy | Price Target: $1.17 | Latest Company Report (pdf) |
| For important disclosures, please read our disclaimer. |