Shares in Damstra Holdings Ltd (ASX: DTC) are flying today after the company announced it has secured a new $20 million debt facility. At the time of writing, the Damstra share price is 88 cents – 6.02% higher than its previous closing price.
Damstra is a software company providing workplace management solutions and safety requirements.
Let's take a closer look at today's news from Damstra.
New debt facility
According to Damstra, the new debt facility will put it in a better position to fund its future growth.
Additionally, the new facility offers more flexible covenants and interest-only repayments. Damstra states this will improve its operating cashflow and provide extra capital to support its global growth ambitions.
Damstra's new facility is with San Francisco-based Partners for Growth (PFG). PFG specialises in funding growing technology companies.
Previously, Damstra had a debt facility with Westpac. That facility was drawn down to $3.7 million.
That debt has now been transferred to Damstra's facility with PFG, leaving it with access to around $17 million of additional capital.
Damstra's PFG debt facility is for 36 months with fixed interest rates for the life of it. To pay its exisiting debt, Damstra will use an initial drawn down tranche at a fixed interest rate of 7.85%.
As part of its agreement with PFG, Damstra will issue the funding provider warrants. The warrants will be exercisable into up to roughly 1.6 million shares.
The warrants' exercise prices will represent a premium of between 20% and 50% on the five-day weighted average price of Damstra shares prior to today's announcement.
Commentary from management
Damstra's CEO Christian Damstra said of the company's new debt facility:
The outlook for Damstra has never been better as we continue to successfully execute our strategy. Partners for Growth and their strategic partner, the Silicon Valley Bank, have a strong track record of supporting high-growth technology companies, and we look forward to working with them as we look to capture the huge growth opportunity for our business around the world.
Damstra share price snapshot
This year has been a tough year for the Damstra share price. It has fallen 42% since the year began.
It has also dropped 33% since this time last year.
The company has a market capitalisation of around $155 million, with approximately 186 million shares outstanding.
