TORONTO – National network service provider TeraGo Inc. announced yesterday it has secured an additional $27 million in senior term debt financing from Royal Bank of Canada to support its investment in a new fibre-optic service delivery platform as well as future acquisitions.
The company secured the additional funding, which is part of a $42 million debt package, for its enhanced business plan through an amended credit agreement with RBC’s Knowledge-Based Industries Banking Group. Of the total debt package, $12 million is from existing drawn facilities which have been extended in term, and an existing $3 million operating line of credit which has not been used.
The amended credit agreement follows the completion of a strategic review concluded yesterday by TeraGo’s board of directors. The new fibre-optic platform initiative is an extension of the company’s core business of offering fixed wireless services to customers, and is part of an enhanced strategic direction.
“With the end of the strategic review, our first priority is enhanced growth and that is what this plan is intended to achieve,” said Bryan Boyd, TeraGo’s president and CEO, in a statement. “We will introduce and build a fibre-optic service delivery platform that will complement our existing fixed wireless technology platform, and leverage our spectrum portfolio. We will continue to target our traditional small to medium business market.”
Boyd said the company also plans to use fibre to address new markets, including “the requirements of larger business, enterprise and public sector customers looking for an alternative to our existing platform. We will also be able to more effectively accommodate growth among existing customers.”
“Our strong financial position, with record revenue, EBITDA and earnings in 2012, as well as positive cash flow, allows us to capitalize on this opportunity and make investments, in fibre and wireless, linked to future growth. These expanded platforms will allow us to remain focused on providing our growing customer base with high capacity and reliable broadband access to the Internet and their private networks,” Boyd said.
