UsPlus Successfully Raises USD8 Million in Senior Unsecured Debt Funding

UsPlus Limited recently announced a significant milestone in its financial journey. On 8 March 2024, the company revealed its successful raising of USD8 million in Senior Unsecured debt funding from the United States International Development Finance Corporation (DFC facility). This move marks a strategic step towards strengthening UsPlus’s financial position and pursuing its growth objectives.

Background and Context

UsPlus has been actively seeking opportunities to enhance its financial structure and optimize its debt obligations. Prior to the DFC facility, the company had existing debt facilities with entities such as Lendable Asset Management LLC and the Small Enterprise Finance Agency. These facilities were at relatively higher interest rates, impacting UsPlus’s cost of borrowing and overall financial health.

The DFC Facility and Drawdown

The DFC facility offers UsPlus a more favorable interest rate of 5.25% per annum compared to its previous arrangements. The company has already made its first drawdown from the DFC facility, accessing USD3 million. This drawdown enabled UsPlus to settle its USD2 million facility with Lendable Asset Management LLC, which carried an interest rate of 13.5% per annum since September 2022.

Financial Impact and Benefits

The transition to the DFC facility and the subsequent drawdowns have several financial implications and benefits for UsPlus:

1. Reduced Borrowing Costs: The lower interest rate of 5.25% per annum under the DFC facility significantly reduces UsPlus’s cost of borrowing compared to its previous arrangements. This translates to cost savings and improved financial efficiency.
2. Debt Consolidation: By settling its higher-interest debts with Lendable Asset Management LLC and the Small Enterprise Finance Agency, UsPlus effectively consolidates its debt portfolio. This simplifies its financial obligations and enhances cash flow management.
3. Enhanced Financial Flexibility: With USD8 million in Senior Unsecured debt funding at favorable terms, UsPlus gains greater financial flexibility. The additional capital can be deployed strategically to support growth initiatives, invest in operational improvements, or pursue new business opportunities.

Comparison of Interest Rates

Let’s compare the interest rates of UsPlus’s previous debts and the DFC facility:

As seen in the table, the DFC facility offers a significantly lower interest rate, providing UsPlus with a cost-effective financing option.

Strategic Implications

The decision to raise USD8 million in Senior Unsecured debt funding and transition to the DFC facility reflects UsPlus’s strategic focus on optimizing its capital structure and reducing financing costs. This move aligns with the company’s long-term growth strategy and enhances its competitiveness in the market.

Conclusion

UsPlus Limited’s successful raising of USD8 million in Senior Unsecured debt funding and the subsequent drawdown from the DFC facility signify a positive financial development for the company. By leveraging favorable interest rates and consolidating its debt portfolio, UsPlus is poised for enhanced financial resilience, flexibility, and strategic growth opportunities. This strategic move underscores the company’s commitment to financial prudence and value creation for its stakeholders.