Echelon Capital analyst Mike Stevens expressed confidence in Decisive Dividend Corp.’s (DE-X) outlook and trajectory after the late Monday announcement it’s in the process of raising its overall debt capacity by $107-million through a new syndicated credit facility.
The jump from $68-million to $175-million includes a committed $100-million senior secured revolving term loan and a $75-million accordion facility through a syndicate expected to include original lender Canadian Western Bank along with National Bank of Canada, Royal Bank of Canada, and The Desjardins Group.
“This is a huge upgrade to the Company’s existing credit facility and more importantly, significant ‘big bank’ validation supporting Decisive’s M&A strategy, execution to date, and outlook going forward,” said Mr. Stevens. “We believe this announcement also provides an added layer of credibility to the Company’s communications around a robust pipeline of acquisition targets existing in the market. Recall that Decisive highlighted on its Q323 conference call in November 2023 that the market was transitioning from a seller’s market to a buyer’s market, which was causing some trepidation from the founders of these potential targets as they adjusted to an environment with less bargaining power. It’s now been just shy of seven months since Decisive’s last acquisition in July 2023, which was the sixth acquisition in the previous 15+ months – thus, we wouldn’t be surprised if the timing of this credit expansion is foreshadowing near-term M&A activity.”
Reiterating a “buy” recommendation for the Kelowna-based company’s shares, he raised his target to $12 from $10.75. The average is $10.71.
“The fact that several of the Canadian big banks are entering the story to support a large credit capacity upgrade (2.5 times the size of the current facility) for Decisive should not be taken lightly and demonstrates their collective optimism for the Company to continue to execute with increasing scale,” he said.
“We recently maintained Decisive in our Top Picks Portfolio for Q124 and shares have begun the year up 16 per cent plus after delivering a 68-per-cent total return across 2023 and nearly 300 per cent over the past three years. Despite this run, we still see compelling value here for long-term investors, while near-term catalysts around M&A and a potential dividend increase highlight the multiple levers at the Company’s disposal here in H124.”