Past relationships and the potential for future collaboration helped Montreal-based Cookie Jar Group score two credit lines that back a prior acquisition and also fund global expansion. The company's CEO Michael Hirsh previously worked with lead bank Royal Bank of Canada (RBC) and CFO Scott McCaw said RBC was also a natural choice because it is the lead lender for entertainment companies in Canada.
RBC backed the company in its acquisition of Canadian's children's entertainment and educational publishing company Cinar last March. A source close to the situation said Hirsh's relationship with the bank brought RBC on board despite bad press Cinar had been receiving regarding financial misconduct. "At the bank, in terms of working with an upstanding individual versus someone who is coming along that [RBC] didn't know and then buying a company like Cinar, I don't think RBC would have backed anyone else," the source said.
RBC is the sole lead on a C$30 million 364-day revolver that converts to a three-year term loan. RBC and a group of lenders including Canadian Imperial Bank of Commerce are also leading a $55 million credit that breaks down as a $20 million, three-year revolver and a $35 million, five-year term loan. The loans were in place in March, but were not syndicated and closed until the end of November. Apart from financing the Cinar deal, the bank debt will be used for future growth.
"We are very relationship orientated," McCaw said of the company and its chosen banks. "We wound up with a very strong group of lenders that have taken the time to learn about the management [and spent] time with them." Once RBC and CIBC were in place, McCaw said the company wanted a small syndicate that understood its business and took time to meet management. Merrill Lynch Capital and Wachovia Bank were selected and McCaw is optimistic about the ability to work with both banks in the future. "One of the things we always look for in our lenders is really to see how we can grow the relationship down the road and how we can use them in other circumstances or provide long-term benefits to them," he said.
Hirsh, along with producer Toper Taylor, Steve Carson andPatty Carson, of Carson-Dellosa publishing, TD Capital Canadian Private Equity Partners and Ontario Municipal Employees Retirement System own the company. Cinar was previously a public company, but the management team took it private. McCaw is optimistic it could go public again in about two years.