iWeb Communities: Blog

IWEB GROUP Inc. and the Business Development Bank of Canada (BDC) have agreed that iWeb will be awarded a new $4.5 million loan in addition to a debt consolidation with easier terms.

This additional funding will be used to acquire new equipments and complete the second development phase of iWeb’s second data center located in St-Léonard. This new development, ?Phase 2?, of the iWEB-CL datacenter is the most extensive and is set to be completed in April 2007. This phase includes extending the building, significantly upgrading electrical power supply and investing in equipment that will allow the company to raise to 4000 the number of dedicated servers it can host in the St-Leonard facility. The facility will also shelter iWeb’s new network operation center.

Completing this second phase of the iWEB-CL infrastructures is essential if we want to maintain our growth. It will provide us with a stable and expandable infrastructure that can be upgraded gradually to accommodate up to 12,000 dedicated servers. Less important upgrades will be planned for the next two years in order to upgrade the capacity according to our needs.

As well as making this significant new funding available to us, the Business Development Bank of Canada is enabling us to benefit from more favourable terms on our existing fundings. We greatly appreciate this mark of confidence.

The supplementary debt will be made up of a subordinated loan in the amount of $2.5 million, bearing interest of 11%, payable monthly, a supplementary interest of 2% and a bonus equivalent to a percentage of its five-year earnings before tax, interest and amortization, varying from 3% to 6%. The capital, supplementary interest and bonus are payable in five years.

The second $2-million component of the supplementary debt will be combined with a consolidation of some of the existing debts into two loans. The first will be in the amount of $2,442,000, bearing interest at the BDC prime rate, plus 0.75% (8.75%), with repayment over 15 years. The second loan will be in the amount of $2,252,000 and will bear interest at prime, plus 1.5% ($9.5%), with repayment over seven years.

Read the complete press release here.