Constellation Software Resets Interest Rate for Series 1 Debentures

Constellation Software Inc. (TSX: CSU, TSX: CSU.DB) has announced that the interest rate applicable to its unsecured subordinated floating rate debentures, Series 1 (the "Debentures"), will be reset to 8.9% per annum on March 31, 2025. This new interest rate is equal to the annual average percentage change in the "All-items Consumer Price Index" published by Statistics Canada during the 12 month period ending on December 31, 2024 plus 6.5%. The current interest rate of 10.4% will remain in place until March 30, 2025.

The reset of the interest rate is an annual event that occurs on March 31 of each year. The interest rate is tied to the annual average percentage change in the All-items Consumer Price Index, which provides a measure of inflation. This mechanism helps to protect the purchasing power of the debenture holders by adjusting the interest rate in line with inflation.

The reset of the interest rate can have implications for the company's cost of capital and overall financial strategy. A lower interest rate reduces the cost of capital, making it more affordable for the company to borrow funds. This can lead to increased financial flexibility, allowing the company to pursue more acquisitions or invest in organic growth initiatives. However, a higher interest rate increases the cost of capital, making debt financing more expensive.

The annual reset of the interest rate also introduces uncertainty and potential volatility in the company's financing costs. The interest rate can fluctuate based on inflation trends, which can affect the company's cost of capital and overall financial strategy. The company must carefully manage this uncertainty and adapt its financial strategy accordingly to mitigate any negative impacts on its financial performance.



In conclusion, the annual reset of the interest rate for Constellation Software's Series 1 Debentures is an important event that can impact the company's cost of capital and overall financial strategy. The company must carefully manage the uncertainty and potential volatility in its financing costs to ensure that it can continue to grow and create value for shareholders.