Giant Eagle has decided to tap the institutional market for $300 million of its $550 million credit facility. According to Mark Minnaugh, cfo, the supermarket company wanted access to additional sources of capital and the ability to put longer-term debt in place. "We thought that our industry would be attractive to the market," Minnaugh said, adding that the notion was confirmed when the "B" tranche was oversubscribed.
The new credit represents the company's first venture into the institutional market. Giant Eagle's previous facility, secured in 1997, was comprised of a $350 million revolver and a $225 million "A" term loan. The pricing for both tranches was linked to a leverage-based grid, which ranged from 1% to 21/ 2% over LIBOR.
The new credit comes with slightly higher pricing, but Minnaugh said the extra interest cost is just a function of tougher market conditions now. The new financing comprises a five-year, $250 million revolver and a seven-year, $300 million "B" term loan. Pricing for the credit is linked to a leveraged-based grid and is currently set at LIBOR plus 2% for the revolver and LIBOR plus 21/ 2% for the term loan.
The deal is co-lead by Citibank and Mellon Bank. Mellon was the lead on the company's previous facility and has a strong relationship with Giant Eagle, in part, because the two are both rooted in Pittsburgh, Minnaugh noted. Citibank, which also participated in the previous credit, was chosen because the company wanted access to a larger player, he said.