Monro Muffler Brake, a provider of automotive undercar repair and tire services, has put in place a new five-year, $160 million credit line that increases borrowing capacity, fueling its acquisition strategy. The loan also cuts the spread from the previous line by 50 basis points. "With this agreement, as long as our production continues the rate will improve and allow us more money for acquisitions, a major strategy for us," said Catherine D'Amico, cfo and v.p. for Rochester, N.Y.-based Monro. The company posted record results two weeks ago with $94.6 million in sales, up 8.3% from last year.
The loan consists of a $125 revolver and has a $35 million accordion feature. Pricing on the loan currently stands at LIBOR plus 75 basis points. The prior $110 million facility, which comprised a $83 million revolver and a $27 million synthetic lease, was up for renewal in September 2006, but Monro was approached by its lenders to renew and increase the line now.
Chase Manhattan Bank led the prior club deal with the syndicate comprising M&T Bank, Fleet Bank, KeyBank, HSBC, and Citizens Bank, a subsidiary of The Royal Bank of Scotland. The syndicate retains the same members save for KeyBank who left due to "not [being] comfortable with the new rates," D'Amico said.
Additionally, RBS has taken over the lead spot. "The new facility gives us much more flexibility," said D'Amico. "Our prior one had restrictions such as geographic limitations. This new facility not only gives us better rates and more capital, but the freedom to expand our business wherever we please," she added.