Delhaize America recently landed a bigger bank deal with cheaper pricing, replacing a $350 million credit with a new $500 million revolver. The U.S. subsidiary of Belgian food retailer Delhaize Group will use the new five-year revolver for working capital and general corporate purposes.
The company was seeking additional flexibility to redeem $560 million in 7 3/8% bonds expiring next April, explained Richard James, Delhaize's treasurer. Pricing will change from LIBOR plus 2 1/4% to LIBOR plus 1%. Also, the new revolver is unsecured, while the old revolver was secured against certain inventories in Delhaize's operating companies in the U.S.
Delhaize was able to obtain better terms and conditions because the market for bank loans is more favorable than it was five years ago, when the old facility was put in place, James said. The company was also able to boast of improved performance both in terms of sales and profitability.
Delhaize's $350 million credit was set to expire in July 2005. JPMorgan, the previous lead, and several other banks within the existing syndicate, approached the food retailer with pitches to lead the credit. But JPMorgan came in with the best deal and held onto the top spot. Delhaize's banker at JPMorgan in New York is Claudette Setton.
Between 20 to 21 banks participated in the previous syndicate. Only 17 are members of the new one. KeyBank, Société Générale and KBC Bank Deutschland are new lenders, while Deutsche Bank, Banca Di Roma, Dexia Bank, GE Capital, HSBC and SunTrust Bank dropped out. James declined to comment on the banks' reasons to step out. He noted, though, it is a normal process in every syndicate that new banks join and others leave. Delhaize operates Food Lion, Hannaford, Harvey's, Kash n' Karry and Sweetbay Supermarkets.