ShopKo Stores amended and restated its $450 million credit facility for four years and lowered its interest rate by 50 basis points, stated John Pindred, v.p. and treasurer. He explained that the company opted for an amended and restated credit agreement, rather than going with the one-year extension option that applied to the previous credit. "We needed to make a decision," he said. The Green Bay, Wis.-based company decided to accept proposals from members of its previous bank group and ultimately chose to continue its partnership with previous lead Fleet Retail Group, Pindred said. "The economics were the most compelling," he said of Fleet's proposal. "They've been a good partner," he added.
The new revolver is priced off of a grid tied to availability, ranging between LIBOR plus 11/2-2%, Pindred noted. The deal is secured by inventory and receivables. The company's previous $600 million credit was put in place in 2001 and included a $100 million institutional loan and a $500 million revolver. ShopKo paid the term loan off after improving working capital management, Pindred said, adding that the remaining revolver was then voluntarily decreased to $450 million in 2002. He noted that the "B" loan was carved out in the previous credit, which was the first facility for ShopKo, in order to satisfy institutional investors in the deal. "[ShopKo] lost most of the institutional folks," Pindred noted of the new syndicate, but most of the original bank lenders stayed in the new pro rata deal. GE Capital is syndication agent on the credit, he said.
ShopKo had $260 million available on the facility as of late last month, as it funded with the revolver proceeds the retirement of its $89.2 million 61/2% senior unsecured notes. ShopKo operates 360 discount stores in 23 U.S. states under the ShopKo and Pamida names.