The Pantry, a Sanford, N.C.-based convenience store retailer, is adding on first-lien and second-lien debt to its existing credit, which was completed last April. Wachovia Securities is shopping a $60 million addition for the "B" loan and $30 million in new money for the second-lien piece. Proceeds from the new debt will back the company's acquisition of the Golden Gallon convenience store chain from Ahold, USA. The credit currently includes a $52 million revolver, a $249 million "B" term loan and a $50 million second-lien loan. Pricing is at LIBOR plus 41/4% for the first-lien debt, while the second-lien piece has a coupon of 61/2% over LIBOR. The add-ons are priced the same as the existing debt. Dan Kelly, cfo, and a Wachovia banker, did not return calls.
When the credit was put in place in April, the "B" loan had to be juiced up 25 basis points and an original issue discount of 991/2 was added to the loan before the deal's completion, according to a banker. The second-lien piece was discounted at 981/2, he added. Moody's Investors Service rated the add-ons at B1 and B2 for the first and second-lien pieces, respectively. "For the 12 months ending June 26, 2003, lease-adjusted leverage was high at 5.5 times and fixed-charge coverage was low at 1.2 times," Moody's states. The Golden Gallon acquisition will, however, "incrementally benefit debt protection measures over the medium-term," Moody's further notes. Specific terms of the acquisition were not disclosed last week, but The Pantry said the transaction will be funded, in addition to the add-ons, with existing cash and sale leaseback financing. The Pantry has been a portfolio company of investment firm Freeman Spogli & Co. since 1995.