Smart & Final is in the midst of "retooling" its $175 million credit agreement after it was out of compliance with some covenants, said Jan Berger, v.p. and treasurer. He explained that after the company divested certain businesses, Smart & Final took write-downs in the second quarter, resulting in a net loss of $69 million, which tripped the breached covenants. Berger noted that the food and food supply warehouse store operator received a waiver on its asset-based credit through Oct. 5 so it can get new provisions in place. BNP Paribas leads the revolver and has been open to the credit agreement restructuring plans, Berger said. A BNP Paribas banker did not return calls.
Smart & Final announced earlier this month that it had completed the divestiture of its foodservice direct delivery business units and its Florida stores. Proceeds from the sales totaled $59 million plus $25 million in future operating lease obligations, which in part went toward reducing the balance on the company's credit.
The facility's borrowing base is currently $112 million, with a lowered total commitment of $127.8 million. Berger said $14 million is being held in the company's real estate lease trust for acquisition of replacement properties or later reduction to the lease facility debt. The company received lender consents to restructure its revolver to include in the borrowing base calculation a 50% advance rate against the value of certain company-owned real estate assets. Rabobank and Harris Trust & Savings Bank are also agents on the deal.