Fleet Capital has amended Dixie Group's senior credit line, reducing its size from $150 million to $128.3 million but increasing the amount the company can access. Gary Harmon, Dixie's cfo, said the amendment was done in order to increase the term loan by $4.5 million and allow for an additional $10 million availability under the revolver's borrowing base. The closing of the refinanced facility also involved a bank shuffle with Foothill Capital stepping into the group, which continues to include Congress Financial and La Salle Business Credit. General Electric Capital Corp. and Transamerica Business Capital are no longer part of the Fleet-led deal.
Commenting on the company's current lenders, Harmon said there are "fewer issues going forward with the group" and that there is "more comfort with the working relationship." He declined to comment further on the bank switch, saying only that the new group is more cohesive. Robert Moore, senior v.p., loan administration at Fleet said, "It was mutually agreed upon for a couple of lenders to fall out." Moore explained that the commitment level went down so the company did not need as many lenders. "There is a point when deals become unprofitable," he added. GE and Transamerica officials did not return calls.
The refinanced credit, in conjunction with a $37 million issuance of senior notes, was used to settle Dixie's $50 million obligation--due in April--to shareholders of Fabrica International. Under the amended credit, the carpet manufacturer can tap an additional $10 million from the revolver, though it was reduced by $20 million. The availability arises from the release of the existing facility's $10 million reserve, which had been put in "to take a little bit of the risk out," said Moore. He explained that there had been more risks in the credit in the spring of 2002 because of Dixie's $50 million obligation to shareholders, which has now been satisfied. The refinanced facility comprises a $90 million revolver and a $38.3 million term loan, with spreads of LIBOR plus 3% and 31/2%, respectively. The previous facility comprised a $110 million revolver and a $40 million term loan.