Wells Fargo and Goldman Sachs' refinancing credit for PETCO Animal Supplies is fully subscribed with the $193 million "B" term loan taken out with a new "C" loan. The new deal cuts the interest spread from LIBOR plus 3 1/2% to LIBOR plus 3%, while PETCO is also paying a 15 basis points fee for a capital expenditure amendment, said a banker. The refinancing trend is slowing but this deal could have been done 25 basis points tighter a few weeks ago, explained the banker. Since the original loan was set last fall, the leverage as measured by debt to EBITDA has gone from 1.5 times for the senior and 3 times total to 1.4 times senior and 2.6 total. The company went public in the first quarter of this year and repurchased $30 million of senior subordinated notes with some of the proceeds.
In terms of achieving a capex amendment and a repricing in this tougher market, the banker attributed it to the strength of the company. "This is a retailer with 37 consecutive quarters of comparable store sale increases of 5% or more," the banker said. The company has remodeled stores and they also have store-expansion plans, he added, explaining the reasons for the capex amendment. The San Diego-based specialty retailer of premium pet food, supplies and services is rated B1 with a positive outlook and BB- by the rating agencies. James Myers, cfo of PETCO, did not return calls,