Wells Fargo and Goldman Sachs' refinancing 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 31/ 2% to LIBOR plus 3%, and PETCO is paying a 15 basis point fee for a capital expenditure amendment, said a banker. The refinancing trend is slowing and this deal could have been done 25 basis points tighter a few weeks ago, he noted.
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 three times total to 1.4 times senior and 2.6 times 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 sales increases of 5% or more," the banker said. The company has remodeled stores and has expansion plans, he added, explaining the reasons for the capex amendment. James Myers, cfo of PETCO, did not return calls.