The Dixie Group went with a new bank group when it decided its banks did not fully recognize the Chattanooga, Tenn.-based carpet manufacturer's move away from being a textile company. "Dixie is a 100% carpet company, but some of the banks still viewed us as a textile company and they did not want to be in that sector," said Gary Harmon, cfo of Dixie. SunTrust Bank, which led the last facility did recognize the change, which occurred several years ago," said Gary Harmon, cfo of Dixie, but instead of reworking the group, Dixie decided to go with an entirely new group, he added.
Fleet Capital leads the new $150 million bank line, which is split between a $110 million, five-year revolver and a $40 million, seven-year amortizing term loan that is due at the end of the fifth year. Explaining the timing of the refinancing, Harmon said the previous line was set to mature in March 2003, but "Dixie has been operating under amendments and waivers since November 2000 and we wanted to get out." This line is much more flexible, he added. In addition to the new facility, Dixie has completed the sale of a manufacturing facility, which contributes to the increased flexibility.
Dixie made acquisitions in 1999 and 2000 and also had some pretty strong capital expenditure in 2000 that increased debt, Harmon noted. "Dixie consolidated three business lines into one," he said. In the last couple of years debt has been reduced by almost $100 million, Harmon stated, and the company is more streamlined. He declined to name the other banks in the old syndicate, but said GE Capital, Congress Financial, TransAmerica and La Salle Bank comprise the new syndicate. Pricing is based on a grid tied to leverage and ranges from LIBOR plus 21/ 4% to 31/ 2%. Calls to officials at SunTrust Bank were not returned by press time.