Brown Shoe Company closed a $350 million secured revolving credit facility in late December, replacing more expensive bond debt and getting increased liquidity. Andy Rosen, cfo, explained that the company retired a bond deal with a coupon of 91/2 %. The new debt has a floating rate and starts at LIBOR plus 2% to 21/2 % based on a grid. The St. Louis-based company sells footwear worldwide. It markets brands like Naturalizer, LifeStride and Buster Brown.
Rosen explained the pricing grid is based on borrowing base availability. Availability is determined by eligible accounts receivable plus eligible inventory less borrowed amounts outstanding, Rosen explained. He said he's satisfied with the pricing on the new bank deal. "It's fairly priced based on the current market," he said. The company had previously had a $165 million credit facility that was due to expire at the end of 2003. Rosen described pricing on that deal as similar. He explained the reason for the larger credit was to pay off bonds. The bond deal was $100 million and due in 2006. Financing also goes toward working capital. "We're taking charges to improve our profitability. We're restructuring our bank deal to give us some latitude," he said.
Bank of America leads the facility. The company went out to bid but chose B of A because of a prior relationship with them. "We have a longstanding relationship with them that's been valued and supportive," said Rosen. FleetBoston Financial is the syndication agent.