A $15 million auction of Quality Stores paper went off last Wednesday in the low 20s. Dealers report levels a month ago were in the 38 range. The rumored seller of the piece was Union Bank of California. Calls to Dan Brigham, bank spokesman, were not returned.
In late October, Quality Stores involuntarily filed for Chapter 11 after the bondholders filed a bankruptcy petition. Last month the company also announced it will close 133 stores, in turn eliminating 1,200 jobs. The company is based out of Muskegon, Mich., and is a farming goods retailer in the U.S. It had operated over 300 retail stores under six names in 31 states. Calls to Thomas Reinebach, cfo and treasurer, were not returned by press time.
Quality Stores has a $405 million deal that breaks down into three tranches and expires in 2005. Bank of America and FleetBoston Financial are the lead arrangers. Pricing is split between LIBOR plus 31/ 2% and LIBOR plus 4%. Standard & Poor's downgraded the debt to B- from B due to poor financial performance. Store sales and EBITDA both trailed 1999 levels.