Ames Department Stores signed a deal for $800 million in senior secured financing with General Electric Capital to finance upcoming store expansions and for general operations. The credit replaces a $650 million facility that Bank of America previously led that was set to expire in June of next year. Rolando de Aguiar, cfo of Ames, said the company has larger inventory and capital expenses and that a new facility was needed to accommodate that. "This facility provides more flexibility and has a higher advance rate," he said. "It's been a tough year for retail, and we needed more flexibility. This facility gives us more stature and more fire power." De Aguiar said Ames is planning to add five stores this year. "As the economy strengthens, we'll pursue other opportunities," he said.
There are no tranches and de Aguiar described the covenants as typical of a facility of this type. "We were very satisfied with B of A, but GE gave a very good proposal," he said of why the company switched leads. He declined to elaborate. A spokeswoman at B of A did not return calls for comment. The new facility has a higher borrowing base and advance rate that will increase availability and improve the company's cash flow and financial flexibility. De Aguiar said he couldn't disclose the other banks in the group but said, "We're always open to banks approaching us." He declined to reveal the company's earnings before interest, taxation, depreciation and amortization.