Home retailer, Lechters, Inc., amended its $130 million credit facility with Fleet Retail Finance, receiving $85 million in commitments from the bank for a new facility in response to the company's downsizing this year. Dan Anderton, cfo, said the company closed 166 underperforming stores this year, prompting the company to meet with its bankers to reduce its bank facilities.
The company's previous $130 million loan comprised a $120 million senior facility and a $10 million tranche "B" which has been replaced with an $80 million facility and a $5 million tranche "B" piece, said Anderton. For the first year, pricing on the new facility is LIBOR plus 2 3/4 % and after the first year can be reduced to LIBOR plus 2 1/4 % based upon the company's performance, he said. The loans are based on a grid tied to performance. Anderton said the company chose to re-sign with Fleet Retail Finance because the bank provides the company with cash management services.
Anderton explained that in the original business plan submitted to the bank for the old facility, the company stated that it planned to close roughly 30 of its stores. After closing 166 stores, the company needed to meet with bankers to discuss its bank debt needs moving forward. "The bank didn't have a problem with the change, but after meeting with them we decided that we didn't need the same amount to carry out our business plan," he said. The facility will be used for general corporate purposes.
Anderton said the company increased the amount of store closings as part of the company's restructuring plans. Lechters is in the process of repositioning and updating its core business, focusing on kitchen products that fit into a higher quality category.