Rent-A-Center Seeks to Refinance JPMorgan-Led Facility
Rent-A-Center announced it intends to refinance its senior credit facility with $850 million in new debt, as the largest rent-to-own business in North America tries to boost its financial position and get the go-ahead to pay a shareholder dividend amid concerns over its performance, liquidity, and debt covenant compliance.
According to an 8-K filing dated July 14, 2011, the current senior secured credit facility, which matures on July 14, 2016, is comprised of a $500 million revolver and a $250 million term loan. The interest rate on the facility is either prime rate plus 0.5%, or Eurodollar rate plus 1.5% to 2.5%. According to filing, JPMorgan was administrative agent for the lender group; BofA, Compass Bank and Wells Fargo were shown as syndication agents.
The company said it expects to complete the transaction in the first quarter of 2014, and intends to repay amounts outstanding under its senior credit facility, currently approximately $348 million, with the proceeds of the new term loan. The company also stated that in connection with the proposed refinancing, it anticipates obtaining from its existing lenders a waiver under its existing credit agreement to permit the declaration and payment of a dividend for the second quarter of 2014, subject to approval by the company’s board of directors.