Fred’s increased its credit facility from $150 million to $225 million to support its upcoming purchase of 885 Rite Aid stores.
According to a related 8-K filing, Regions Bank, in its capacity as administrative agent, collateral agent and lender and Bank of America, in its capacity as lender amended Fred’s credit agreement to:
- Increase the revolving loan commitment from $150 million to $225 million, subject to a $30 million sublimit on letters of credit
- Limit the amount that can be drawn on the revolving loan facility to percentages of the company’s credit card receivables, pharmacy receivables, inventory and pharmacy scripts, less reserves
- Establish a financial covenant requiring the company to maintain excess availability of at least the greater of $22.5 million and 10% of the aggregate revolving commitments
- Revise the definitions of “applicable margin” and “excluded subsidiary”, among other definitions
- Revise the excess availability requirements for certain acquisitions
- Revise the limitation on dividends paid during any four consecutive quarters to $12.5 million from $20 millio
- Authorize Regions to take control of certain accounts of the company upon certain conditions being satisfied for the purpose of directing payments to Regions
In addition, up to $15 million of borrowings under the revolving loan facility may be used in connection with the acquisition of up to 10 Rite Aid stores.
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BofA, Regions, Others Increase Fred’s ABL to Support Rite Aid Buy