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GRAND RAPIDS, Mich. - Spartan Stores, Inc. has completed an amendment to its existing financing agreement with Congress Financial (a subsidiary of Wachovia Corp.) and terminated its Supplemental Secured Credit Facility with Kimco Realty Corp.
Spartan’s amended agreement with Congress Financial will increase the senior secured credit facility by approximately $25 million to $215 million with a five-year term, from its original $170 million four-year term. A portion of the funds made available under the agreement with Congress Financial were used to prepay without penalty, the $13.9 million of higher interest rate borrowings outstanding under its supplemental secured credit facility with Kimco.
Interest rates under the amended agreement are 100 basis points lower for LIBOR borrowings and 50 basis points lower for prime-based borrowings. Assuming current LIBOR and prime lending rates, Spartan said it expects annual interest expense to decline by approximately $2 million due to the lower interest rates and the prepayment of the higher interest rate supplemental secured credit facility.
The company also expects to incur a non-cash, after-tax charge of $0.4 million in the third quarter to write off unamortized loan origination fees associated with the previous Kimco financing agreement.
"The amended agreement provides us with more borrowing capacity, lowers our cost of capital, and provides us with greater capital expenditure flexibility," said Craig Sturken, Spartan Stores' chairman, president and c.e.o.
Spartan Stores, the nation's eighth largest grocery distributor with warehouse facilities in Grand Rapids and Plymouth, Mich., distributes more than 40,000 private label and national brand products to more than 300 independent grocery stores in Michigan. Spartan also owns and operates 54 retail supermarkets and 21 deep-discount food and drug stores in Michigan and Ohio, including Family Fare Supermarkets, Glen's Markets, and The Pharm.