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Orchard Supply Hardware Stores Expands Credit Facility With WFCF, Bank of America

February 19, 2013, 07:08 AM

Orchard Supply Hardware Stores provided an update on the company’s efforts to refinance or modify its Term Loan debt and otherwise work to improve its capital structure. Additionally, Orchard provided an update on select preliminary fourth quarter fiscal 2012 financial performance and reiterated the Company’s commitment to its repositioning strategy, including opening new and renovating existing stores. The Company’s updates include the following:

  • On February 11, 2013, OSH expanded its existing Senior Secured Credit Facility with Wells Fargo Capital Finance and Bank of America, N.A., increasing total borrowing capacity to $145.0 million through the addition of a $17.5 million last-in-last-out supplemental term loan tranche.
  • As of February 12, 2013, the company had cash and available credit of $40.0 million, including $32.0 million available to borrow on the Senior Secured Credit Facility. This liquidity will be used for general working capital purposes, including paying vendors in the ordinary course of business as part of the Company’s customary spring inventory build-up.
  • On February 14, 2013, the company obtained a waiver from its current Term Loan lenders related to compliance with the leverage ratio covenant for the fiscal quarter ended February 2, 2013, and the fiscal quarter ending May 4, 2013, which means that the next applicable measurement date for the leverage covenant is August 3, 2013, subject to the Company’s continued compliance with the terms and conditions set forth in the waiver.
  • OSH continues to work with Moelis & Co. toward the refinancing or modification of its Senior Secured Term Loan to achieve an outcome that is in the best interests of the Company and all of its stakeholders. In addition to seeking an agreement with our Term Loan holders to refinance or modify the Senior Secured Term Loan, OSH continues to explore several actions designed to restructure our balance sheet for a sustainable capital structure, including seeking new long term debt and/or equity.
  • As previously reported, since October 2011, OSH has generated proceeds and secured tenant improvement allowances through multiple sale-leaseback transactions and have reduced term loan debt by more than $90 million.

Mark Baker, president and chief executive officer, stated, “As we begin 2013, we remain committed to our repositioning strategy. We have taken a number of steps in the past year to drive long-term improvement in Orchard’s operating results and to strengthen our financial position. We are very pleased to have expanded our credit facility, as planned, and improved our financial flexibility, both of which provide additional liquidity as we enter our peak spring selling season. We are gratified by the ongoing support of our lenders as we continue our work with Moelis & Co. and our financial partners to achieve a sustainable capital structure that will best position the company for long-term success.”

Orchard Supply Hardware Stores Corporation operates neighborhood hardware and garden stores focused on paint, repair and the backyard.

View the 8-K filing from Orchard Supply Hardware.

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