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Orchard Supply Hardware Stores Corporation (Nasdaq:OSH), a neighborhood hardware and garden store focused on paint, repair and the backyard, today announced additional progress in the Company’s efforts to strengthen its financial position through refinancing and reducing its debt.
Today, the Company successfully closed on a new five-year Senior Secured Credit Facility consisting of a $120.0 million revolving credit facility and a $7.5 million FILO term loan, with Wells Fargo Capital Finance and Bank of America, N.A. The new facility replaces the Company’s existing $100.0 million Senior Secured Credit Facility.
During the past 12 months, the Company reduced its long-term debt by approximately $93 million and secured funds to remodel Orchard stores, primarily through the execution of multiple sale-leaseback transactions of Company-owned properties. The Company’s Real Estate Secured Term Loan was paid off in its entirety as of July 28, 2012.
“We are pleased with the progress we have made to strengthen the Company’s financial position, which includes substantially reducing debt and lowering our borrowing costs,” stated Chris D. Newman, EVP and Chief Financial Officer. “We are particularly pleased to have the new credit facility in place, which provides Orchard with additional borrowing capacity at better rates. We greatly appreciate the confidence that Wells Fargo and Bank of America have in our ability to manage and grow the Company.”
“We are proud to lead the Orchard Supply Hardware revolver and are excited to be a valued lender as the company solidifies its balance sheet,” said Keith Vercauteren, head of the Retail Finance Division of Wells Fargo Capital Finance. “Through ongoing collaboration, we look forward to enhancing our relationship in continued support of the company’s success.”
Newman continued, “Orchard was highly leveraged at the time of our spin-off from Sears Holding Corporation in December 2011; during the past 12 months, we have been analyzing the Company’s financial position and taking steps to deleverage the Company and improve our liquidity. After reducing debt, paying off our real estate loan and securing a new asset backed loan at lower rates, we are focused on the refinancing of our Senior Secured Term Loan. We believe these actions will provide us with greater flexibility as we pursue our strategic plans to reposition the business and transform Orchard’s store portfolio.”