Advance Auto Parts
, an automotive aftermarket parts retailer, said Thursday that it has refinanced its secured credit facility to a new $750 million unsecured five-year revolving credit facility, replacing the existing term loans and revolver.
The company said that it does not expect to significantly increase its leverage. As a result of the improved borrowing costs under the new facility, it expects pre-tax interest expense savings of more than $2.5 million annually.
The facility, against which $434 million has been drawn, has an annual interest of about 6.1%, based on the sum of current LIBOR and spread. It has also entered into new swap agreements, which effectively fix the interest rate on $225 million of the new facility at about 5.0% plus a spread. The spread over LIBOR will adjust to reflect any future changes in the company's credit rating.
In relation with this refinancing, the company expects to record a charge of about $1.9 million of deferred financing charges related to its prior credit facility, and post income of about $2.9 million related with the previously unrealized gains on interest-rate swaps. Both of these amounts are to be accounted in the company's third fiscal quarter, resulting in a net pre-tax gain of $1.0 million for the quarter, Advance Auto Parts added.
This story was created through a joint venture between TheStreet.com and IRIS.