ITASCA, IL — Midas has entered into a three-year, $115 million credit facility to refinance its existing debt.
The new facility, which expires on March 16, 2007, enabled Midas to retire $92.4 million in term loans, including a $29 million term loan that carried interest at 18 percent. Those loans would have expired in October 2004.
The new facility consists of a $55 million revolving loan and a $60 million term loan from a group of lenders led by Bank One, NA.
“This three-year debt facility will enable us to support our continuing operations and significantly reduce our interest costs,” said William Guzik, Midas’ senior vice president and CFO. “The willingness of Bank One and these new lenders to enter into this new facility is evidence of their confidence in the transformation the company achieved in 2003, as we focus on the profitable franchise retail business going forward.”
During 2003, Midas completed a major restructuring that included outsourcing distribution of Midas-brand and other automotive parts to AutoZone in the U.S. and Uni-Select in Canada, closing 11 of its 12 regional distribution centers and all 77 PWI quick-delivery sites, reducing the number of company-operated shops from 111 to 73, and reducing its employment at headquarters and in the field from 1,900 to 900.
The company used funds generated by liquidating inventories to fund restructuring actions and to pay down term loan debt by $40.1 million from $132.5 million at the time of refinancing in late March to $92.4 million at the end of the year.
The refinancing will result in a loss on repayment of debt of approximately $4.8 million because of the non-cash write-off of the unamortized debt discount and financing fees related to the old debt facility. This loss will be recorded in the first quarter of fiscal 2004, according to Midas.
“Midas is in a much stronger financial position today as a result of our restructuring,” Guzik said. “We are seeing positive results from our focus on the growth of the Midas retail system and we fully expect to return to profitability in 2004.”
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