Bon-Ton considers asset-based facility, mortgage-backed facility, notes for Saks purchase

By Sara Rosenberg

New York, Oct. 31 - The Bon-Ton Stores Inc. is looking at using various financing options for the acquisition of Saks Inc.'s Northern Department Store Group, including an asset-based facility, a mortgage-backed facility and senior notes, company officials said in a conference call Monday.

Bank of America has committed to provide the financing.

Initial leverage following the close of the acquisition is expected to be around 80% debt to total capitalization, officials said in the call.

But, combined cash flow and synergies should allow for appreciable leverage reduction over the next three years, officials added.

Under the acquisition agreement, Bon-Ton will pay $1.1 billion in cash for the Saks asset plus the assumption of about $85 million of liabilities, including about $35 million in capitalized leases.

Closing of the transaction, which is expected to occur in the first quarter of 2006, is subject to certain conditions, including financing, the expiration or termination of all waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions.

Bon-Ton is a York, Pa., regional department store chain.

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