Shoppers Drug Mart bank loan restructured prior to closing

By Sara Rosenberg

New York, May 24 - Shoppers Drug Mart Corp.'s bank loan underwent some restructuring before closing including being resized and repriced. The loan was originally sized at $435 million, but was reduced to a $425 million term B because the company had some extra cash on its balance sheet, a syndicate source said. It was "well oversubscribed north of a billion" and the interest rate was flexed down by 25 basis points to Libor plus 200 basis points, he added.

The loan, which expires in 6.75 years, closed on Wednesday, according to the syndicate source. CIBC is the lead bank on the deal.

Proceeds will be used to refinance existing debt. Basically all assets will be used to secure the loan.

Moody's Investors Service rates the North York, Ont. drugstore chain's loan Ba1 and Standard & Poor's rates it BBB+.

The Standard & Poor's rating - upgraded to its current investment-grade level from BB on May 16 - was "a pleasant surprise," the syndicate source said.

Overall, Friday was a quiet day in the bank loan market as people prepared for the long holiday weekend. According to one trader, there was "absolutely nothing going on" in the secondary.

News of some new deals that are currently in the market was released Friday.

Belk Inc., a Charlotte, N.C. department store operator, is in the market with a $327 million credit facility, which consists of a $200 million three-year revolver with an interest rate of Libor plus 100 basis points and a $127 million three-year letters of credit facility with an interest rate of Libor plus 37.5 basis points, according to a syndicate source. Wachovia is the lead arranger, Bank of America is the syndication agent and Branch Banking & Trust is the documentation agent for the deal.

Dycom Industries Inc. is in market with a $200 million three-year revolver with an interest rate of Libor plus 125 basis points, a syndicate source said. Wachovia is the sole lead arranger and administrative agent for the deal. Dycom, based in Palm Beach Gardens, Fla., designs, builds, and maintains coaxial, copper, and fiber-optic cable systems for local and long-distance phone companies and cable TV operators.

Lastly, G&K Services Inc., a Minnetonka, Minn. uniform rental agency, is presently in the market with a $300 million credit facility that consists of a $225 million five-year revolver with an interest rate of Libor plus 125 basis points and a $75 million five-year term A with an interest rate of Libor plus 125 basis points, a syndicate source said. Wachovia and Bank One are co-lead arrangers for the deal. Additionally, Wachovia is the syndication agent and Bank One is the administrative agent.

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