hhgregg Inc. (HGG) announced that its subsidiary, Gregg Appliances Inc. successfully completed an Amended and Restated Loan and Security Agreement thereby amending Gregg Appliances’ existing revolving credit facility.
According to this agreement, the maximum borrowing capacity has been increased to $300 million from $125 million, subject to borrowing base availability and the date of maturity being extended to March 29, 2016. The bankers, Wells Fargo Bank, National Association will act as administrative agents for the purpose.
Gregg Appliances retired the other remaining term debt along with the interest rate swap arrangement by burning roughly $90 million of excess cash. The early retirement of the debt and the swap rate will give way to some financial charges (roughly $2.1 million or 3 cents per diluted share), which the company expects to record in its fourth quarter 2011 earnings.
On July 25, 2007, Gregg Appliances entered into an Amended and Restated Loan and Security Agreement with a bank group for up to $100 million. On September 15, 2009, Gregg Appliances to into the Amended and Restated Loan and Security Agreement with Amendment No.1 with a bank group, which amended the Revolving Credit Facility.
Amendment No.1 increased the maximum amount available under the Revolving Credit Facility from $100 million to $125 million, subject to borrowing base availability. Under the Revolving Credit Facility, as amended by Amendment No.1, borrowings from time to time shall not exceed a defined borrowing base.
Company officials feel that the favorable financing market and the amended facility will enable the company to develop a strong liquidity position. The extension of the maturity until 2016 will provide greater operating and financial flexibility for the company as it continues executing its growth plan.
Under the Revolving Credit Facility as of December 31, 2010 and March 31, 2010, the company had no cash borrowings outstanding and had $4.8 million of letters of credit outstanding, which will expire through December 31, 2011.
hhgregg Inc., which competes with Best Buy Co. Inc. (BBY), maintains a Underperform rating on a long term basis. Further the stock currently holds a Zacks #4 Rank with a short-term Sell rating.
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