Fred’s increases acquisition financing commitments to $2.2 billion

By Angela McDaniels

Tacoma, Wash., June 12 – Fred’s, Inc. entered into amended and restated commitment letters that increased the commitment for a senior secured asset-based loan facility to $1.65 billion from $1.2 billion, increased the commitment for a term loan to $550 million from $450 million and extended the initial outside commitment date for both to July 31, according to an 8-K filing with the Securities and Exchange Commission.

The company has to option to further extend the outside commitment date to Oct. 31.

The amendment to the commitment letter for the ABL facility also provides for a senior secured asset-based term loan secured by certain acquired intellectual property.

In addition, both commitment letters now permit certain real estate financings and sale-leaseback transactions.

The amendment and restatement occurred Friday. The company first received the commitments on Dec. 19.

The financing will be used to acquire up to 1,200 retail stores – increased from 865 retail stores – from Rite Aid Corp.

The commitment letter for the ABL facility is with Bank of America, NA, Bank of America Merrill Lynch, Regions Bank, Regions Capital Markets and Citizens Bank, NA.

The commitment letter for the term loan is with MLPFS, TPG Specialty Lending Inc., Birch Grove Capital LP, Crystal Financial LLC, Gordon Brothers Finance Co., LLC, Pathlight Capital LLC, Silver Point Specialty Credit Fund, LP, Tennenbaum Capital Partners, LLC, Great American Capital Partners, LLC, Apollo Global Management, Cerberus Business Finance LLC, KKR Credit Advisors US LLC and White Oak Asset Finance.

Fred’s is a Memphis, Tenn.-based operator of discount general merchandise stores and specialty pharmacy-only locations.

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