Duckwall-ALCO Stores, Inc. Announces New Credit Facility
July 21 2011 - 4:15PM
Duckwall-ALCO Stores, Inc. (Nasdaq:DUCK) today announced that it
has entered into a $120 million five-year revolving credit
agreement with Wells Fargo Capital Finance, part of Wells Fargo
& Company (NYSE:WFC). The new credit facility replaces an
existing $120 million credit agreement with Bank of America, N.A.
and Wells Fargo Retail Finance, LLC executed in February
2010.
Under the new Wells Fargo Capital Finance credit agreement, the
Company will recognize many benefits, including a 150 basis point
reduction in interest rates, access to more availability through an
increase of advance rates on the collateral, a streamlined treasury
management process and an extended term.
Rich Wilson, President and Chief Executive Officer, said, "We
are very pleased with our partnership with Wells Fargo Capital
Finance, and this agreement is a testament to our strategy and
Duckwall-ALCO's recent accomplishments. The new facility not
only provides additional flexibility, but also reduces our
borrowing costs. While we are very focused on growing sales in
our stores, this new credit facility shows our continued commitment
to reduce expenses in all areas. It is an exciting time to be
at Duckwall-ALCO, and we look forward to continuing our long-term
partnership with Wells Fargo Capital Finance."
Under both the prior credit facility and the new one, applicable
interest rates are determined based upon average loan availability
and, at the Company's election, either a prime rate or LIBOR-based
rate. As a result of recent average availability, interest
rates under the prior facility have been either prime rate plus 250
basis points or LIBOR plus 350 basis points. Under the new
facility, those rates have been reduced to prime plus 100 basis
points and LIBOR plus 200 basis points. Assuming an average
outstanding loan balance of $50 million, the estimated after-tax
interest savings would be about $450,000 per year, or approximately
$0.12 per share.
Under this asset-based loan, the advance rates applied to
collateral represent key levers in determining the total amount of
borrowing capacity for the Company. These advance rates have
been increased under the Wells Fargo Capital Finance facility, and
the Company expects its borrowing capacity to increase by
approximately $6 million as a result.
Furthermore, Duckwall-ALCO expects to be able to use Wells Fargo
Capital Finance treasury management services to make the Company's
cash management more efficient and to reduce expenses through
improved pricing for these services.
In conjunction with the closing of the transaction, the Company
will record a one-time non-cash after-tax charge of approximately
$300,000, or $0.08 per share, in the second quarter ended July 31,
2011. This one-time charge is related to accelerated
amortization of certain transaction fees from the February 2010
loan agreement with Bank of America.
About Duckwall-ALCO Stores, Inc.
Duckwall-ALCO Stores, Inc. is a broad-line retailer, primarily
located in small underserved communities across 23 states. The
Company has 213 ALCO stores that offer both name brand and private
label products of exceptional quality at reasonable prices. We
are proud to have continually provided friendly, personal service
to our customers for the past 110 years. To learn more about
the Company, visit www.ALCOstores.com.
The Duckwall-ALCO Stores, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5865
About Wells Fargo Capital Finance
Wells Fargo Capital Finance is the trade name for certain
asset-based lending, accounts receivable and purchase order finance
services of Wells Fargo & Company and its subsidiaries, and
provides traditional asset-based lending, specialized senior
secured financing, accounts receivable financing, purchase order
financing and channel finance to companies across the United States
and Canada. Dedicated teams within Wells Fargo Capital Finance
provide financing solutions for companies in specific industries
such as retail, software publishing and high-technology, commercial
finance, staffing, government contracting and others. For more
information, visit www.wellsfargocapitalfinance.com.
Forward-looking statements
This press release contains forward-looking statements, as
referenced in the Private Securities Litigation Reform Act of 1995
("the Act"). Forward-looking statements can be identified by the
inclusion of "will," "believe," "intend," "expect," "plan,"
"project" and similar future-looking terms. You should not rely
unduly on these forward-looking statements. These forward-looking
statements reflect management's current views and projections
regarding economic conditions, retail industry environments, and
Company performance. Forward-looking statements inherently involve
risks and uncertainties, and, accordingly, actual results may vary
materially. Factors which could significantly change results
include but are not limited to: sales performance, expense levels,
competitive activity, interest rates, changes in the Company's
financial condition, and factors affecting the retail category in
general. Additional information regarding these and other factors
may be included in the Company's Annual Report on Form 10-K,
Quarterly Report on Form 10-Q and other public documents, copies of
which are available from the Company on request and are available
from the United States Securities and Exchange Commission.
CONTACT: Wayne S. Peterson
Senior Vice President - Chief Financial Officer
785-263-3350 X164
email: wpeterson@ALCOstores.com
or
Debbie Hagen
Hagen and Partners
913-642-6363
email: dhagen@hagenandpartners.com
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