Zale strengthens on newly closed loan
Dallas Zale Corp. said late Monday it has closed on a new $150 million, five-year senior secured term loan provided by private-equity firm Golden Gate Capital.
In addition to interest and fees on the GGC Loan, GGC will receive a 25% equity stake in Zale Corp., pending required shareholder approval, and two GGC representatives will serve on the company’s board of directors.
Zale said it has also closed on a new bank credit facility (led by Bank of American as administrative agent and General Electric Capital and Wells Fargo Retail Finance as co-borrowing base agents) that amends and extends its existing asset-backed credit facility to provide total commitments of $600 million, including a $100 million seasonal adjustment.
After debt reduction of the existing bank facility, Zale said it expects to have approximately $160 million in debt and available liquidity of approximately $250 million.
Zale also announced that it has reached agreement with TD Financing Services to offer a proprietary credit-card program to its Canadian customers effective July 1, replacing its existing agreement with Citi Cards Canada that expires on June 30.
“The agreements announced today are important steps in positioning Zale for the future,” said Theo Killion, president and interim CEO. “With the completion of our financial restructuring, we will now be able to focus 100% of our time on key merchandising, in-store and marketing initiatives to grow sales and return to profitability.”
Zale announced that Stefan Kaluzny and Peter Morrow have been elected to its board of directors. Kaluzny focuses on several sectors, including multichannel retail, consumer products and restaurants, and currently serves as chairman of the board at Express.
Morrow is a principal at GGC, where he focuses on several sectors, including multichannel retail and consumer products. Simultaneously, Thomas C. Shull and David M. Szymanski have resigned from the board of directors.
In addition, John B. Lowe, Jr., chairman, has advised Zale that he will not run for reelection to the board when his current term as a director expires at the next annual meeting.
AAFES continues to invest in facilities
During a time when many retailers are tightening the reins on capital expenditures, AAFES (Army & Air Force Exchange Services), which finances projects through the sale of merchandise and services, is actually accelerating facility renovations to improve service. Funding comes strictly from self-generated, non-appropriated resources and is not a burden to the American taxpayer.
“With a slumping economy, shoppers have been asking more questions about capital improvements,” said Army & Air Force Exchange Service’s senior VP real estate Mike Gividen. “We want our customers to know we are investing in our facilities more than ever before.”
According to Gividen, there is a direct correlation between patronage at the exchange and resulting capital improvement projects.
“AAFES shoppers are essentially AAFES’ shareholders and our goal is to be our customer’s first choice,” he said. “As such, we have a responsibility to properly re-invest in our facilities to provide a pleasant, first-class shopping experience.”
The replacement of aging facilities begins with a thorough evaluation of factors such as age, potential demand and military transformation requirements. Once complete, AAFES’ real estate team is able to identify potential priority locations that are reviewed for replacement.
By the end of 2010, AAFES will have opened five new shopping centers, including the world’s largest exchange, a sprawling 490,000-sq.-ft., multi-use retail development, Freedom Crossing at Fort Bliss, El Paso, Texas. It is the first-ever open-air shopping center to be located on Military Post. This is in addition to six new shopping centers opened in 2009.
Even as it invests in new construction, AAFES is also investing in image updates, or facelifts, of existing exchanges.
“As we executed renovation projects last year, we were experiencing 25%-30% savings because contractors needed work,” said Gus Elliott, VP facilities division in charge of renovations. “As a result, we decided to accelerate future renovations not only to realize capital program savings, but to help the local contractors with increased business during these tough economic times.”
AAFES plans to bring 24 exchanges up to current retail design standards in 2010.
Cleaning up after others
Target donated $50,000 to the National Wildlife Federation’s Gulf Oil Spill Restoration Fund to protect and rescue wildlife and habitats impacted by the oil spill and restore fragile nesting and breeding grounds damaged by oil infiltration.
“Target is committed to funding programs that provide disaster relief to communities in need,” said Laysha Ward, president of Target community relations and Target Foundation. “Through our donation to the National Wildlife Federation, we hope to help protect the precious coastal resources and wildlife threatened by this crisis and preserve them for the next generation.”
The National Wildlife Federation is America’s largest conservation organization with more than four million members, partners and supporters. The organization is likely to burn through Target’s donation quickly judging from how much BP, the company responsible for the oil spill, has already spent. The oil company said as of Monday it had spent $350 million on various efforts to contain oil hemorrhaging from the ocean floor in addition to cleanup efforts including the use of 275 vessels that so far have recovered about 90,000 barrels of oil.