Spartan Stores Inc. has tendered an early termination of its interest rate swap agreement, which converted a portion of its variable rate debt to a fixed rate basis.
As a result, Spartan was able to use available cash to reduce the outstanding balance under its senior secured revolving credit facility by $45 million. Further, the company will recognize an $800,000 pre-tax breakage fee in the third quarter of fiscal 2012, but interest expense is expected to be reduced by $1.4 million over the next four quarters.
“We are pleased to take this opportunity to increase the productivity of our assets," said Dave Staples, Spartan Stores’ EVP and CFO. "Our strong cash flow generation and the stable outlook for interest rates made the termination of the swap agreement and pay off of our outstanding revolver balance the logical action to take at this time." Staples said the retailer/distributor additionally expects to report earnings per share, excluding unusual items, in the range of 20 to 23 cents in the third quarter of fiscal 2012.
Grand Rapids, Mich.-based Spartan Stores Inc. distributes more than 40,000 corporate and national brand products to approximately 375 independent locations in Michigan, Indiana and Ohio, and to 97 corporate-owned stores in Michigan, including D&W Fresh Markets, Family Fare Supermarkets, Glen’s Markets and VG’s Food and Pharmacy.