CMRG enters into sale-leaseback transaction for $ 57 mn
31 Jan '06
2 min read
Casual Male Retail Group Inc, retail brand operator of Casual Male XL, Casual Male Big and Tall and Rochester Big & Tall, reported it has entered into a sale-leaseback transaction with Spirit Finance Corporation.
The transaction involves the sale for $57 million and the immediate leaseback of the company's headquarters and distribution center located in Canton, MA. The transaction is expected to close and be funded shortly, subject to the satisfaction of customary closing conditions.
The company anticipates using the net proceeds from the sale of approximately $56 million to reduce outstanding bank debt, including the term loan, to repay the existing mortgage on the property, to buyback a portion of the Company's outstanding convertible notes and the remaining proceeds of approximately $14 million will be used for working capital.
The company repaid the existing mortgage in January 2006 and incurred an approximate $1.2 million pre-payment penalty resulting in a one-time charge to its 2005 earnings, which will be recognized in the fourth quarter.
Casual Male has agreed to lease the building for an initial period of 20 years, with option periods to extend the lease for another 30 years. After considering the annual rent obligation, the approximate $28 million gain on sale to be amortized over the initial term of the lease, together with interest savings from debt reduction and the decreased depreciation in assets as a result of the sale, the transaction is expected to be slightly accretive to earnings in 2006.
marketing@alchempro.com
