A new $375 million loan package for Revco D.S. appeared closer at hand Friday, as a group of three banks prepared to submit a joint financing proposal to the Twinsburg, Ohio-based drugstore chain.
As reported, Revco last month solicited individual bids from a number of lenders. The company then selected three of those banks to come back with a joint bid.
The three banks' names could not be learned. Among those said to have expressed interest were units of Bank of New York Co., Chase Manhattan Corp., Chemical Banking Corp., Continental Bank Corp., and National Westminster Bank PLC, and Banque Paribas, Arab Bank, and Heller Financial.
Agreement on Terms?
By Friday, the three banks were said to have agreed among themselves on the credit's terms. It couldn't be learned whether the joint bid actually was sent to Revco on Friday.
Progress on the new bank financing has been closely watched by Revco investors. The loans would be used, at least in part, to replace higher-cost debt, saving Revco millions of dollars in interest costs.
Revco is paying a blended rate of more than 11% on three issues of debt totaling $435 million. The bank loans probably would be priced at 2.5 to 2.75 percentage points above the London interbank offered rate.
The three-month Libor rate now is about 3.3%.
One source suggested that, while no major issue seemed to stand in the way of a loan agreement, there could be no assurance at this point that a deal would be struck between Revco and the banks.
A Revco spokeswoman said the company had no comment.