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Sprouts reaches new credit deal

Sprouts Farmers Market, Phoenix, on Friday said it has completed a new, $450 million revolving credit facility to replace an existing term loan and credit facility.

The company said it would utilize the initial drawing of $260 million under the new credit facility to pay off its existing $258 million term loan and transaction costs associated with the refinancing. Upon the completion of the refinancing, Sprouts will have approximately $260 million of total debt and $2.5 million of letters of credit outstanding under the new facility, which will mature on April 17, 2020.

The revolver has an initial drawn pricing of LIBOR plus 1.75%, as compared with LIBOR (with a floor of 1%) plus 3% percent under the previous term loan. At today's interest rates, this pricing would reduce the company's annual interest expense by approximately $5 million.

"This refinancing reflects the significant progress we have made in deleveraging the company," CFO Amin Maredia said in a statement. "While we plan to continue to self-fund our targeted 14% unit growth, this new facility preserves Sprouts' financial flexibility and reduces our ongoing debt service expense."

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