Canadian Tire Corp., the Toronto-based operator of more than 1,100 general merchandise retail stores, gas stations and car washes, said that its committed bank lines have been increased by $500 million to a total of $1.15 billion raising speculation that it could be in the market for an acquisition.
In addition, Canadian Tire expects to add a further $110 million in committed lines for which bank credit approval has been received and documentation is in process. This will result in $1.26 billion in committed bank lines, which are not subject to any market disruption clause. The lines are provided by 10 domestic and international banks reflecting the strong support for Canadian Tire and the Glacier Credit Card Trust commercial paper program.
The additional lines increase Canadian Tire’s flexibility to support its growing retail and financial services businesses. In addition to the above noted lines, the company has the following sources of financing:
* A $750 million shelf prospectus for its Medium Term Note Program, $300 million of which was issued successfully in an oversubscribed transaction in October 2007.
* An $800 million Canadian Tire commercial paper program that is fully supported by the aforementioned committed bank lines. Approximately $250 million is currently outstanding with strong investor demand at cost-effective rates.
Glacier Credit Card Trust commercial paper program has access to $760 million of the total Canadian Tire committed lines. Glacier commercial paper continues to be rolled over on an as needed basis, albeit at higher credit spreads consistent with current difficult market conditions for structured debt. Currently $140 million is outstanding and backed by the bank credit lines.
The $472.5 million Glacier Credit Card Trust Medium Term Note that matures in December 2007 has been funded by a combination of the $300 million Canadian Tire note issued in October 2007, the Canadian Tire commercial paper program and operating cash flows.
Overall, Canadian Tire believes it is in a strong position “with respect to its financial flexibility and is well positioned to support its proposed growth agenda even if continued challenging market conditions continue,” the company said.
