MEMPHIS, Tenn. (Nov. 14, 2003) – TBC Corp. expects to generate up to $140 million toward its $225 million purchase of National Tire & Battery through the sale and lease-back of 89 NTB company-owned locations, TBC disclosed in its third quarter 10-Q filing with the Securities and Exchange Commission.
TBC said it expects to realize proceeds of $130 million to $140 million from the sale of “substantially all” of the 89 NTB-owned properties it is acquiring from Sears, Roebuck and Co. It will then lease the properties back. NTB operates a total 226 stores, 137 of which are leased properties.
TBC will finance the remainder of the deal through existing credit facilities, which are being amended to allow for this acquisition, as well as an additional $65 million term loan.
In additiion to the $225 million sale price, TBC also is paying $35 million for inventory and assets, for a total of $260 million.
TBC and Sears announced the sale agreement Sept. 22. It is expected to close in early December. Antitrust clearance under the provisions of the Hart-Scott-Rodino Act was received from the Federal Trade Commission in October, TBC said.
NTB's 226 outlets are located in 20 states and generate annual revenues in excess of $425 million, TBC said. The chain employees about 3,900, according to Sears.
In its filing, TBC said once the NTB acquisition and the related financing arrangements are completed, it believes it will have adequate financial resources to allow for the continued execution of its retail expansion strategy, although significant future acquisitions would require additional capital resources and new or amended credit facilities.
The sale agreement also calls for a final accounting of net working capital within five days of closing that could adjust the final sale price up or down slightly.
Separately, Sears said it anticipates recognizing an after-tax gain in the range of $40 million to $60 million from the sale.