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January 27, 2016 01:00 AM

Monro boosts credit to support acquisitions

Tire Business Staff
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    ROCHESTER, N.Y. (Jan. 27, 2016) — Monro Muffler Brake Inc. has more than doubled the value of its credit facilty to $600 million, an increase Monro President and CEO John van Heel said would allow Monro to pursue larger and more frequent acquisitions.

    The new facility, with nine banks, is a five-year revolving credit facility that includes an accordion feature that increases the borrowing capacity by $100 million if needed, according to Catherine D'Amico, executive vice president of finance, CFO and treasurer.

    The increased borrowing capacity reflects the company's financial strength and strong growth in sales and profitability, the executives told analysts Jan. 26 in a conference call.

    (Monro Muffler Brake Inc. photo)

    “…(T)he increase in our credit facility from $250 million to $600 million provides us with the increased flexibility to pursue our acquisition strategy and other business opportunities even more aggressively,” Mr. van Heel said, noting that Monro has 10 non-disclosure agreements pending covering independent tire dealers/auto service providers of five to 40 stores.

    The expanded facility bears interest at 75 to 175 basis points over LIBOR and includes standard leverage and coverage covenants consistent with the prior facility, Monro said.

    Ms. D'Amico said about $460 million of the facility is available for use.

    At the start of calendar 2016, Monro had 1,031 company-owned stores in its 25-state footprint and noted that its Car-X franchise network stood at 138 locations.

    In the quarter ended Dec. 26, Monro had a net gain of two stores — seven stores opened and five closed.

    Acquisitions completed in the first nine months of fiscal 2016 — four locations of Windsor Tire Co. Inc. in Massachusetts and 27 Kost Tire & Auto Care locations in central New York and Pennsylvania, along with the Car-X franchise program —  represent $35 million in annualized sales.

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