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MailTribune.com
  • Harry & David Holdings granted credit extension

    However, company's credit line was decreased by $20 million and its interest rate increased
  • Harry & David Holdings' credit with multiple lenders has been extended through July 7, 2014, but its borrowing power has been reduced and interest rates will rise, according to a Securities and Exchange Commission filing by the Medford gourmet food and gift company.
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  • Harry & David Holdings' credit with multiple lenders has been extended through July 7, 2014, but its borrowing power has been reduced and interest rates will rise, according to a Securities and Exchange Commission filing by the Medford gourmet food and gift company.
    The agreement with UBS AG, UBS Loan Finance and GMAC Commercial Finance reduced Harry & David's line to $105 million from $125 million. However, the lenders left the door open to increase the line if Harry & David meets certain conditions.
    At the same time, Euro interest rate margins have jumped to between 3.25 percent and 3.5 percent above the London Interbank Offered Rate, an equivalent of the prime rate. Previously the range was 1.5 percent to 2 percent.
    The lower end of the ranges from 1.5 percent to 3.25 percent raises the cost of borrowed funds 117 percent. The increase on the upper end of the range from 2 percent to 3.5 percent is 75 percent.
    The filing indicates that the more Harry & David borrows, the greater the interest rate.
    The amended credit line with UBS and GMAC also puts the lenders in position to collect their debt prior to the maturity of floating rate notes that come due in 2012 and 9 percent notes maturing in 2013.
    The closing fee for the extension was $1.575 million and associated fees were increased, as well, according to the filing.
    A telephone message to Harry & David's Senior Vice President and Chief Financial Officer Ed Dunlap was not immediately returned.
    Harry & David's revenues have tumbled and profits have turned to losses in recent years. Long-time Chief Executive Officer Bill Williams was ousted in February, replaced by Wasserstein & Co. Chairman Steve Heyer.
    In fiscal 2005, the company had sales of $521.3 million and peaked at $598.2 million in fiscal 2006. By fiscal year 2009, which ended last July, sales fell 10.2 percent to $489.6 million from $545 million in 2008. The company lost $20.2 million compared with a net income of $4.6 million for the 2008 budget year.
    In May the company, whose major revenue comes during the Christmas holidays, reported a net loss of nearly $28 million for the quarter ending March 27. It is expected to announce its full-year fiscal 2010 results in September.
    Reach reporter Greg Stiles at 541-776-4463 or e-mail business@mailtribune.com.
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