Congressman enters Ace Hardware dispute
An article in the Washington Post has escalated the battle between Ace Hardware and a group of former members who claim they were misled by the hardware co-op’s sales projections and other financial data. Joining the fray is Rep. Gerry Connolly, (D-Va.) who has sent a letter to the Small Business Administration, asking for a “robust investigation” into the complaint of Fischer Hardware, a Springfield, Va., dealer in his district that claims to have taken out $1.85 million in loans based on allegedly inflated revenue projections provided by Ace.
Pattie and Roy Ewers bought Fisher Hardware in late 2008, opened a Vision 21 Ace store in January 2009 and declared Chapter 11 bankruptcy protection in April 2012. In addition to the complaint filed with the SBA, they have filed a lawsuit against Ace Hardware. The store is still operating and is now supplied by Memphis, Tenn.-based distributor Orgill.
A copy of the Congressman’s letter provided to Home Channel News by Rep. Connolly’s office never mentions Ace Hardware. Instead, it asked for an investigation of the “lender,” who may have “willfully manipulated figures and business projections in order to justify inflated values, which were then used to qualify for loans” that were ultimately guaranteed by the SBA.
The letter also mentions numerous lawsuits filed around the country similar to this complaint. “This is not an isolated case, but appears to be a pattern that needs to be addressed,” the letter states.
Sasha Bigda, director of corporate communications for Ace Hardware, told Home Channel News that: “Our understanding is that Congressman Connolly recently asked the Small Business Administration to investigate the practices of some lenders under SBA loan programs. Ace Hardware Corporation is not a lender under any SBA program. The SBA has not contacted Ace about any investigation concerning any SBA loan program, nor has any other government agency done so.”
Ace completes early debt refinance
Oak Brook, Ill.-based Ace Hardware Corp. announced the early redemption of its outstanding 9.125% senior secured notes originally maturing June 1, 2016. The refinance was driven by the April 13, 2012, closing of a new five-year $600 million senior secured credit facility composed of a new $400 million revolving credit facility and a new $200 million term loan, according to the co-op.
Ray Griffith, president and CEO of Ace Hardware, said the deal puts Ace in a position for “significant future interest savings, while reflecting our strong financial position and ability to access the financial market at attractive terms.”
In addition to the early redemption of the senior notes, the new facility also replaced an existing $300 million senior secured revolving credit facility.
The pricing on the new $600 million facility will initially be LIBOR plus an applicable credit margin, subject to adjustment based on Ace’s leverage ratio, according to Ace. Bank of America served as administrative agent on the transaction, while Bank of America, JP Morgan and US Bank served as joint lead arrangers and joint bookrunners.
To take advantage of the favorable interest rate environment, Ace entered into an interest rate swap derivative agreement to fix the interest rate of the $200 million term loan at 1.13% plus an applicable credit margin, representing an all-in rate of 3.38% based on today’s leverage ratio tier.
Ace’s Va. redistribution center almost ready
According to an article in The Virginian-Pilot, the Oak Brook, Ill.-based Ace Hardware Corp.’s redistribution center at the CenterPoint Intermodal Center is nearing completion.
The facility, which broke ground last June, is described as a 336,000 square-foot import redistribution center.
The grand opening is slated for July 26, but the facility has already received its temporary certificate of occupancy (May 1) and received its first shipment, according to the article. The center will employ 75 full-time workers when it comes online in July.