M&A in the retail sector is driving some companies to alter their loans. When Hudson's Bay Co. acquired Saks Inc. in November, it completed the deal with the help of a $2 billion term loan, a $300 million term loan and a $950 million asset-based loan. That type of deal, in a year when M&A was down, is exciting, says Joesph Nemia, head of asset-based lending for TD Bank. "I look at it as a positive sign for our business."

M&A in the consumer goods and retail sector increased in the third quarter of 2013, PricewaterhouseCoopers reported. For deals of more than $50 million, total transaction value increased 112 percent from the same quarter in 2012, according to PwC's U.S. retail and consumer deals insights report for the third quarter. For more, see last month's Mergers & Acquisitions cover story, "Boutique Appeal."

Several other dealmaking companies amended their loans as part of transactions in 2013.

In connection with Cerberus Capital Management LP's March acquisition of some of Supervalu Inc.'s grocery store brands, Supervalu secured a $900 million asset-based revolving credit facility, led by Wells Fargo.

In another grocery store deal, Kroger Co. agreed to acquire Harris Teeter Supermarkets Inc. for $2.5 billion in July. Bank of America Corp. reportedly structured a loan for that transaction.

For Pinnacle Foods Inc. (NYSE: PF), the acquisition of Wish-Bone salad dressings business in October was assisted by new debt. The company funded the transaction with a $545 million term loan, due in 2020, and cash on hand.

As these companies grow and expand their number of stores, the wholesale distributors are often the ones in need of more capital, says Nemia of TD. "We will start to see activity on the wholesale distribution side as retailers take larger positions."

"It's a buildup of inventory that we tend to see as the reason for our retailers needing more financing. The working capital demands of the customer are what drives the growth," Nemia says. The inventory increase occurs as a result of expansion.

Those stores with a planned growth strategy may not need to amend their facilities, Nemia says. "If the company had strategically set out in their planning to expand their business by increasing their store locations, they would generally build that into their facility," says Nemia.

But things could work out different if the company had not planned the expansion. "If they don't have a line that is sufficient to help them grow their business, they may be bumping up against that line, and need to expand their facility," Nemia says.

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