Midas Complete Debt Restructuring

Midas, Inc. has completed a comprehensive debt restructuring with its current group of lenders.
The new facilities replace all of the company’s debt, including a $100 million U.S. revolving credit facility that was scheduled to mature on March 31, and $45 million U.S. in unsecured private placement notes.
The group of lenders includes seven banks and five insurance companies. All following figures are in U.S. dollars.
The replacement facilities have a total commitment amount of $172.5 million consisting of a $40 million revolving loan facility and two term loans totalling $132.5 million. Interest on the revolving loan and a portion of the Term Loan A is based on the prime rate or LIBOR. Interest on the balance of the Term Loan A is fixed at 7.67 percent. Interest on the Term Loan B is fixed at 12 percent cash interest, plus 6.0 percent paid-in-kind (PIK) which is added to the principal and due at maturity.
“This financing puts us on solid footing to continue restructuring our operations, which will allow us to focus on our profitable franchising and real estate businesses and exit unprofitable parts of our business,” said William M. Guzik, Midas’ senior vice president and chief financial officer.
Midas has announced it is closing unprofitable company-operated Midas shops, exiting its Parts Warehouse, Inc. (PWI) quick-delivery parts distribution business and seeking profitable alternatives for other parts of its wholesale distribution business.
In connection with the debt restructuring, the company will issue detachable warrants for 1.0 million shares of Midas common stock. If the company meets certain financial objectives by Jan. 3, 2004, 50 percent (500,000) of the warrants will be returned to the company. The exercise price of the warrants is $0.01 and they are exercisable at any time up to the 10th anniversary of issuance, except that the 500,000 warrants subject to return cannot be exercised until Jan. 4, 2004.
The new facilities are secured by substantially all of the company’s assets and will be for a term of 18 months.
Midas is one of the world’s largest providers of automotive service, offering exhaust, brake, steering and suspension services, as well as batteries, climate control and maintenance services at 2,700 franchised, licensed and company-owned Midas shops in 19 countries, including nearly 2,000 in the United States and Canada.