West Los Angeles-based WhiteHawk Capital Partners served as the lead and only financial institution to provide a first-in, last-out term loan, as part of a larger $1.5 billion deal that would position the beleaguered Family Dollar Stores Inc. as a standalone private company.
According to an announcement released earlier this month, the loan will help close the acquisition of the Chesapeake, Virginia-based discount retailer by a coalition of asset managers: Brigade Capital Management, Macellum Capital Management and Arkhouse Management Co.
Dollar Tree Inc. announced its plans to sell Family Dollar to the group in March.
Family Dollar has experienced some tough times since it was acquired by Dollar Tree in 2015 for $9 billion. Last year, Family Dollar was fined almost $42 million by the U.S. Justice Department for a severe rodent infestation at its West Memphis distribution center, which serviced 404 stores across six states. In 2019, Family Dollar announced that it would close about 390 stores considered to be underperforming, according to an announcement from parent company Dollar Tree.
Vote of confidence
Alex Zuckerman, a managing director at WhiteHawk, said that his firm’s loan would serve as a vote of confidence.
“This transaction reflects WhiteHawk’s commitment to providing tailored financing to businesses with strong fundamentals and significant growth potential,” Zuckerman said in a statement.
A first-in, last-out loan, often abbreviated as a FILO, is a senior secured loan that could be organized under the category of asset-based lending. It requires a first priority lien on all of a borrower’s assets and is typically repaid last from the proceeds of the assets. It also could be considered as an alternative to a mezzanine loan, according to a blog from corporate attorney, Susan Alker of the law firm Reed Smith.
Transaction partners include law firm Sidley Austin, which represented WhiteHawk.
Last month, WhiteHawk announced that it provided a $70 million senior secured term loan to an online grocer, without identifying the grocer.
