ValueVision Media, which operates as ShopNBC, announced a lower-cost revolving credit facility with its bank lender. The company also renewed three of its TV distribution agreements as a cost savings.
ValueVision said it has secured a $40 million revolving credit facility with PNC Bank NA. Loans under the new revolving credit facility will bear an interest rate of LIBOR plus 3% per annum. Proceeds will be used to fund the retirement of the company’s existing 11% per annum, $25 million term loan and the payment of an approximately $12.4 million deferred payment obligation to a TV distribution provider during Q1 2012.
The public company (Nasdaq: VVTV) also renewed three TV distribution agreements, covering approximately 54% of ShopNBC’s 81 million households. The early renewal of the largest TV distribution agreement covers 18 million homes. The terms of this agreement better reflect rates in today’s competitive distribution environment, and ValueVision anticipates a reduction in annual TV distribution costs by approximately $15 million beginning January 2013. As part of the agreement, ValueVision said it will receive a second channel on this distribution provider beginning January 2013. The renewals of the other two TV distribution agreements cover a total of 26 million ShopNBC homes. These agreements were effective January 2012 and will improve ShopNBC’s channel positioning in over 20% of the homes served by these two distributors.
ValueVision will report its Q4 financial results on March 15, but it provided an early look at the numbers. The company said it expects to report Q4 net sales down approximately 18% to around $148 million. “The net sales decline primarily reflects challenges in Consumer Electronics, which are expected to continue in the near-term,” it said. Full year 2011 sales are expected to be down 1% to approximately $558 million.
“I am disappointed with our fourth quarter sales, which were principally impacted by a sales shortfall in Consumer Electronics. Despite this shortfall, we were able to carefully manage our working capital components during the quarter to improve our cash position. The successful completion of our debt refinancing, as well as the anticipated operational savings and improved channel positioning from renewing our TV distribution agreements, puts the Company in a stronger position to support future growth,” said ValueVision CEO Keith Stewart.