Tuesday, September 2, 2014
Inquirer Daily News

How Boscov's raised more than $300 million

More financial detail on the public-private rescue of Boscov's department stores.

How Boscov's raised more than $300 million

Specialist Arthur Andrews, foreground, works at his post on the floor of the New York Stock Exchange. (AP Photo/Richard Drew)
Specialist Arthur Andrews, foreground, works at his post on the floor of the New York Stock Exchange. (AP Photo/Richard Drew)

Last week's Boscov's department store reorganization depends on loans from taxpayers, investments from two prominent developers, and two groups of banks: giant national lenders that financed Boscov's in the past, and local banks based in Boscov's Pennsylvania Dutch Country heartland.

Here's where the money to refloat the 39-store chain and keep its 9,000 workers (5,500 in Pennsylvania) employed is coming from, say people familiar with the deal:

$20 million, equity -- Al Boscov of Reading and his extended family
$20 million, equity -- Anthony Cafaro Sr. and family, Youngstown, Ohio
$10 million, unsecured loan -- Ron Rubin's Pennsylvania Real Estate Invesment Trust (PREIT), Philadelphia
$35 million, loan secured by stores and inventory -- HUD Section 108 federal money via State of Pennsylvania
$12 million, loan secured by stores and inventory -- HUD 108 via Scranton, Wilkes-Barre, Vineland, Atlantic City
$210 million line of credit from Bank of America Corp., Wells Fargo & Co., and GE Capital (Boscov's previous lenders) joined by CIT Group Inc., mostly at around 12.5% (variable) interest.

The $47 million in HUD money won't be ready til April, so six banks have stepped in with a bridge loan for the next few months, at around 8.5% variable interest: Susquehanna Bank. of Lititz; Harleysville National Bank; National Penn Bank, of Boyertown; Fulton Bank, of Lancaster; Vist Financial, of Leesport; WSFS, Wilmington; and Commerce Bank of Pennsylvania, Harrisburg.

Not present: Citizens, M&T, National City, PNC, Sovereign, TD and Wachovia -- Pennsylvania's biggest lenders. More on this deal and who helped make it happen in today's PhillyDeals column in the print Inquirer.

UPDATE: Cafaro spokesman Joe Bell tells me, "We think that Al Boscov is a winner in the real estate industry. We believe he has a plan in place that will make his chain thrive up and down the East Coast. Boscov's has shown great resilience over the years. It's going to be a winner."

About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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