After announcing a $100 million line of credit last July from Wells Fargo Foothill, a lender of last resort, of sorts, Bank of America (NYSE:BAC) analyst Michael Savner asked Take-Two (NASDAQ:TTWO) on an August conference call whether terms of the deal would be changing. He was concerned because the video game maker had just pushed back the release date for the latest edition of its much anticipated Grand Theft Auto.
“There will be no ripping up of our facility,” CEO Ben Feder said. "It is our facility that’s in place for the next five years and they’ll be working with us going forward and funding us for a long time.”
Savner: “And they’ve affirmed the terms are not changing?”
“This is a contract that will not change
Feder then added: "You know, by the way, I think we actually are very pleased with the terms, because we all know what's been going on in the credit markets and we got in just before the whole thing exploded. So we are pleased with the piece of paper we have in place."
Fast forward to today: Take-Two announced it was expanding its line of credit to $140 million, with the cash coming from Foothill and, this time, Citigroup (NYSE:C). Here’s what wasn’t in the press release, but was in the 8-K: Not only is the new deal at a higher rate, but the company has pledged almost all of its U.S. assets and its European subsidiaries. (The European part is new.)
So much for terms not changing. Bear Stearns (NYSE:BSC) said the new deal should give the company “more breathing room.” Or more rope, depending on your perspective.