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CUs loan helps organic grocery in credit crunch
SANTA CRUZ, Calif. (12/30/08)—A Santa Cruz, Calif.-based organic grocery market got caught in the Wall Street credit crunch when its bank could no longer extend its credit line for an expansion. But Santa Cruz Community CU stepped in to help. Scott Roseman and Rex Stewart, co-owners of New Leaf Community Markets, were midway through a major expansion of their grocery business when Wall Street imploded (The Mercury News Dec. 27). Its regular lenders could not provide cash they needed to finish their new Westside store and to remodel its downtown store. However, the $72.1 million asset Santa Cruz Community CU provided the bridge loan. As a result, the grocers completed a $1 million remodeling on time and on budget, and its new store will open by March 1, ahead of a large competitor’s store. The markets generated $33 million in revenue and with the opening last June of a store in Half Moon Bay, its work force expanded to 330 from 225, with 20 more expected in the Westside store. New Leaf had two setbacks during the year. In May, Canada’s largest natural foods retailer, Planet Organic, pulled back on its offer to buy New Leaf for $9.8 million. The sale would have provided cash for the expansion. Comerica backed the market, but sales were so good, the market didn’t need to borrow for the expansion. In October, Wall Street imploded and Comerica hit a ceiling on how much it could bump up the grocery’s credit lines. Instead, the credit union provided the loan, with the help of a partial guaranty by California Coastal Rural Development Co. Frank Nuciforo, the credit union’s director of lending, told the newspaper that New Leaf was an “excellent and extremely well-managed company. Their expansion plans have been well thought out and their locations are consistently profitable.”
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