DineEquity, Inc. Announces Successful Completion of Re-Pricing and Covenant Amendments of its Senior Secured Credit Facility
DineEquity, Inc. (NYSE: DIN), the parent company of Applebee’s
Neighborhood Grill & Bar and IHOP Restaurants, today announced the
completion of the re-pricing of its senior secured credit facility,
including its senior secured revolving credit facility, which remained
at $75 million. In addition, modifications to certain covenants were
made to provide added flexibility. As a result of the re-pricing,
interest is computed at LIBOR plus 2.75% with a LIBOR floor of 1.00%, or
a current effective term loan rate of 3.75%. The Company, at its
discretion, can select a Base Rate loan.
As of December 31, 2012, the balance of the Company’s senior secured
credit facility was $472 million.
DineEquity’s debt covenants were modified to reduce their limitations on
the Company’s capital allocation options. These amended covenants govern
the total amount of permitted restricted payments, as defined in the
Company’s Credit Agreement. The amendments which reduce the limitations
are:
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Higher consolidated leverage ratio(1) thresholds for excess
cash flow prepayments: 50% if the consolidated leverage ratio is 5.75x
or greater; 25% if the consolidated leverage ratio is less than 5.75x
and greater than or equal to 5.25x; and 0% if the consolidated
leverage ratio is less than 5.25x.
-
The mandatory repayment of 1% per year is now based on the current
outstanding principal balance of $472 million, as compared to the
previous outstanding balance of $742 million.
-
Certain other terms were revised, positively impacting DineEquity’s
total amount of restricted payments allowed under the Credit Agreement.
All other material provisions, including maturity and covenants under
the existing Credit Agreement, comprised of the senior secured term loan
facility and the $75 million senior secured revolving credit facility,
remain unchanged.
The Company’s actions reflect its ongoing strategy to prudently manage
its capital structure to lower interest expense on borrowings.
Previously on February 25, 2011, DineEquity completed the initial
re-pricing of its senior secured credit facility, which lowered the
interest rate from 6.0% to 4.25%.
About DineEquity, Inc.
Based in Glendale, California, DineEquity, Inc., through its
subsidiaries, franchises and operates restaurants under the Applebee’s
Neighborhood Grill & Bar and IHOP brands. With more than 3,500
restaurants combined in 18 countries, over 400 franchisees and
approximately 200,000 team members (including franchisee- and
company-operated restaurant employees), DineEquity is one of the largest
full-service restaurant companies in the world. For more information on
DineEquity, visit the Company's Web site located at www.dineequity.com.
Forward-Looking Statements
Statements contained in this release may constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. You can identify these forward-looking statements by
words such as "may," "will," "should," "expect," "anticipate,"
"believe," "estimate," "intend," "plan" and other similar expressions.
These statements involve known and unknown risks, uncertainties and
other factors, which may cause actual results to be materially different
from those expressed or implied in such statements. These factors
include, but are not limited to: the effect of general economic
conditions; the Company's substantial indebtedness; risk of future
impairment charges; the Company's results in any given period differing
from guidance provided to the public; the highly competitive nature of
the restaurant business; the Company's business strategy failing to
achieve anticipated results; risks associated with the restaurant
industry; shortages or interruptions in the supply or delivery of food;
changing health or dietary preferences; our dependence upon our
franchisees; our engagement in business in foreign markets; harm to our
brands' reputation; litigation; environmental liability; liability
relating to employees; failure to comply with applicable laws and
regulations; failure to effectively implement restaurant development
plans; concentration of Applebee's franchised restaurants in a limited
number of franchisees; credit risk from IHOP franchisees operating under
our previous business model; termination or non-renewal of franchise
agreements; franchisees breaching their franchise agreements; insolvency
proceedings involving franchisees; changes in the number and quality of
franchisees; inability of franchisees to fund capital expenditures;
third-party claims with respect to intellectual property assets; heavy
dependence on information technology; failure to protect the integrity
and security of individually identifiable information; failure to
execute on a business continuity plan; inability to attract and retain
talented employees; risks associated with retail brand initiatives;
failure of our internal controls; and other factors discussed from time
to time in the Company's Annual and Quarterly Reports on Forms 10-K and
10-Q and in the Company's other filings with the Securities and Exchange
Commission. The forward-looking statements contained in this release are
made as of the date hereof and the Company assumes no obligation to
update or supplement any forward-looking statements.
(1)Consolidated leverage ratio as defined in the Company’s
Credit Agreement.