|12 Months Ended|
Dec. 30, 2012
6. LONG-TERM DEBT
Long-term debt at December 30, 2012 and December 25, 2011, consists of the following:
In November 2006, the Company, entered into a credit agreement with each of Wells Fargo Capital Finance, Inc. and HBK Investments, L.P. as administrative agents to, among other things, finance the acquisition of the restaurants owned by the Company’s Founders, pay the related fees and expenses of the acquisition, and provide funds for the operation of the Company. The aforementioned credit facilities were paid off in May 2011 under the Senior Secured Credit Facility as discussed below.
Wells Fargo Credit Facility
Pursuant to the 2006 credit agreement, the Company entered into two term loans, Term A Loan in the amount of $5,000, a New Unit Term Loan, in the amount of $15,000, and a Working Capital Revolving Line of Credit of up to $5,000.
The Company had two interest rate options, one was a rate based on prime rate plus an applicable margin that ranged from 1.25% to 2% per annum and the other was an interest rate based upon the London Interbank Offered Rate (“LIBOR”) plus an applicable margin that ranged from 3% to 3.75% per annum. As of December 26, 2010, the weighted average interest rate for debt outstanding under our Wells Fargo Credit Facility was 8.6%. In addition, the Company paid an annual commitment fee of 0.5% on the unused portion of the Working Capital Revolving Line of Credit. On May 24, 2011, the Company repaid the amount outstanding under and terminated the Wells Fargo Credit Facility.
HBK Credit Facility
The Company also entered into a $10,000 Term B Loan facility with HBK Investments, L.P. as administrative agent. This note bore interest at the greater of the base rate plus an applicable margin or LIBOR plus an applicable margin. As of December 26, 2010, the Term B Loan interest rate was 14%. On May 24, 2011, the Company repaid the amount outstanding under and terminated the HBK Credit Facility.
Senior Secured Credit Facility
On May 24, 2011, the Company entered into a $67,500 senior credit facility with a syndicate of financial institutions and other entities with respect to a senior secured credit facility. This senior secured credit facility provided for, (a) $5,000 Revolving Credit Facility, (b) $52,500 Term A Loan, (c) $10,000 Delayed Draw Term B Loan and (d) $20,000 Incremental Term Loan. All loans, if utilized, bore interest at a variable rate based on prime or federal funds (Index Rate) or LIBOR plus an applicable margin at the Company’s election based on the Company’s total leverage ratio. As of December 25, 2011, the interest rate was 8.5%. The term loan required quarterly principal payments of $131. Lastly, the Company was required to pay a commitment fee to lenders under the revolving credit facility with respect to the unused commitments thereunder at a rate equal to 0.5%. These loans were secured by a first priority lien on substantially all of the Company’s assets.
The Company did not elect to draw the Delayed Draw Term B Loan or the Incremental Term Loan.
As a result of entering into the senior secured credit facility, the Company recorded a $78 loss on extinguishment of debt to write off the unamortized loan origination fees related to the retired credit facility. The Company paid loan origination costs of $1,800 related to the senior secured credit facility.
On March 21, 2012, the Company entered into a credit facility amendment (the “Amendment”). The Amendment provided for an additional draw on its Term A Loan of $25,000 which increased the outstanding principal amount of the Term A Loan from $52,369 to $77,369. This incremental loan had the same terms and covenants as the existing senior credit facility and quarterly principal payments were increased from $131 to $194.
The proceeds of the loan were used for a $2,000 termination payment to the Sponsor to terminate its advisory agreement effective March 21, 2012 (see Note 12 Commitments and Contingencies), $575 in estimated fees and expenses related to the incremental loan, and $22,474 to repurchase shares of the Company’s common and preferred stock.
In connection with the IPO, the Company used the proceeds from the offering and additional Company funds to repay approximately $79,400 of the Company’s loans outstanding under the Company’s credit facility.
As a result of the repayment of outstanding loans with the proceeds from the offering, the Company recorded a $1,582 loss on extinguishment of debt to write off the unamortized loan origination fees related to the portion of long term debt that was repaid.
New Revolving Credit Facility
On November 30, 2012, the Company entered into a secured $25,000 revolving credit facility (the “New Revolving Credit Facility”) with Wells Fargo Bank, National Association. On that same date, the Company borrowed $5,000 under the New Revolving Credit Facility to pay fees and expenses associated with the New Revolving Credit Facility and to repay the outstanding borrowings under its prior senior secured credit facility.
The New Revolving Credit Facility (a) will mature on November 30, 2017, unless the Company exercises its option to voluntarily reduce all of the commitment before the maturity date, (b) accrues commitment fees on the daily unused balance of the facility at an applicable margin, which varies based on the Company’s leverage ratio and (c) includes a sub-facility for letters of credit up to an aggregate amount of $5,000. All borrowings under the New Revolving Credit Facility bear interest at a variable rate based upon the Company’s election, of (i) the base rate, which is the highest of the prime rate, federal funds rate or one month LIBOR plus 1%, or (ii) LIBOR, plus, in either case, an applicable margin based on the Company’s total leverage ratio. Interest is due at the end of each quarter if the Company selects to pay interest based on the base rate and at the end of each LIBOR period if it selects to pay interest based on LIBOR. As of December 30, 2012, this interest rate was 2.07%
The New Revolving Credit Facility contains certain affirmative and negative covenants and events of default that the Company considers customary for an agreement of this type, including covenants setting a maximum leverage ratio and a minimum fixed charge coverage ratio.
As a result of entering into the New Revolving Credit Facility, the Company recorded an expense of $91 to write off the unamortized loan origination fees related to the retired senior secured credit facility. The Company paid loan origination costs of approximately $216 related to the New Revolving Credit Facility, and will amortize these loan origination costs over the term of the credit agreement.
The obligations under the Company’s long-term debt are secured by a first priority lien on substantially all of the Company’s assets.
The entire disclosure for long-term debt.
Reference 1: http://www.xbrl.org/2003/role/presentationRef