Denny's Strengthens Capital Structure
Denny's announced today that its operating subsidiaries,
Denny's Inc. and Denny's Realty, LLC, have entered into a new senior secured
credit agreement in an aggregate a principal amount of $350 million. The
Company estimates that based on current interest rates, the refinancing will
save approximately $5.5 million per year in cash interest.
The new credit facility consists of a $50 million revolving credit line(including a $10 million revolving letter of credit), a $260 million term loan, and an additional $40 million synthetic letter of credit. The revolving facility matures in five years and the term loan and synthetic letter of credit facility mature in five and a half years. Banc of America Securities LLC acted as sole lead arranger and book manager for the new credit facility and Bank of America, N.A. will serve as administrative agent.
The new credit facility has been used to refinance the Company's prior credit facility and will be available for working capital, capital expenditures and other general corporate purposes. The new facility is guaranteed by Denny's Corporation and its other subsidiaries and is secured by substantially all of the assets of the Company and its subsidiaries. In addition, the new facility is secured by first-priority mortgages on 140 company-owned real estate assets. Interest on loans under the new revolving facility will be payable, initially, at per annum rates equal to LIBOR plus 250 basis points and adjusting over time based upon Denny's leverage ratio. Interest on the new term loan will be payable at per annum rates equal to LIBOR plus 225 basis points. The covenants under the new agreement remain generally consistent with those under the prior agreement.
'We are pleased to be able to complete this refinancing transaction, which further strengthens the Company's capital structure, as it will allow us to reduce Denny's cost of borrowing,' said Nelson J. Marchioli, President and Chief Executive Officer. 'The positive response to this transaction by the credit rating agencies and our lenders is a testament to Denny's ongoing operational improvements that have generated increasing cash flow and greater financial stability. The favorable terms of this refinancing will result in further improved cash flow, which will provide additional flexibility to continue investing in the Denny's brand and to advance our commitment to reducing debt.'
Denny's is America's largest full-service family restaurant chain, consisting of 526 company-owned units and 1,024 franchised and licensed units, with operations in the United States, Canada, Costa Rica, Guam, Mexico, New Zealand and Puerto Rico.