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DineEquity, Inc. Announces Successful Completion Of Re-Pricing And Covenant Amendments Of Its Senior Secured Credit Facility

Stocks in this article: DIN

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:

  • 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%.

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