Jack in the Box Inc., parent company of the Jack in the Box and Qdoba Mexican Grill restaurant brands, has completed a new five-year $600 million senior credit facility, comprised of a $400 million revolving credit facility and $200 million term loan.
Proceeds from the refinancing will be used to retire all previously existing bank indebtedness, including a $150 million revolver due in December 2011, of which $20 million was drawn as of the end of the company’s second quarter, and a $370 million term loan due in December 2012.
As of the closing, approximately half of the $400 million revolving credit facility will be drawn, and $200 million will be outstanding on the term loan. Both will mature in June 2015, with the term loan having required principal payments of $10 million in the first year after closing, $20 million in the second and third years, $30 million in the fourth year and the balance due in the fifth year.
The interest rate on the new senior credit facility is based on the company’s leverage ratio and can range from LIBOR plus 2.25 percent to 2.75 percent with no floor. The initial interest rate is LIBOR plus 2.50 percent.
“By refinancing at this time, we’re creating a longer-term capital structure with greater flexibility to support the company’s strategic plan,” said Jerry Rebel, executive vice president and CFO for Jack in the Box Inc.
Due to replacing existing credit facilities prior to expiration, the company will be required to expense approximately $2.3 million deferred financing fees in the third quarter.
Last month, analysts speculated that Jack in the Box Inc. might the next private equity buyout target because of its similarities to CKE Restaurants, which was recently bought out by Apollo Management, according to StreetInsider.com.
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Jack In the Box completes new credit facility
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