Wendy's/Arby's Restaurants LLC has completed a new $650 million senior secured credit facility that was used to pay down debt and refinance for a better interest rate. The new secured credit facility includes a $150 million revolving credit facility and a $500 million term loan.
Proceeds from the new term loan were used to retire approximately $251 million of outstanding indebtedness under the company's existing term loan, which was to mature in 2012. They also will be used to redeem $200 million of Wendy's International Inc.'s 6.25 percent senior notes due Nov. 15, 2011, plus a redemption premium of approximately $15 million. The remainder of the proceeds of the term loan will be used to pay related expenses of the transaction, with approximately $15 million of residual cash added to the balance sheet.
The interest rate on the new senior secured credit facility is based on a LIBOR rate, which has a floor of 1.5 percent, plus 3.5 percent, or a base rate, which has a floor of 2.5 percent, plus 2.5 percent. These rates are 225 basis points lower than the company's borrowing rate on the existing credit facility. The term loan was issued at 99.5 percent of par, which represented an original issue discount of 0.5 percent.
Steve Hare, CFO of Wendy's/Arby's Group, said: "We are pleased to complete this refinancing of our medium-term debt maturities and take advantage of the current favorable interest rate environment. This transaction simplifies our borrowing structure and is expected to reduce our cash interest expense by approximately $5.8 million over the next 12 months."
Bank of America Securities LLC and Citigroup Global Markets Inc. served as joint lead arrangers and joint book managers and Wells Fargo Securities LLC and Credit Suisse Securities (USA) LLC served as co-managers.
