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Del Taco lowers annual interest expense by $5M

Lowering its annual interest expense allows even greater flexibility, Del Taco CFO says.

August 6, 2015

Del Taco recently announced the closing of its five-year, $250 million senior credit facility, according to a press release. In the report, Del Taco said that its revolving credit facility has an initial interest rate of LIBOR, plus 200 basis points, and used $164 million of the profits to refinance its existing senior secured debt as well as pay refinancing costs.

"Del Taco’s strong performance, including twelve consecutive quarters of positive same store sales at company-owned restaurants and growth in restaurant contribution margins, along with significant debt reduction since the completion of our business combination with Levy Acquisition Corp. has enabled us to refinance our outstanding indebtedness at a substantially lower interest rate," Del Taco’s CFO Steven L. Brake said in the release. "This refinancing materially reduces our annual interest expense, enhancing our net income and free cash flow, and allowing us even greater flexibility to execute our new store development strategy."

Refinancing, according to the report, allowed Del Taco to reduce its borrowing costs by 305 basis points based on current market conditions. Del Taco expects to lower its annual interest expense by over $5 million per year.