Brinker International Inc.(EAT) announced recently that it has secured a five year, new $400 million senior credit facility, which includes a $200 million revolver and a $200 million term loan.
The new credit facility will replace the existing $400 million credit facility in which the company had $200 million outstanding under a term loan expiring in October 2010 and zero drawn on the previous revolver expiring in February 2012. Brinker will have to pay deferred financing fees of $1.7 million in the fourth quarter of 2010 due to the early extinguishment of debt.
After this new facility, Brinker will have $200 million outstanding on the term loan set to expire in June 2015 and an unfunded revolver.
The company believes that the new credit facility will strengthen its financial position and offer future investment opportunities. Moreover it extends the maturity and amortization periods of its debt.
The long-term debt of the company as of March 24, 2010 was $338 million, down from $727 million at June 24, 2009. Though the new facility would enhance the amount of borrowings available to the company, the indebtedness increases Brinker’s vulnerability and interest risk exposure.
However, the cash position of the company is improving. At the end of the first quarter, ended March 24, 2010, cash and cash equivalents amounted to $182 million, compared with $94 million as of June 24, 2009 and $110 million at the end of the prior quarter. Moreover, Brinker is expected to get $180 million at the end of fiscal 2010, from the sale of its On The Border restaurant brand to OTB Acquisition LLC, an affiliate of Golden Gate Capital.
Based in Dallas, Texas, Brinker is one of the world’s leading casual dining restaurant companies. Brinker currently owns, operates, or franchises 1,700 restaurants under the names of Chili’s Grill & Bar, On The Border Mexican Grill & Cantina and Maggiano’s Little Italy.
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