Denny’s Corp. has entered into a new five-year, $250 million credit facility that refinances its senior secured debt and is expected to result in annualized interest expense savings of about $5 million, the company said Thursday.
The new senior secured bank credit facility includes a $190 million term loan and a $60 million revolving line of credit. The facility refinances Denny’s senior secured debt from September 2010, which was amended in March 2011. The former facility held a $250 million term loan and a $60 million revolver.
“Our new credit facility is a testament to the tremendous progress Denny’s has made over the past several years with its franchise-focused business model, resulting in a stronger balance sheet with growing profitability and free cash flow,” John Miller, Denny’s president and chief executive, said in a statement. “In addition to reducing interest costs, this refinancing allows the company to further strengthen its balance sheet with more flexibility to create additional value for stockholders.”
The refinanced facility has a reduced interest rate of LIBOR, or London Interbank Offered Rate, plus 300 basis points, or 3 percent, for the term loan and revolver. The prior facility held an interest rate of LIBOR plus 375 basis points, or 3.75 percent.
The Spartanburg, S.C.-based company, which operates or franchises 1,685 family-dining restaurants, said the closing of the new facility will lead to an $8 million one-time charge in the second quarter.
Wells Fargo Securities LLC, Regions Capital Markets and GE Capital Markets Inc. are the joint lead arrangers and joint bookrunners in the new facility.
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