The parent to the casual-dining Red Robin Gourmet Burgers chain has closed on a new $225 million credit agreement to refinance debt and fund strategic growth and transformation efforts, the company said Monday.
Red Robin International Inc., a wholly owned subsidiary of Red Robin Gourmet Burgers Inc., has committed to a five-year, $225 million revolving line of credit, which replaces a previous facility comprised of a $150 million term loan and a $100 million revolving line of credit that was scheduled to mature in June 2016.
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“We’re very pleased with the execution of our new credit agreement, which reflects the further strengthening of Red Robin’s financial position and improvements in the credit market,” said Stuart Brown, Red Robin’s chief financial officer. “This new facility provides Red Robin with additional financial flexibility to deliver on our strategic plan while extending our debt maturities.”
The amended agreement allows the company to increase the credit facility by up to an additional $100 million in the future, subject to lender participation.
At the end of the company’s third quarter, on Sept. 30, the outstanding balance under the prior credit facility was $121.9 million. At that time, company officials said ongoing brand transformation efforts were gaining traction.
Menu changes are boosting sales, such as the introduction of the “everyday value” Tavern Double burger platform earlier this year, for example, along with the revamp of bar offerings and across-the-board efforts to cut costs.
In conjunction with the closing, the company said it anticipates recording a non-cash, pre-tax charge of about $2.9 million, comprised of a write-off of unamortized fees from the prior credit agreement and a charge related to the re-designation of an interest rate swap in the fourth quarter this year.
Wells Fargo Bank served as administrative agent for the transaction; Bank of America was syndication agent; and BBVA Compass and U.S. Bank National Association were documentation agents. Rabobank International was senior managing agent; and Wells Fargo Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Inc. were co-lead arrangers and co-bookrunners.
Based in Greenwood Village, Colo., Red Robin operates or franchises more than 470 locations in the U.S. and Canada.
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