Fogo de Chao flexes $550 million term loan B to SOFR plus 475 bps

By Sara Rosenberg

New York, Sept. 21 – Fogo de Chao (BCPE Grill Parent Inc.) lowered pricing on its $550 million seven-year covenant-lite term loan B (B3/B-) to SOFR plus 475 basis points from SOFR plus 500 bps, according to a market source.

Furthermore, the original issue discount on the term loan was tightened to 98 from 97, the source said.

Also, the company removed the ability to reallocate the general debt basket to the incremental starter basket, the ‘no worse’ prong for pari passu debt incurrence was removed from the incremental ratio basket, the general investments basket was reduced to 40% of EBITDA from 50%, the ratio investments basket was reduced to 3.6x total net leverage from 4.1x, a 50% cap was added on permitted acquisitions by a non-credit party, and the available amount starter basket was reduced to 35% of EBITDA from 50%.

MFN was revised to change the maturity carve-out to apply to incremental term loans that mature 12 months outside of the term loan, the carve-out for MFN permitted acquisitions was removed, the MFN trigger amount was reduced to 50% of EBITDA from 100%, and the general MFN scope was changed to apply MFN to incremental equivalent debt, subject to the same carve-outs that apply to incremental term loans, and apply MFN to ratio debt, subject to the same carve-outs that apply to incremental term loans.

In addition, the company added a 50% of EBITDA cap on non-credit party incurrences of ratio debt, debt that can be incurred in the amount of the available restricted payments capacity basket was reduced to 100%, the ratio asset sale basket was removed, asset sale sweep step-downs were removed, asset sale sweep reinvestment rights were reduced to 18 months plus six months from 24 months plus six months, and “run rate” cost savings/synergies addback was reduced to 24 months with a 25% of EBITDA cap on “run-rate” cost savings/synergies from a 36-month look-forward with no cap, the source continued.

Lastly, it was specified that while the borrower plans to conduct quarterly conference calls and provide quarterly management discussion and analysis, it will not be required to do so under the credit agreement.

The term loan still has a 0.5% floor and 101 soft call protection for six months.

Deutsche Bank Securities Inc., Jefferies LLC and UBS Investment Bank are the bookrunners on the deal. Deutsche Bank is the administrative agent.

Recommitments were scheduled to be due at 12:30 p.m. ET on Thursday, the source added.

Proceeds will be used to help fund the buyout of the company by Bain Capital Private Equity from Rhone Capital.

Closing is expected this month, subject to customary conditions, including regulatory approvals.

Fogo de Chao is a Dallas-based restaurant chain focused on fire-roasting high-quality meats.

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