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CKE Restaurants looking for new or amended credit facility
By Peter Heap
New York, Sept. 27 - CKE Restaurants, Inc. said it is "actively pursuing" entering into a new or amended credit facility by the end of its fiscal year on Jan. 31, 2002.
The Santa Barbara, Calif. restaurant operator is already paying down its existing credit facility, which expires Feb. 1, 2002, according to a filing with the Securities and Exchange Commission.
During the first half of fiscal 2002, CKE said it repaid $149 million of debt on its senior credit facility. Of that figure, cash proceeds from its asset sales program contributed $86 million - $61.2 million of it from the sale of Taco Bueno - while operations generated the remainder.
As of Aug. 13, CKE said it had $19.5 million outstanding on its senior credit facility and $67 million of borrowings available.
Owing to poor financial performance, CKE has repeatedly amended its current facility. For the 28 weeks ending Aug. 13, earnings failed to cover fixed charges by $72.0 million, or $8.2 million excluding the effect of repositioning charges.
Amendments were effective Jan. 31, 2000, Aug. 14, 2000, Jan. 31, 2001 and April 13, 2001, primarily to modify covenants.
The amendments also resulted in the final maturity date changing to Feb. 1, 2002 and an increase in the interest rate.
As of June 30, 2001, all borrowings had to be at prime plus the applicable margin. That margin was 225 basis points on Aug. 13 for a rate of 9.25%. However the margin increases to 300 basis points on Sept. 30. In addition, CKE is required to pay a fee of 1.5% of the outstanding commitment, which was $137.1 million on Aug. 13. However, CKE said it believes its overall cost will be limited since the higher rates will be "significantly" offset by a decrease in borrowings.
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