Wendy's/Arby's amends to permit note sale, revise covenants, pricing

By Sara Rosenberg

New York, June 10 - Wendy's/Arby's Group Inc. amended its credit facility on Wednesday, allowing for the issuance of senior notes, modifying covenants and changing pricing, according to an 8-K filed with the Securities and Exchange Commission.

Under the amendment, certain total leverage financial covenants were changed, certain financial covenants based on senior secured leverage ratios were added and the minimum interest coverage ratio was revised.

Effective upon the issuance of the notes, the credit agreement will contain a maximum total leverage ratio, a maximum senior secured leverage ratio, a maximum lease adjusted leverage ratio, a maximum senior secured lease adjusted leverage ratio, a minimum interest coverage ratio and maximum annual capital expenditures. The new senior secured leverage ratios exclude subordinated and unsecured debt, including the notes.

Also, upon the issuance of the notes, pricing on the facility will range from Libor plus 400 basis points to 600 bps, depending on the company's corporate credit rating. Based on the corporate credit rating at the time of the amendment, pricing is Libor plus 400 bps.

There is a 2.75% Libor floor.

The amendment also permits the prepayment at any time prior to maturity of certain senior notes and eliminates certain incremental debt baskets.

Citicorp is the administrative agent on the deal.

On Wednesday, the company announced plans to sell $550 million of senior unsecured notes.

Proceeds from the notes will be used to prepay $125 million in term loan debt and for general corporate purposes, which may include working capital, funding for key strategic growth initiatives, acquisitions of other restaurant companies, repayment or refinancing of debt, and the return of capital to its stockholders.

If the notes offering is upsized, the amount of term loan being repaid would increase.

Wendy's/Arby's is an Atlanta-based quick-service restaurant company.

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