Carrols Restaurant drops debt by $48.2 million in fourth quarter to ensure covenant compliance

By Angela McDaniels

Tacoma, Wash., Jan. 12 - Carrols Restaurant Group, Inc. said it reduced its debt balances by about $48.2 million during the fourth quarter, leaving it with $313.3 million of debt on Dec. 28.

"As stated previously, because of the uncertain consumer environment, we are committed to reducing our financial leverage by lowering the outstanding debt on our balance sheet," chairman and chief executive officer Alan Vituli said in a company news release.

"The objective of these actions has been to ensure that there is more than an adequate margin of safety with respect to the financial covenants in our senior credit facility and to provide investors with a greater degree of confidence in our ability over the long term to realize growth in shareholder value.

"While our actions taken thus far have significantly addressed this issue, it is the company's intent to continue to make lower debt levels a priority."

The company repurchased $13 million of its 9% senior subordinated notes due 2013 and amended the leases for 25 restaurant properties, which qualified these leases as operating leases and resulted in a $34.5 million reduction in debt. The balance of the debt reduction resulted from the use of cash flow from operations.

Carrols operates three restaurant brands in the quick-casual and quick-service restaurant segments and is based in Syracuse, N.Y. It is the parent company of Carrols Corp.

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