Carrols Restaurant details $500 million credit facilities commitment

By Sara Rosenberg

New York, Feb. 25 – Carrols Restaurant Group Inc. revealed in an 8-K filed with the Securities and Exchange Commission on Monday details of its proposed $500 million of senior secured credit facilities.

A bank meeting for the deal is expected to take place sometime in March, a market source added.

The facilities consist of a $100 million five-year revolver and a $400 million seven-year covenant-light term loan B.

As committed, pricing on the revolver and term loan B is expected to be Libor plus 375 basis points with a 0% Libor floor.

The revolver has a 50 bps commitment fee.

The term loan B has 101 soft call protection for six months and amortization of 1% per annum.

Wells Fargo Securities LLC is the sole lead arranger and bookrunner on the deal.

Proceeds will be used to refinance debt assumed in connection with the acquisition of 166 Burger King and 55 Popeyes restaurants from Cambridge Franchise Holdings LLC, to refinance Carrols’ existing debt and for general corporate purposes.

Under the agreement, Cambridge will receive about 7.36 million shares of Carrols common stock, and at closing will own around 16.6% of Carrols’ outstanding common shares. Cambridge will also receive shares of 9% PIK series C convertible preferred stock that will be convertible into about 7.45 million shares of Carrols common stock at $13.50 per share.

The transaction is valued at about $238 million, including roughly $100 million of net debt assumed from Cambridge.

After giving effect to the transaction and the refinancing, the company expects that total debt will be under 3 times adjusted EBITDA.

Carrols is a Syracuse, N.Y.-based restaurant franchisee and operator.

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