Carrols Restaurant to launch $500 million credit facilities Thursday

By Sara Rosenberg

New York, March 19 – Carrols Restaurant Group Inc. is scheduled to hold a lender call at 10:30 a.m. ET on Thursday to launch its proposed $500 million of senior secured credit facilities, according to a market source.

Wells Fargo Securities LLC, Rabobank, M&T Bank and SunTrust Robinson Humphrey Inc. are the leads on the deal.

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

The term loan has 101 soft call protection for six months and amortization of 1% per annum, the source said.

The commitment letter filed with the Securities and Exchange Commission last month outlined expected pricing on the revolver and term loan B at Libor plus 375 basis points with a 0% Libor floor.

Official price talk has not yet been released.

Commitments are due at 3 p.m. ET on April 4, the source added.

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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