Carrols Restaurant tightens $400 million term loan B discount to 99.5

By Sara Rosenberg

New York, March 25 – Carrols Restaurant Group Inc. revised the original issue discount on its $400 million seven-year covenant-lite term loan B to 99.5 from 99, according to a market source.

Also, while pricing remained at Libor plus 350 basis points with a 0% Libor floor, a step-down was added to Libor plus 325 bps at 2.75 times first-lien leverage, the source said.

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

The company’s $500 million of senior secured credit facilities (B2/B) also include a $100 million five-year revolver.

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

Commitments are due at 11 a.m. ET on Friday, accelerated from 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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