Carrols Restaurant increases term loan B amount to $425 million

By Sara Rosenberg

New York, April 3 – Carrols Restaurant Group Inc. upsized its seven-year covenant-lite term loan B to $425 million from $400 million, according to a market source.

Pricing on the term loan remained at Libor plus 325 basis points with a 0% Libor floor and an original issue discount of 99.5.

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

Previously in syndication, pricing on the term loan was lowered from Libor plus 350 bps, a 25 bps step-down at 2.75 times first-lien leverage was added and then removed, and the discount was revised from 99.

The company’s now $525 million of senior secured credit facilities (B2/B), up from $500 million, 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.

Comments on the credit agreement are due at 9 a.m. ET on Thursday, and allocations are expected thereafter, 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. The additional proceeds raised from the loan upsizing will be used to fund cash on the balance sheet 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.

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

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