Furr's Restaurant Group this month signed a $55 million credit facility that replaces bonds set to mature at the end of the year. The credit, a $20 million revolver and a $35 million term loan, offers a better route than bonds, said Paul Hargett, cfo. "We got a deal to redeem the bonds and for working capital and growth," Hargett said. "Given the market and rates on bonds, a credit facility fits our needs." The company was paying 12% on the bonds and will pay all-in pricing of approximately 8% on the bank facility.
FleetBoston Financial leads the deal, which went out to bid. "Fleet has the largest restaurant practice of anyone," Hargett said. There are four banks in the syndicate, which Hargett noted is enough for now. "We got the deal done, so we have no borrowing needs," he added.
Covenants on the deal pertain to maintaining certain leverage ratios and achieving certain restrictions on the payment of dividends and additional indebtedness. The deal matures in 2006. Furr Restaurant has no other lines of credit. Earnings before interest, taxation, depreciation and amortization is between $18-20 million. Ratio of debt to EBITDA is 2.5. The facility is not yet rated.
Texas-based Furr's Restaurant owns and operates more than 100 cafeteria and buffet-style restaurants in the Southwest. The company also operates Dynamic Foods, its food preparation, processing and distribution division, in Lubbock, Texas.