CKE Restaurants is significantly expanding its credit facility to replace its notes with lower-cost debt.
is significantly expanding its credit facility to replace its notes with lower-cost debt. Proceeds from the facility will be used to pre-pay and retire $200
million of senior subordinated notes at 91/8% that become callable May 1, noted
, CKE's executive v.p. and cfo.
, the incumbent lead, is leading the amendment. "I would expect most of the lenders to roll over and for some new players to come in given the expansion of the entire facility," Abajian said.
CKE currently has a $150 million revolver and $25 million term loan. Abajian declined to comment on pricing, but price talk was LIBOR plus 33/4% on the facility (LMW, 9/29). The new facility comprises a three-year, $150 million revolver; five-year, $170 million first-lien term loan; and six-year, $60 million second-lien term loan. The revolver and first-lien term loan are being talked at LIBOR plus 23/4% while price talk on the second-lien term loan is LIBOR plus 43/4%. "This does provide fairly substantial interest expense savings for the company, estimated at $6.5 million during the first year," Abajian said.
Syndication launched April 8. "It's moving along very well," Abajian noted. The loan was almost filled two business days after launch, market participants noted. CKE is the parent company of fast-food chains
BNP Paribas bankers declined comment.