Domino's Shaves $2.5 Mln On Bank Loan Rates

Domino's Pizza was able to shave 50 basis points from its $513 million bank loan, saving $2.5 million a year. "A very strong third quarter coupled with a favorable bank market and familiarity with our lenders. You put all of these factors into a bucket and all of a sudden you come out with a 50 basis point reduction," said Harry Silverman, cfo and v.p. of finance at Domino's Pizza.

J.P. Morgan led the repricing for the existing credit facility that shrunk the interest rate from LIBOR plus 2 1/4 % to LIBOR plus 1 3/4 %. Domino's also has a $125 million revolver. Global sales for Domino's third quarter were up 12% against the prior year. Last July Domino's completed an initial public offering using the proceeds to purchase $109.1 million of its 8 1/4% senior subordinated notes, which saved $9 million on an annual basis. The Ann Arbor, Mich.- based company now has a debt-to-EBITDA ratio of 3.75 times.

Commenting on the changing loan environment Silverman noted, "In the old days, when I first started out, mainly you dealt with banks. Now you're really dealing with institutions and you're dealing with a lot of mutual fund houses. There's actually a lot fewer banks and it tends to be a lot more transaction-based and less relationship driven."