Bank of America landed the lead spot on Denny's Corp.'s new credit by being competitive and offering the best deal, according to Ken Jones, Denny's v.p. and treasurer. The credit had been led by J.P. Morgan. "As we were going out with our new facility we expanded our options," said Jones. "We weren't married to J.P. Morgan Chase and they weren't married to us." UBS, the company's financial advisor for the past couple of years, is the other lead on the new credit. He declined to comment if J.P. Morgan offered a proposal for the new credit and a spokesman at the bank declined comment.
The new $375 million credit facility comprises a $75 million revolver, $200 million "B" loan and $100 million second-lien facility. The credit went out to investors at LIBOR plus 3 1/2% on the term loan and revolver and LIBOR plus 5 1/2% on the second-lien facility, though Jones said the company hopes to do better on the second lien. The new credit replaces a $115 million revolver and $40 million term loan. The revolver carried a spread of LIBOR plus 5%, while the term loan had a fixed rate of 11%. "We were able to price our new bank facility at more favorable terms to the company," Jones noted. A B of A spokeswoman and UBS banker did not return calls.
Proceeds are being used to refinance the company's existing facility and prepay and refinance some outstanding notes. "[We're] looking to refinance those notes to lower our interest costs as well as extend maturities," Jones said. The credit facility was set to mature in December and the company recently raised $92 million of additional equity that provided a catalyst for the refinancing, he explained. Proceeds from the equity offering were used to prepay some of the credit facility and repurchase some notes. "We're a highly leveraged company," Jones said. "We're looking to delever, reduce our debt. That's why we raised the equity."