Carmike Cinemas recently reworked its capital structure in an effort to decrease interest and amortization costs, push out maturities and reduce the overall debt of the company. The company secured a new $150 million credit facility, issued $150 million of notes and offered three million shares of new common stock, explained Martin Durant, senior v.p. of finance, treasurer and cfo. The financing replaces debt that was put in place when the company reorganized under Chapter 11 in 2002.
Carmike's new credit comprises a $50 million revolver and a $100 million term loan and replaces an existing $50 million revolver and a term loan that had about $169 million outstanding at the time of refinancing. The former term loan had an interest-rate floor of 73/4%, whereas the new loan is priced at LIBOR plus 33/4%. The company is also able to reap interest rate savings through the offering of $150 million, 71/2% notes that replaced a $154 million issue of 103/8% notes due in 2009. In addition, the company would have been required to pay approximately $30 million on principal amortization in 2004. Comparably, the company is only required to pay 1% on the outstanding principal on the new loan each year.
Goldman Sachs is the lead on the new credit facilities. Goldman is also the sole book running manager on the common stock and senior subordinated notes. The company shopped the transaction with its existing lender group and took proposals from other investment banking firms. Durant said that Goldman was chosen because the firm put together the best proposal for the refinancing overhaul, providing the company with the best execution and best rate structure. GE Capital led the previous revolver and is still a participant on the company's new revolver. There was no lead on the former term loan. Instead, the piece was established in conjunction with the company's reorganization.