O'Charley's has completed a $300 million credit facility after an upward price flex and a structural shuffling of the deal. Wachovia Securities leads the credit, which at launch consisted of a $150 million "B" piece priced at LIBOR plus 31/ 2% and a $135 million revolver priced at LIBOR plus 21/ 4%. However, the six-year "B" was whittled down to $100 million and its spread increased to 4% over LIBOR. The four-year revolver was increased to $200 million and priced on a grid ranging from LIBOR plus 21/ 4-23 /4%. The current revolver rate is LIBOR plus 23/ 4%, said Chad Fitzhugh, cfo. He added that investor demand warranted the structural changes. "The revolver was well subscribed," he noted. Some bank lenders reportedly piled on in hopes of developing a relationship with the company.
The credit backs the Nashville, Tenn.-based restaurant chain's approximately $160 million acquisition of the New England-based casual restaurant franchise Ninety Nine Restaurant & Pub. The transaction involved $116 million in cash and the issuance of 2.35 million shares of common stock. Fitzhugh noted that this was the company's largest acquisition so far.
Lenders on the revolver include Bank of America, SunTrust Bank, AmSouth Bank, Rabobank and Fleet National. Beyond financing the acquisition, the new secured credit also repays $100 million that was outstanding on the company's previous $135 million revolver, Fitzhugh noted, adding that AmSouth led that credit. "We did an equity offering with [Wachovia] in 2001 and we were impressed with what they were able to do with us," he stated, explaining the new bank lead selection. Fitzhugh also explained that the company has been exploring different financing alternatives for several years and O'Charley's felt that bank debt was the most liquid option. "Short and mid-term debt is at historical lows," he said.