Burger King 2011 Annual Report Download - page 59

Table of Contents
Senior Notes
We currently have outstanding $797.5 million aggregate principal amount of 9.875% senior notes due 2018 (the “Senior Notes”). The Senior Notes bear
interest at a rate of 9.875% per annum, which is payable semi-annually on October 15 and April 15 of each year. The Senior Notes mature on October 15, 2018.
During 2011, we repurchased and retired Senior Notes with an aggregate face value of $2.5 million for a purchase price of $2.7 million, including accrued
interest. We may periodically repurchase additional Senior Notes in open market purchases or privately negotiated transactions, subject to our future liquidity
requirements, contractual restrictions under our Credit Agreement and other factors.
Based on the amount outstanding at December 31, 2011, required debt service for the next 12 months on the Senior Notes is $78.8 million in interest
payments. No principal payments are due until maturity.
Restrictions and Covenants
The Credit Agreement and Senior Notes Indenture contain certain restrictions and covenants that BKC must meet during the term of the Credit Agreement
and Senior Notes, including, but not limited to, limitations on restricted payments (as defined in the Credit Agreement and Senior Notes Indenture), incurrence of
indebtedness, issuance of disqualified stock and preferred stock, asset sales, mergers and consolidations, transactions with affiliates and guarantees of
indebtedness by subsidiaries.
BKC’s capital expenditures are limited to between $160 million and $220 million, with the annual limitation based on our Rent-Adjusted Leverage Ratio
of our most recently ended fiscal year. Up to 50% of the unused amount for the prior fiscal year (less the amount carried forward into the prior fiscal year) is
allowed to be carried forward into the next fiscal year. Capital expenditures for 2011 totaled $82.1 million thus $38.9 million is allowed to be carried forward
into 2012.
BKC is also required to comply with customary financial ratios, including a minimum Interest Coverage Ratio (the ratio of Consolidated EBITDA to
Consolidated Interest Expense, as defined in the Credit Agreement) and a maximum Total Leverage Ratio (the ratio of Consolidated Total Debt to Consolidated
EBITDA, as defined in the Credit Agreement).
As of December 31, 2011, we were in compliance with all financial ratios and other covenants of the Credit Agreement and Senior Notes Indenture and
there were no limitations on our ability to draw on the remaining availability under our Revolving Credit Facility.
Loss on Early Extinguishment of Debt
In connection with the February 2011 amendment to the Credit Agreement, we recorded a $19.6 million loss on early extinguishment of debt. We recorded
an additional $1.8 million loss on early extinguishment of debt in 2011 in connection with the Term Loan prepayments and Senior Note repurchases described
above. Our loss on early extinguishment of debt consists primarily of write-offs of deferred financing costs and original issue discount.
Interest Rate Cap Agreements
At December 31, 2011, we had deferred premium interest rate cap agreements, which are denominated in U.S. dollars (notional amount of $1,526.9
million) and Euros (notional amount of €193.6 million) (the “Cap Agreements”) to effectively cap the annual interest expense applicable to our borrowings under
the Credit Agreement at a maximum of 4.75% for U.S. Dollar denominated borrowings and 5.0% for our Euro-denominated borrowings. At December 31, 2011,
the deferred premium associated with the Cap Agreements was $35.8 million for the U.S. Dollar denominated exposure and €5.6 million for the Euro
denominated exposure.
58
Source: Burger King Holdings Inc, 10-K, March 14, 2012 Powered by Morningstar® Document Research℠