Burger King 2012 Annual Report Download - page 57

Table of Contents
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As of December 31, 2012, we had outstanding $407.1 million of senior discount notes due 2019 (the “Discount Notes”), which were issued by Burger
King Capital Holdings, LLC (“BKCH”) and Burger King Capital Finance, Inc. (“BKCF” and together with BKCH, the “Issuers”).
Until April 15, 2016, no cash interest will accrue, but the Discount Notes will accrete at a rate of 11.0% per annum compounded semi-annually such
that the accreted value on April 15, 2016 will be equal to the principal amount at maturity. Thereafter, cash interest on the Discount Notes will accrue at a rate
equal to 11.0% per annum and will be payable semi-annually in cash in arrears on April 15 and October 15 of each year, commencing on October 15, 2016.
The Discount Notes will mature on April 15, 2019. BKW has guaranteed the Issuers’ obligations under the Discount Notes. The Issuers have no operations
or assets other than the interest in Holdings held by BKCH. Accordingly, the cash required to service the Discount Notes is expected to be funded through
distributions from BKC.
During 2012, we repurchased Discount Notes with an aggregate face value of $92.9 million and an aggregate carrying value of $61.1 million, net of
unamortized original issue discount, for a purchase price of $69.6 million. During 2011, we repurchased Discount Notes with a carrying value of $7.9
million for a purchase price of $7.6 million.
On December 16, 2011, the board of directors of Worldwide paid a dividend to its stockholders, including 3G, in the amount of $393.4 million,
representing the net proceeds from the sale of the Discount Notes.
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The 2012 Credit Agreement and Indentures contain certain restrictions and covenants that we must meet during the term of the 2012 Credit Agreement,
Senior Notes and Discount Notes, including, but not limited to, limitations on restricted payments (as defined in the 2012 Credit Agreement and Indentures),
incurrence of indebtedness, issuance of disqualified stock and preferred stock, asset sales, mergers and consolidations, transactions with affiliates and
guarantees of indebtedness by subsidiaries.
The 2012 Credit Agreement contains a number of customary affirmative and negative covenants that, among other things, will limit or restrict the ability
of BKC and its restricted subsidiaries to: incur additional indebtedness (including guarantee obligations); incur liens; engage in mergers, consolidations,
liquidations and dissolutions; sell assets (with exceptions for, among other things, sales of company-owned restaurants to existing or prospective franchisees
and sales of real estate, subject to achievement of specified total leverage ratios in the case of real estate sales); pay dividends and make other payments in
respect of capital stock; make investments, loans and advances; pay and modify the terms of certain indebtedness; engage in certain transactions with
affiliates; enter into certain speculative hedging arrangements; enter into negative pledge clauses and clauses restricting subsidiary distributions; and change its
line of business. In addition, under the 2012 Credit Agreement, BKC is required to maintain a specified minimum interest coverage ratio and not exceed a
specified maximum total leverage ratio.
Pursuant to the Senior Notes Indenture, BKC is restricted from paying any dividend or making any payment or distribution on account of its equity
interests unless, among other things, (i) the dividend, payment or distribution (together with all other such dividends, payments or distributions made since
the issue date of the Senior Notes) is less than an amount calculated based in part on the Consolidated Net Income (as defined in the Senior Notes Indenture) of
BKC and its restricted subsidiaries since the issue date of the Senior Notes, or (ii) the dividend, payment or distribution fits within one or more exceptions,
including if:
• it is made with funds received from the issuance of equity interests of BKC or its direct or indirect parent companies and is used for the
redemption, repurchase or other acquisition of equity interests of BKC or its direct or indirect parent companies;
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Source: Burger King Worldwide, Inc., 10-K, February 22, 2013 Powered by Morningstar® Document Research℠
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