Burger King 2013 Annual Report Download - page 82

Table of Contents

We have senior notes due 2018 that 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”). The Senior Notes mature on October 15, 2018. During 2012, we repurchased and retired Senior Notes with an aggregate face value
of $3.0 million for a purchase price of $3.4 million, including accrued interest. 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 did not repurchase any Senior Notes in 2013.
The Senior Notes are general unsecured senior obligations of BKC that rank pari passu in right of payment with all our existing and future senior
indebtedness. The Senior Notes are effectively subordinated to all our Secured Indebtedness (including the 2012 Credit Facilities) to the extent of the value of
the assets securing such indebtedness and are structurally subordinated to all indebtedness and other liabilities, including preferred stock, of non-guarantor
subsidiaries.
The Senior Notes are guaranteed by Holdings and all existing direct and indirect subsidiaries that borrow under or guarantee any indebtedness or
indebtedness of another guarantor. Additionally, in August 2012 the Company entered into a Supplemental Indenture to guarantee BKC’s obligations under the
Senior Notes. Under certain circumstances, subsidiary guarantors may be released from their guarantees without the consent of the holders of the Senior
Notes.
At any time prior to October 15, 2014, BKC may redeem all or part of the Senior Notes at a redemption price equal to 100% of the principal amount of
the Senior Notes redeemed plus the “Applicable Premium” as of, and accrued and unpaid interest, to (but excluding) the redemption date. “Applicable
Premium” means the greater of: (1) 1.0% of the principal amount of the Senior Notes redeemed; and (2) the excess of (a) the present value at such redemption
date of (i) the redemption price of such Senior Notes at October 15, 2014, plus (ii) all required interest payments through October 15, 2014, computed using a
discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over (b) the principal amount of the Senior Notes redeemed. On or
after October 15, 2014, BKC may redeem the Senior Notes at the redemption prices (expressed as percentages of principal amount of the Senior Notes to be
redeemed) set forth below, plus accrued and unpaid interest, to (but excluding) the redemption date: October 15, 2014 – October 14, 2015 (104.938%);
October 15, 2015 – October 14, 2016 (102.469%); and October 15, 2016 and thereafter (100%).
The occurrence of a change in control of BKC and/or its parent entities will require us to offer to purchase all or a portion of the Senior Notes at a price
equal to 101% of the principal amount, together with accrued and unpaid interest, if any, to the date of purchase. Certain asset dispositions will also require us
to use the proceeds from those asset dispositions to make an offer to purchase the Senior Notes at 100% of their principal amount, if such proceeds are not
otherwise used within a specified period to repay indebtedness or to invest in capital assets related to our business or capital stock of a restricted subsidiary.
The Senior Notes were issued pursuant to an indenture (the “Senior Notes Indenture”), which contains certain covenants that we must meet during the
term of the Senior Notes, including, but not limited to, limitations on restricted payments (as defined in the Senior Notes Indenture), incurrence of
indebtedness, issuance of disqualified stock and preferred stock, asset sales, mergers and consolidations, transactions with affiliates, guarantees of
indebtedness by subsidiaries and activities of Holdings.
The Senior Notes Indenture also includes customary events of default including, but not limited to, nonpayment of principal, interest, premiums or
other amounts due under the Senior Notes Indenture, violation of a covenant, cross-default to material indebtedness, bankruptcy and a change of control.
Failure to comply with the covenants or other provision of the Senior Notes Indenture (subject to grace periods) could, absent a waiver or an amendment from
the lenders under such Senior Notes Indenture, permit the acceleration of all outstanding borrowings under the Senior Notes Indenture.
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;
• it is less than 6% per annum of the net cash proceeds received by or contributed to BKC from a public offering of BKC’s common stock or the
common stock of any of its direct or indirect parent companies;
• it is used to fund certain operational expenditures of any of BKC’s direct or indirect parent companies; or
• it, when combined with all other Restricted Payments (as defined in the Senior Notes Indenture) that rely upon this exception, does not exceed $75
million (the transactions described in these four bullet points, collectively, the “Permitted Distributions”).
80
Source: Burger King Worldwide, Inc., 10-K, February 21, 2014 Powered by Morningstar® Document Research℠
The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this
information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.