Comfort Inn 2013 Annual Report Download - page 92

Table of Contents
The Company may elect to have borrowings under the New Credit Facility bear interest at a rate equal to (i) LIBOR, plus a margin ranging from 200 to
425 basis points based on the Company's total leverage ratio or (ii) a base rate plus a margin ranging from 100 to 325 basis points based on the Company's
total leverage ratio.
The New Credit Facility requires the Company to pay a fee on the undrawn portion of the New Revolver, calculated on the basis of the average daily
unused amount of the New Revolver multiplied by 0.30% per annum.
The Company may reduce the New Revolver commitment and/or prepay the Term Loan in whole or in part at any time without penalty, subject to
reimbursement of customary breakage costs, if any. Any Term Loan prepayments made by the Company shall be applied to reduce the scheduled
amortization payments in direct order of maturity.
Additionally, the New Credit Facility requires that the Company and its restricted subsidiaries comply with various covenants, including with respect to
restrictions on liens, incurring indebtedness, making investments, paying dividends or repurchasing stock, and effecting mergers and/or asset sales. With
respect to dividends, the Company may not make any payments if there is an existing event of default or if the payment would create an event of default. In
addition, if the Company's total leverage ratio exceeds 4.50 to 1.00, the Company is generally restricted from paying aggregate dividends in excess of $50.0
million during any calendar year.
The New Credit Facility also imposes financial maintenance covenants (as defined in the loan agreements) requiring the Company to maintain:
•a total leverage ratio of not more than 5.75 to 1.00 in year 1, 5.00 to 1.00 in year 2, 4.50 to 1.00 in year 3 and 4.00 to 1.00 thereafter,
•a maximum secured leverage ratio of not more than 2.50 to 1.00 in year 1, 2.25 to 1.00 in year 2, 2.00 to 1.00 in year 3 and 1.75 to 1.00
thereafter, and
•a minimum fixed charge coverage ratio of not less than 2.00 to 1.00 in years 1 and 2, 2.25 to 1.00 in year 3 and 2.50 to 1.00 thereafter.
At December 31, 2013, the Company maintained a total leverage ratio of 3.33x, a maximum secured leverage ratio of 0.59x and a minimum fixed charge
ratio of approximately 5.56x.
The New Credit Facility includes customary events of default, the occurrence of which, following any applicable cure period, would permit the lenders
to, among other things, declare the principal, accrued interest and other obligations of the Company under the New Credit Facility to be immediately due and
payable. At December 31, 2013, the Company was in compliance with all covenants under the New Credit Facility.
The Company incurred debt issuance costs in connection with the New Credit Facility totaling approximately $3.7 million, which are included in other
current assets and other assets on the Company's consolidated balance sheets. These debt issuance costs are amortized, on a straight-line basis, which is not
materially different than the effective interest method, through the maturity of the New Credit Facility. Amortization of these costs is included in interest
expense in the consolidated statements of income.
At December 31, 2013, the Company had $138.8 million outstanding under the Term Loan and no amounts outstanding under the New Revolver. At
December 31, 2012, the Company had $146.3 million outstanding under the Term Loan and $57.0 million under the New Revolver.
In connection with entering into the New Credit Facility, the Company's $300 million senior unsecured revolving credit agreement, dated as of February
24, 2011, among the Company, Wells Fargo Bank, National Association, as administrative agent, and a syndicate of lenders (the “Old Credit Facility”), was
terminated and replaced by the New Credit Facility. The Old Credit Facility permitted the Company to borrow, repay and re-borrow revolving loans until the
scheduled maturity date of February 24, 2016. Upon refinancing, the Company had unamortized deferred financing fees totaling $1.7 million pertaining to
the Old Credit Facility. Based on an analysis of the lenders participating in both the Old and New Credit Facilities, the Company recorded a loss on
extinguishment of debt of approximately $0.5 million during the year ended December 31, 2012. The remaining unamortized deferred fees related to the Old
Credit Facility will be amortized, on a straight-line basis through the maturity of the New Credit Facility.
Borrowings under the Old Credit Facility bore interest at (i) a base rate plus a margin ranging from 5 to 80 basis points based on the Company's credit
rating or (ii) LIBOR plus a margin ranging from 105 to 180 basis points based on the Company's credit rating. In addition, the Old Credit Facility required
the Company to pay a quarterly facility fee on the full amount of the commitments under the Old Credit Facility (regardless of usage) ranging from 20 to 45
basis points based upon the credit rating of the Company.
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