El Pollo Loco 2015 Annual Report Download - page 64

Download and view the complete annual report

Please find page 64 of the 2015 El Pollo Loco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 123

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123

Table of Contents
The 2013 First Lien Term Loan required quarterly principal payments of 0.25% be made commencing March 26, 2014. Obligations under the
2013 First Lien Credit Agreement were secured by a first priority lien on substantially all of EPL’s and Intermediate’s assets.
The 2013 Revolver provided for a $15 million revolving line of credit. At December 25, 2013, $7.3 million of letters of credit were outstanding
and $7.7 million was available to borrow under the revolving line of credit.
As part of the 2014 Refinancing, the 2013 First Lien Term Loan was repaid in full, resulting in an expense of $3.9 million related to the
remaining unamortized deferred finance costs and the write off of $0.7 million of unamortized discount. These costs were expensed, and are
reflected in loss on early extinguishment of debt in the accompanying consolidated statements of operations.
2013 Second Lien Credit Agreement
Loans under the 2013 Second Lien Credit Agreement bore interest at an Alternate Base Rate or LIBOR, at EPL’s option, plus an applicable
margin. The applicable margin rate under the 2013 Second Lien Credit Agreement was 8.50% with respect to LIBOR loans and 7.50% with
respect to Alternate Base Rate loans, with a 1.00% floor with respect to the LIBOR rate. Interest was due on loan amounts under Alternate Base
Rate elections on a monthly basis and on loan amounts bearing interest based on LIBOR at the end of each interest period in effect, provided that
with respect to LIBOR interest periods longer than three months, interest was payable at three month intervals. The 2013 Second Lien Term
Loan was issued at a discount of $1.0 million, and this discount was being accreted over the term of the loan, using the effective interest method.
The unamortized discount at December 25, 2013, was $962,000. The 2013 Second Lien Term Loan and the related guarantees were secured by a
second-priority lien on substantially all of the assets and equity interests of EPL and Intermediate, subject to certain exceptions, which were also
used to secure the 2013 First Lien Term Loan on a first-priority basis.
In conjunction with our IPO, the 2013 Second Lien Term Loan was repaid in full. In conjunction with the repayment of the 2013 Second Lien
Term Loan, we incurred call premiums of $1.5 million. In addition, we expensed $2.7 million of the remaining unamortized deferred finance
costs, and wrote off $0.9 million of unamortized discount. These costs were expensed, and are reflected in loss on early extinguishment of debt
in the accompanying consolidated statements of operations.
Hedging Arrangements
In connection with our credit agreements, we entered into two interest rate caps with Wells Fargo Bank, N.A. The first interest rate cap is for a
notional amount of $30 million, with a cap rate of 3.00% based on 1 month USD LIBOR, terminating on December 1, 2015. The second interest
rate cap is for a notional amount of $120 million, with a cap rate of 3.00% based on 1 month USD LIBOR, terminating on December 1, 2016.
60