IHOP 2010 Annual Report Download - page 116

DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
8. Debt (Continued)
all obligations under the indentures under which certain of the instruments had been issued (the
‘‘October 2010 Refinancing’’).
Senior Secured Credit Facility
On October 8, 2010, the Company entered into a Credit Agreement, by and among the Company,
a group of lenders and other financial institutions party thereto (the ‘‘Credit Agreement’’).
The Credit Agreement established a senior secured credit facility (the ‘‘Senior Secured Credit
Facility’’) consisting of a $900.0 million senior secured term loan facility maturing in October 2017 (the
‘‘Term Facility’’) and a $50.0 million senior secured revolving credit facility maturing in October 2015
(the ‘‘Revolving Facility’’). The Revolving Facility provides for borrowings up to $50 million, with
sub-limits for the issuance of letters of credit and for swingline borrowings, and may be used for
general corporate purposes, including working capital, permitted acquisitions, capital expenditure,
dividends and investments. The Credit Agreement also provides for an uncommitted incremental
facility that permits the Company, subject to certain conditions, to increase the senior secured credit
facility by up to $250 million; provided that the aggregate amount of the commitments under the
Revolving Facility may not exceed $150 million.
Interest Rate
Loans made under the Term Facility and the Revolving Facility bear interest, at the Company’s
option, at an annual rate equal to (i) a LIBOR based rate (which will be subject to a floor of 1.50%)
plus a margin of 4.50% or (ii) the base rate (the ‘‘Base Rate’’) (which will be subject to a floor of
2.50%) which will be equal to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate
and (c) the one month LIBOR rate (which will be subject to a floor of 1.50%) plus 1.00%, plus a
margin of 3.50%. The margin for the Revolving Facility is subject to debt leverage-based step-downs.
Both the Term Facility and the Revolving Facility are subject to upfront fees of 1.00% of the principal
amount thereof.
Effective Interest Rate
Taking into account fees and expenses associated with the Credit Agreement that will be amortized
as additional non-cash interest expense over a seven-year period, the weighted average effective interest
rate for the Term Loan during the year ended December 31, 2010 was 7.0161%.
Guarantees
The loans made under the Credit Agreement are guaranteed by the Company’s domestic wholly-
owned restricted subsidiaries, other than immaterial subsidiaries (the ‘‘Guarantors’’), and are secured
by a perfected first priority security interest in substantially all of the tangible and intangible assets of
the Company and the Guarantors, including, without limitation, (i) substantially all personal, real and
mixed property, (ii) all intercompany debt owing to the Company and the Guarantors and (iii) 100% of
the equity interests held by the Company and each of the Guarantors (with customary limits for foreign
subsidiaries), subject to certain customary exceptions.
100