IHOP 2010 Annual Report Download - page 117

DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
8. Debt (Continued)
Mandatory Prepayment
Mandatory prepayments equal to 0.25% of the aggregate principal amount of the initial Term
Loan borrowing must be made on a quarterly basis (1.0% for a fiscal year). Mandatory prepayments
are also required to be made upon the occurrence of certain events, including, without limitation,
(i) sales of certain assets, (ii) receipt of certain casualty and condemnation awards proceeds, (iii) the
incurrence of certain additional indebtedness and (iv) excess cash flow (as defined in the Credit
Agreement). The Credit Agreement permits the Company to purchase loans under the Term Facility
pursuant to customary Dutch auction provisions and subject to customary conditions and limitations.
Covenants/Restrictions
The Credit Agreement requires the Company to comply with certain financial covenants, including
a minimum consolidated interest coverage ratio and a maximum consolidated leverage ratio, in each
case, commencing with the fiscal quarter ending March 31, 2011. The Credit Agreement also includes
certain negative covenants customary for transactions of this type, that restrict the ability of the
Company and the Company’s existing and future restricted subsidiaries to, among other things, modify
material agreements and/or incur additional debt, incur liens, make certain investments and
acquisitions, make fundamental changes, transfer and sell assets, pay dividends and make distributions,
modify the nature of the Company’s business, enter into agreements with shareholders and affiliates,
enter into burdensome agreements, change the Company’s fiscal year, make capital expenditures and
prepay certain indebtedness, subject to certain customary exceptions, including carve-outs and baskets.
The Credit Agreement contains certain customary representations and warranties, affirmative
covenants and events of default, including change of control provisions and cross-defaults to other debt.
Upon the occurrence of an event of default, the lenders, by a majority vote, will have the ability to
direct the Administrative Agent to terminate the loan commitments, accelerate all loans and exercise
any of the lenders’ other rights under the Credit Agreement and the related loan documents on behalf
of the lenders.
Borrowings Under Senior Secured Credit Facility
On October 21, 2010, the Company borrowed $900 million under the Term Facility, of which
$844.0 million was outstanding at December 31, 2010. There have been no borrowings under the
Revolving Facility; however, available borrowing capacity under the Revolving Facility is reduced by
$25.5 million of letters of credit outstanding as of December 31, 2010 pursuant to sub-limits of the
Credit Agreement.
Subsequent Event
See Note 25, Subsequent Events, regarding modification of the Credit Agreement after
December 31, 2010.
9.5% Senior Notes due 2018
On October 19, 2010, the Company, issued $825,000,000 aggregate principal amount of its 9.5%
Senior Notes due October 30, 2018 (the ‘‘Notes’’) pursuant to an Indenture (the ‘‘Indenture’’), by and
among the Company, the Guarantors and Wells Fargo Bank, National Association, as trustee (the
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