IHOP 2011 Annual Report Download - page 96

DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
8. Debt (Continued)
78
Long-Term Debt
In October 2010, the Company effected a series of transactions (the "October 2010 Refinancing") that culminated in the
retirement of all long-term debt instruments that had been outstanding prior to the October 2010 Refinancing and the release from
all obligations under the indentures under which certain of the retired instruments had been issued.
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 "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 provided for borrowings up to $50.0 million, with sub-limits for the issuance of letters of credit and for swing-
line 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 Credit facility by up to $250.0 million, provided that the aggregate
amount of the commitments under the Revolving Facility may not exceed $150.0 million. See "Amendment to Credit Agreement"
below.
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 was subject to a floor of 1.50%) plus a margin of 4.50% or (ii) the base rate (the "Base
Rate") (which was 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 was 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. See "Amendment to Credit Agreement" below.
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.
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. See "Amendment to Credit
Agreement" below.
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,