Red Lobster 2013 Annual Report Download - page 52

Notes to Consolidated Financial Statements
Darden
48 Darden Restaurants, Inc. 2013 Annual Report
The Revolving Credit Agreement matures on October 3, 2016, and the proceeds
may be used for commercial paper back-up, working capital and capital expen-
ditures, the refinancing of certain indebtedness, certain acquisitions and general
corporate purposes. Loans under the Revolving Credit Agreement bear interest at
a rate of LIBOR plus a margin determined by reference to a ratings-based pricing
grid (Applicable Margin), or the base rate (which is defined as the higher of the
BOA prime rate or the Federal Funds rate plus 0.500 percent) plus the Applicable
Margin. Assuming a “BBB” equivalent credit rating level, the Applicable Margin
under the Revolving Credit Agreement will be 1.075 percent for LIBOR loans and
0.075 percent for base rate loans.
As of May 26, 2013, we had no outstanding balances under the Revolving
Credit Agreement. As of May 26, 2013, $164.5 million of commercial paper was
outstanding, which was backed by this facility. After consideration of commercial
paper backed by the Revolving Credit Agreement, as of May 26, 2013, we had
$585.5 million of credit available under the Revolving Credit Agreement.
On October 4, 2012, we issued $450.0 million aggregate principal amount
of unsecured 3.350 percent senior notes due November 2022 (the New Senior
Notes) under a registration statement filed with the Securities and Exchange
Commission on October 6, 2010. Discount and issuance costs, which totaled
$4.7 million, are being amortized over the term of the New Senior Notes using
the straight-line method, the results of which approximate the effective interest
method. Interest on the New Senior Notes is payable semi-annually in arrears on
May 1 and November 1 of each year and commenced May 1, 2013. We may redeem
the New Senior Notes at any time in whole or from time to time in part, at the
principal amount plus a make-whole premium. If we experience a change in
control triggering event, unless we have previously exercised our right to redeem
the New Senior Notes, we may be required to purchase the New Senior Notes from
the holders at a purchase price equal to 101 percent of their principal amount
plus accrued and unpaid interest.
On August 22, 2012, we entered into a Term Loan Agreement (the Term Loan
Agreement) with BOA, as administrative agent, and the lenders and other agents
party thereto. During the second quarter of fiscal 2013, we made borrowings
under this agreement in a total aggregate principal amount of $300.0 million.
The Term Loan Agreement is a senior unsecured term loan commitment to the
Company and contains customary representations, events of default and affirma-
tive and negative covenants (including limitations on liens and subsidiary debt
and a maximum consolidated lease adjusted total debt to total capitalization
ratio of 0.75 to 1.00) for facilities of this type.
The Term Loan Agreement matures on August 22, 2017, and the proceeds
may be used for the refinancing of certain indebtedness, certain acquisitions
and general corporate purposes. The loans under the Term Loan Agreement are
subject to annual amortization of principal of 5 percent, 5 percent, 5 percent
and 85 percent, payable on the second, third, fourth and fifth anniversaries,
respectively, of the effective date of the Term Loan Agreement. Interest rates
on borrowings under the Term Loan Agreement will be based on LIBOR plus a
fixed spread as described in the Term Loan Agreement and, in part, upon our
credit ratings. Pricing for interest and fees under the Term Loan Agreement
may be modified in the event of a change in the rating of our long-term senior
unsecured debt.
On August 28, 2012, we closed on the issuance of $80.0 million unsecured
3.790 percent senior notes due August 2019 and $220.0 million unsecured
4.520 percent senior notes due August 2024, pursuant to a Note Purchase
Agreement dated June 18, 2012. The Note Purchase Agreement contains customary
representations, events of default and affirmative and negative covenants
(including limitations on liens and priority debt and a maximum consolidated
total debt to capitalization ratio of 0.75 to 1.00, as such may be adjusted in certain
circumstances) for facilities of this type.
On May 15, 2013 we repaid, prior to maturity, a $4.9 million unsecured
commercial bank loan which was used to support a loan from us to the Employee
Stock Ownership Plan portion of the Darden Savings Plan.
The interest rates on our $500.0 million 6.200 percent senior notes due
October 2017 and $300.0 million 6.800 percent senior notes due October 2037
are subject to adjustment from time to time if the debt rating assigned to such
series of notes is downgraded below a certain rating level (or subsequently
upgraded). The maximum adjustment is 2.000 percent above the initial interest
rate and the interest rate cannot be reduced below the initial interest rate. As of
May 26, 2013, no adjustments to these interest rates had been made.
All of our long-term debt currently outstanding is expected to be repaid
entirely at maturity with interest being paid semi-annually over the life of the
debt. The aggregate maturities of long-term debt for each of the five fiscal years
subsequent to May 26, 2013, and thereafter are as follows:
(in millions)
Fiscal Year Amount
2014    $   –
2015 15.0
2016 115.0
2017 15.0
2018 755.0
Thereafter 1,600.0
Long-term debt $2,500.0