Baskin Robbins 2011 Annual Report Download - page 95

(8) Debt
Debt at December 31, 2011 and December 25, 2010 consisted of the following (in thousands):
December 31,
2011
December 25,
2010
Term loans ................................. $1,468,309 1,243,823
Senior notes ................................ — 615,693
Total debt .............................. 1,468,309 1,859,516
Less current portion of long-term debt ........... 14,965 12,500
Total long-term debt ..................... $1,453,344 1,847,016
Senior credit facility
The Company’s senior credit facility consists of $1.50 billion aggregate principal amount term loans and a
$100.0 million revolving credit facility, which were entered into by DBGI’s subsidiary, Dunkin’ Brands, Inc.
(“DBI”) in November 2010. The term loans and revolving credit facility mature in November 2017 and
November 2015, respectively. As of December 31, 2011 and December 25, 2010, $11.2 million of letters of
credit were outstanding against the revolving credit facility.
Borrowings under the senior credit facility bear interest at a rate per annum equal to an applicable margin plus, at
our option, either (1) a base rate determined by reference to the highest of (a) the Federal Funds rate plus 0.5%,
(b) the prime rate, (c) the LIBOR rate plus 1%, and (d) 2.00% or (2) a LIBOR rate provided that LIBOR shall not
be lower than 1.00%. The applicable margin under the term loan facility is 2.00% for loans based upon the base
rate and 3.00% for loans based upon the LIBOR rate. In addition, we are required to pay a 0.50% commitment
fee per annum on the unused portion of the revolver and a fee for letter of credit amounts outstanding of 3.00%.
The effective interest rate for term loans, including the amortization of original issue discount and deferred
financing costs, was 4.4% at December 31, 2011.
Repayments are required to be made under the term loans equal to $15.0 million per calendar year, payable in
quarterly installments through September 2017, with the remaining principal balance due in November 2017.
Additionally, following the end of each fiscal year, if DBI’s leverage ratio, which is a measure of DBI’s cash
income to outstanding debt, exceeds 4.00x, the Company is required to prepay an amount equal to 25% of excess
cash flow (as defined in the senior credit facility) for such fiscal year. Under the terms of the senior credit
facility, the first excess cash flow payment is due in the first quarter of fiscal year 2012 based on fiscal year 2011
excess cash flow and leverage ratio. In December 2011, the Company made an additional principal payment of
$11.8 million to be applied to the 2011 excess cash flow payment that is due in the first quarter of 2012. Based
on fiscal year 2011 excess cash flow, considering all payments made, the excess cash flow payment required in
the first quarter of 2012 is $2.9 million, which may be deducted from future minimum required principal
payments. Other events and transactions, such as certain asset sales and incurrence of debt, may trigger
additional mandatory prepayments.
The senior credit facility contains certain financial and nonfinancial covenants, which include restrictions on
liens, investments, additional indebtedness, asset sales, certain dividend payments, and certain transactions with
affiliates. At December 31, 2011 and December 25, 2010, the Company was in compliance with all of its
covenants under the senior credit facility.
Certain of the Company’s wholly owned domestic subsidiaries guarantee the senior credit facility. All
obligations under the senior credit facility, and the guarantees of those obligations, are secured, subject to certain
exceptions, by substantially all assets of DBI and the subsidiary guarantors.
During 2011, the Company increased the size of the term loans from $1.25 billion to $1.50 billion. The
incremental proceeds of the term loans were used to repay $250.0 million of the Company’s senior notes.
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