Baskin Robbins 2012 Annual Report Download - page 79

-69-
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 29, 2012
and December 31, 2011, 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. Additionally, the Company completed two
separate re-pricing transactions to reduce the stated interest rate on the senior credit facility. As a result of the additional term
loan borrowings and the re-pricings of the term loans, the Company recorded a loss on debt extinguishment and refinancing
transactions of $8.2 million in fiscal year 2011, which includes debt extinguishment of $477 thousand related to the write-off of
original issuance discount and deferred financing costs, and $7.7 million of costs paid to creditors and third parties.
In August 2012, DBI amended its senior credit facility to provide for additional term loan borrowings of $400.0 million. The
additional borrowings were issued with an original issue discount of $4.0 million, resulting in net cash proceeds of $396.0
million. The proceeds were used to fund a repurchase of common stock from certain shareholders (see note 13(c)). In addition,
the amendment provides certain changes to the negative covenants contained in the senior credit facility and permits increases
in future incremental facilities subject to the Company and DBI remaining in compliance with certain specified leverage ratios.
In connection with the amendment, the Company recorded costs of $4.0 million, which consisted primarily of fees paid to third
parties, within loss on debt extinguishment and refinancing transactions in the consolidated statements of operations.
Total debt issuance costs incurred and capitalized in relation to the senior credit facility were $34.6 million, including costs
incurred and capitalized in connection with additional term loan borrowings. The term loans, including additional term loan
borrowings, were issued with an original issue discount of $10.3 million. Total amortization of original issue discount and debt
issuance costs related to the senior credit facility was $5.7 million, $5.3 million, and $323 thousand for fiscal years 2012, 2011
and 2010, respectively, which is included in interest expense in the consolidated statements of operations.
In February 2013, the Company amended its senior credit facility, resulting in a reduction of the applicable margin for term
loans by 0.25% and extending the term loan maturities to February 2020.
Subsequent to the amendment to the senior credit facility, borrowings under the revolving 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, and (c) the LIBOR rate plus 1.0%, or (2) a LIBOR rate. The applicable
margin under the revolving credit facility is 1.5% for loans based upon the base rate and 2.5% for loans based upon the LIBOR
rate. In addition, we are required to pay a 0.5% commitment fee per annum on the unused portion of the revolver and a fee for
letter of credit amounts outstanding of 2.5%. The amendment extends the maturity of the revolving credit facility to February
2018.
In connection with the amendment, the Company expects to incur costs of approximately $6.2 million, primarily consisting of
fees paid to existing creditors and third parties.
Senior notes
DBI issued $625.0 million face amount senior notes in November 2010 with a maturity of December 2018 and interest payable
semi-annually at a rate of 9.625% per annum.
The senior notes were issued with an original issue discount of $9.4 million. Total debt issuance costs incurred and capitalized
in relation to the senior notes were $15.6 million. Total amortization of original issue discount and debt issuance costs related to
the senior notes was $1.0 million and $182 thousand for fiscal years 2011 and 2010, respectively, which is included in interest
expense in the consolidated statements of operations.
In conjunction with the additional term loan borrowings during 2011, the Company repaid $250.0 million of senior notes.
Using funds raised by the Company’s initial public offering (see note 13(a)) in August 2011, the Company repaid the full
remaining principal balance on the senior notes. In conjunction with the repayment of senior notes, the Company recorded a
loss on debt extinguishment of $26.0 million, which includes the write-off of original issuance discount and deferred financing
costs totaling $22.8 million, as well as prepayment premiums and third-party costs of $3.2 million.