Dunkin' Donuts 2011 Annual Report Download - page 96

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.
The term loans were issued with an original issue discount of $6.3 million. Total debt issuance costs incurred and
capitalized in relation to the senior credit facility were $32.6 million. Total amortization of original issue
discount and debt issuance costs related to the senior credit facility was $5.3 million and $323 thousand for fiscal
years 2011 and 2010, respectively, which is included in interest expense in the consolidated statements of
operations.
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 12) 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.
ABS Notes
On May 26, 2006, certain of the Company’s subsidiaries (the “Co-Issuers”) entered into a securitization
transaction. In connection with this securitization transaction, the Co-Issuers issued 5.779% Fixed Rate
Series 2006-1 Senior Notes, Class A-2 (“Class A-2 Notes”) with an initial principal amount of $1.5 billion and
8.285% Fixed Rate Series 2006-1 Subordinated Notes, Class M-1 (“Class M-1 Notes”) with an initial principal
amount of $100.0 million. In addition, the Company also issued Class A-1 Notes (the Class A-1 Notes, together
with the Class A-2 Notes and the Class M-1 Notes, the “ABS Notes”), which permitted the Co-Issuers to draw up
to a maximum of $100.0 million on a revolving basis.
Total debt issuance costs incurred and capitalized in relation to the ABS Notes were $72.9 million, of which
$6.0 million and $7.4 million was amortized to interest expense during fiscal years 2010 and 2009, respectively.
During fiscal year 2009, the Company repurchased and retired outstanding Class A-2 Notes with a total face
value of $153.7 million. The Class A-2 Notes were repurchased using available cash for a total repurchase price
of $142.7 million. As a result of these repurchases, the Company recorded a net gain on debt extinguishment of
$3.7 million, which includes the write-off of deferred financing costs of $4.8 million and pre-payment premiums
paid to Ambac of $2.5 million.
In 2010, all outstanding ABS Notes were repaid in full with proceeds from the term loans and senior notes, as
well as available cash. As a result, a net loss on debt extinguishment of $62.0 million was recorded, which
includes the write-off of deferred financing costs of $37.4 million, make whole payments of $23.6 million, and
other professional and legal costs.
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