Einstein Bros 2006 Annual Report Download - page 57

http://www.sec.gov/Archives/edgar/data/949373/000104746907001622/a2176540z10-k.htm[9/11/2014 10:12:36 AM]
On February 28, 2006, we completed the refinancing of the AmSouth Revolver and $160 Million Notes. Our new debt obligations consist of
the following:
•$15 million revolving credit facility (Revolving Facility);
•$80 million first lien term loan (First Lien Term Loan);
•$65 million second lien term loan (Second Lien Term Loan); and
•$25 million subordinated note (Subordinated Note).
Proceeds from the new debt facility were used to repay the $160 Million Notes plus a 3% redemption premium of $4.8 million and accrued
and unpaid interest to the redemption date.
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Revolving Facility
The Revolving Facility has a maturity date of March 31, 2011 and provides for interest based upon the prime rate or LIBOR plus a margin.
The margin may increase or decrease up to 0.25% based upon our consolidated leverage ratio as defined in the agreement. The initial margin is at
prime plus 2.00% or LIBOR plus 3.00%. This facility may be used in whole or in part for letters of credit. As of January 2, 2007, nothing was
borrowed under the Revolving Facility and the stated interest rate was at prime plus 2.00%, or 10.25%.
In the event that we have not extended the maturity date of the Mandatorily Redeemable Series Z Preferred Stock (Series Z) to a date that is on
or after July 26, 2012 or redeemed the Series Z by December 30, 2008, then the Revolving Facility will mature on December 30, 2008.
We are required to pay an unused credit line fee of 0.5% per annum on the average daily unused amount. The unused line fee is payable
quarterly in arrears. Additionally, we are required to pay a letter of credit fee based on the ending daily undrawn face amount for each letter of
credit issued, of an applicable margin being based on our consolidated leverage ratio with a minimum and maximum applicable margin of 2.75%
and 3.25%, respectively, plus a 0.5% arranger fee payable quarterly. Letters of credit reduce our availability under the Revolving Facility. At
January 2, 2007, we had $6.7 million in letters of credit outstanding. The letters of credit expire on various dates during 2007, are automatically
renewable for one additional year and are payable upon demand in the event that we fail to pay the underlying obligation related to certain workers
compensation claims or distributor claims. Our availability under the Revolving Facility was $8.3 million at January 2, 2007.
The Revolving Facility contains usual and customary covenants including consolidated leverage ratios, fixed charge coverage ratios,
limitations on capital expenditures, etc. The ratio covenants are based on a Consolidated EBITDA calculation (as defined in our loan agreement)
and are measured on a twelve month period ending on the last day of each fiscal quarter. The loan is guaranteed by our material subsidiaries. The
Revolving Facility and the related guarantees are secured by a first priority security interest in all of our assets and our material subsidiaries,
including a pledge of 100% of our interest in all shares of capital stock (or other ownership or equity interests) of each material subsidiary. As of
January 2, 2007, we were in compliance with all our financial and operating covenants.
Approximately $0.4 million in debt issuance costs have been capitalized and are being amortized using the straight-line method over the term
of the Revolving Facility.
First Lien Term Loan
The First Lien Term Loan has a maturity date of March 31, 2011 and provides for a floating interest rate based upon the prime rate or LIBOR
plus a margin. The margin may increase or decrease 0.25% based upon our consolidated leverage ratio as defined in the agreement. The initial
margin is at prime plus 2.00% and/or LIBOR plus 3.00% and is payable in arrears quarterly and/or at the LIBOR date, dependent upon the rate in
effect. As of January 2, 2007, the stated interest rate under the First Lien Term Loan was 8.45%, which represents a weighted average of 6-Month
LIBOR plus 3.00%, or 8.45%, 2-Month LIBOR plus 3.00%, or 8.35%, and prime plus 2.00%, or 10.25%. The effective interest rate since inception
was
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