El Pollo Loco 2015 Annual Report Download - page 63

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Table of Contents
December 31, 2014, $7.4 million of letters of credit were outstanding and $27.6 million was available to borrow under the revolving line of
credit. The 2014 Revolver will mature on or about December 11, 2019.
Borrowings under the 2014 Revolver (other than any swingline loans) bear interest, at the borrower’s option, at rates based upon either LIBOR
or a base rate, plus, for each rate, a margin determined in accordance with a lease-adjusted consolidated leverage ratio-based pricing grid. The
base rate is calculated as the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate of Bank of America, or (c) LIBOR plus 1.00%.
For LIBOR loans, the margin is in the range of 1.75% to 2.50%, and for base rate loans the margin is in the range of 0.75% and 1.50%. The
margin is initially set at 2.00% for LIBOR loans and at 1.00% for base rate loans until the delivery of financial statements and a compliance
certificate for the period ended March 25, 2015.
The 2014 Revolver includes a number of negative and financial covenants, including, among others, the following (all subject to certain
exceptions): a maximum lease-adjusted consolidated leverage ratio covenant, a minimum consolidated fixed charge coverage ratio, and
limitations on indebtedness, liens, investments, asset sales, mergers, consolidations, liquidations, dissolutions, restricted payments, and negative
pledges. The 2014 Revolver also includes certain customary affirmative covenants and events of default. We were in compliance with all such
covenants at December 31, 2014.
Under the 2014 Revolver, Holdings may not make certain payments such as cash dividends, except that it may, inter alia, (i) pay up to $1 million
per year to repurchase or redeem qualified equity interests of Holdings held by past or present officers, directors, or employees (or their estates)
of the Company upon death, disability, or termination of employment, (ii) pay under its income tax receivable agreement (the “TRA”), and,
(iii) so long as no default or event of default has occurred and is continuing, (a) make non-
cash repurchases of equity interests in connection with
the exercise of stock options by directors and officers, provided that those equity interests represent a portion of the consideration of the exercise
price of those stock options, (b) pay up to $2.5 million per year pursuant to stock option plans, employment agreements, or incentive plans,
(c) make up to $5 million in other restricted payments per year, and (d) make other restricted payments, provided that such payments would not
cause, in each case, on a pro forma basis, (x) its lease-adjusted consolidated leverage ratio to equal or exceed 4.25 times and (y) its consolidated
fixed charge coverage ratio to be less than 1.75 times.
Prior Credit Agreements
On October 11, 2013, the Company refinanced its debt, with EPL entering into the 2013 Credit Agreements, including the 2013 First Lien Term
Loan and the 2013 Second Lien Term Loan (together, the “2013 Term Loans”). The proceeds received from the 2013 Term Loans on
October 11, 2013, plus $14.4 million of cash on hand, were used to pay off the 2011 Financing Agreements and to pay fees and expenses in
connection therewith.
The 2013 Credit Agreements were executed with Intermediate as guarantor, Jefferies Finance LLC as administrative agent, collateral agent, and
a lender, and, solely with respect to the 2013 First Lien Credit Agreement, General Electric Capital Corporation as issuing bank, swing line
lender, and a lender, and GE Capital Bank as a lender.
2013 First Lien Credit Agreement
Loans under the 2013 First Lien Credit Agreement bore interest at an Alternate Base Rate or LIBOR, at EPL’
s option, plus an applicable margin.
The applicable margin rate under the 2013 First Lien Credit Agreement was 4.25% with respect to LIBOR loans and 3.25% with respect to
Alternate Base Rate loans, with a 1.00% floor with respect to the LIBOR rate. Interest was due on loan amounts under Alternate Base Rate
elections on a monthly basis and on loan amounts bearing interest based on LIBOR at the end of each interest period in effect, provided that with
respect to LIBOR interest periods longer than three months, interest was payable at three month intervals. The 2013 First Lien Term Loan was
issued at a discount of $950,000, and this discount was being accreted over the term of the loan, using the effective interest method. The
unamortized discount at December 25, 2013, was $910,000.
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