El Pollo Loco 2015 Annual Report Download - page 87

Table of Contents
EL POLLO LOCO HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
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 Second Lien Term Loan was issued at a
discount of $1.0 million, 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 $962,000. The 2013 Second Lien Term Loan and the related guarantees were secured by a second-priority
lien on substantially all of the assets and equity interests of EPL and Intermediate, subject to certain exceptions, which were also used to secure
the 2013 First Lien Term Loan on a first-priority basis.
In conjunction with the Company’s IPO, the 2013 Second Lien Term Loan was repaid in full. In conjunction with the repayment of the 2013
Second Lien Term Loan, the Company incurred call premiums of $1.5 million. In addition, the Company expensed $2.7 million of the remaining
unamortized deferred finance costs and wrote off $0.9 million of unamortized discount. These costs were expensed and are reflected in loss on
early extinguishment of debt in the accompanying consolidated statements of operations.
Transaction costs
Transaction costs of $8.1 million were incurred in connection with the October 11, 2013 refinancing and were capitalized and are included in
other assets in the accompanying consolidated balance sheet at December 31, 2013, and the related amortization is reflected as a component of
interest expense, net in the accompanying consolidated financial statements.
2011 Prior Credit Agreement
On July 14, 2011 the Company entered into a credit agreement (“Prior Credit Agreement”) that included a $170 million Senior Secured Term
Loan (the “Prior Term Loan”) that was due to mature in July 2017 and a senior secured revolving credit facility of $12.5 million (the “Prior
Revolver,” and together with the Term Loan, the “Prior Senior Credit Facility”) that was due to mature in July 2016. EPL also issued $105
million of 17% second priority senior secured notes due January 2018 (“2018 Notes”).
The Prior Credit Agreement was executed with Intermediate as guarantor. The Senior Credit Facility was secured by a first priority lien on
substantially all of EPL’s and Intermediate’s assets.
In conjunction with the October 11, 2013 refinancing of EPL’s debt, call premiums of $3.3 million were incurred in connection with the
repurchase of the Prior Senior Credit Facility. In addition, the Company expensed $5.1 million of the remaining unamortized deferred finance
costs and wrote off $3.2 million of unamortized discount, associated with the Prior Senior Credit Facility. These costs were expensed and are
reflected in loss on early extinguishment of debt in the accompanying consolidated statements of operations.
Second Priority Senior Secured Notes (“2018 Notes”)
The 2018 Notes bore cash interest of 12.5% per annum, which was due semi-annually in January and July of each year, which commenced on
January 1, 2012. An additional 4.5% non-cash interest amount accrued on the 2018 Notes, which was added to the principal amount of the 2018
Notes on each interest payment date. The 2018 Notes were issued at a discount of $3.2 million, and this discount was accreted over the term of
the notes, using the effective interest rate method. The 2018 Notes were unconditionally guaranteed by Intermediate and each existing and
subsequently acquired wholly-owned domestic subsidiary of EPL. The 2018 Notes were due to mature on January 10, 2018.
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