El Pollo Loco 2016 Annual Report Download - page 53

aportionoftheconsiderationofthe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.
The2013FirstLienTermLoanrequiredquarterlyprincipalpaymentsof0.25%bemadecommencingMarch26,2014.Obligationsunderthe2013FirstLien
CreditAgreementweresecuredbyafirstprioritylienonsubstantiallyallofEPL’sandIntermediate’sassets.
The2013Revolverprovidedfora$15millionrevolvinglineofcredit.AtDecember25,2013,$7.3millionoflettersofcreditwereoutstandingand$7.7million
wasavailabletoborrowundertherevolvinglineofcredit.
Aspartofthe2014Refinancing,the2013FirstLienTermLoanwasrepaidinfull,resultinginanexpenseof$3.9millionrelatedtotheremainingunamortized
deferredfinancecostsandthewriteoffof$0.7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.
2013SecondLienCreditAgreement
Loansunderthe2013Second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SecondLienCreditAgreementwas8.50%withrespecttoLIBORloansand7.50%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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ourIPO,the2013SecondLienTermLoanwasrepaidinfull.Inconjunctionwiththerepaymentofthe2013SecondLienTermLoan,we
incurredcallpremiumsof$1.5million.Inaddition,we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.
Hedging Arrangements
Inconnectionwithourcreditagreements,weenteredintotwointerestratecapswithWellsFargoBank,N.A.Thefirstinterestratecapwasforanotionalamount
of$30million,withacaprateof3.00%basedon1monthUSDLIBOR,whichterminatedonDecember1,2015.Thesecondinterestratecapisforanotional
amountof$120million,withacaprateof3.00%basedon1monthUSDLIBOR,
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