El Pollo Loco 2016 Annual Report Download - page 74
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EL POLLO LOCO HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
SecondLienTermLoanandtherelatedguaranteesweresecuredbyasecond-prioritylienonsubstantiallyalloftheassetsandequityinterestsofEPLand
Intermediate,subjecttocertainexceptions,whichwerealsousedtosecurethe2013FirstLienTermLoanonafirst-prioritybasis.
InconjunctionwiththeCompany’sIPO,the2013SecondLienTermLoanwasrepaidinfull.Inconjunctionwiththerepaymentofthe2013SecondLienTerm
Loan,theCompanyincurredcallpremiumsof$1.5million.Inaddition,theCompanyexpensed$2.7millionoftheremainingunamortizeddeferredfinancecosts
andwroteoff$0.9millionofunamortizeddiscount.Thesecostswereexpensedandwerereflectedinlossonearlyextinguishmentofdebtintheaccompanying
consolidatedstatementsofoperations.
Transaction Costs
Transactioncostsof$8.1millionwereincurredinconnectionwiththeOctober11,2013refinancingandwerecapitalizedandwereincludedinotherassetsinthe
consolidatedbalancesheet,andtherelatedamortizationisreflectedasacomponentofinterestexpense,netintheaccompanyingconsolidatedfinancialstatements.
2011 Prior Credit Agreement
OnJuly14,2011theCompanyenteredintoacreditagreement(“PriorCreditAgreement”)thatincludeda$170millionSeniorSecuredTermLoan(the“Prior
TermLoan”)thatwasduetomatureinJuly2017andaseniorsecuredrevolvingcreditfacilityof$12.5million(the“PriorRevolver,”andtogetherwiththeTerm
Loan,the“PriorSeniorCreditFacility”)thatwasduetomatureinJuly2016.EPLalsoissued$105millionof17%secondpriorityseniorsecurednotesdue
January2018(“2018Notes”).
ThePriorCreditAgreementwasexecutedwithIntermediateasguarantor.TheSeniorCreditFacilitywassecuredbyafirstprioritylienonsubstantiallyallof
EPL’sandIntermediate’sassets.
InconjunctionwiththeOctober11,2013refinancingofEPL’sdebt,callpremiumsof$3.3millionwereincurredinconnectionwiththerepurchaseofthePrior
SeniorCreditFacility.Inaddition,theCompanyexpensed$5.1millionoftheremainingunamortizeddeferredfinancecostsandwroteoff$3.2millionof
unamortizeddiscount,associatedwiththePriorSeniorCreditFacility.Thesecostswereexpensedandarereflectedinlossonearlyextinguishmentofdebtinthe
accompanyingconsolidatedstatementsofoperations.
Second Priority Senior Secured Notes (“2018 Notes”)
The2018Notesborecashinterestof12.5%perannum,whichwasduesemi-annuallyinJanuaryandJulyofeachyear,whichcommencedonJanuary1,2012.An
additional4.5%non-cashinterestamountaccruedonthe2018Notes,whichwasaddedtotheprincipalamountofthe2018Notesoneachinterestpaymentdate.
The2018Noteswereissuedatadiscountof$3.2million,andthisdiscountwasaccretedoverthetermofthenotes,usingtheeffectiveinterestratemethod.The
2018NoteswereunconditionallyguaranteedbyIntermediateandeachexistingandsubsequentlyacquiredwholly-owneddomesticsubsidiaryofEPL.The2018
NoteswereduetomatureonJanuary10,2018.
InconjunctionwiththeOctober11,2013refinancingofEPL’sdebt,callpremiumsof$4.6millionwereincurredinconnectionwiththerepurchaseofthe2018
Notes.Inaddition,theCompanyexpensed$3.2millionoftheremainingunamortizeddeferredfinancecostsandwroteoff$2.0millionoftheremaining
unamortizeddiscountassociatedwiththePriorSeniorCreditFacility.Thesecostswereexpensedandarereflectedinlossonearlyextinguishmentofdebtinthe
accompanyingconsolidatedstatementsofoperations.
Hedging Arrangements
Inconnectionwithourcreditagreements,weenteredintotwointerestratecapswithWellsFargoBank,N.A.Thefirstinterestratecapwasforanotionalamount
of$30million,withacaprateof3.00%basedon1monthUSDLIBOR,whichterminatedonDecember1,2015.Thesecondinterestratecapisforanotional
amountof$120million,withacaprateof3.00%basedon1monthUSDLIBOR,terminatingonDecember1,2016.Thefairvalueoftheseinstrumentsisnot
materialatDecember30,2015.
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