Wendy's 2008 Annual Report Download - page 131

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The obligations under the Arby’s Credit Agreement were secured by substantially all of the assets, other
than real property, of the Arby’s restaurants segment which had an aggregate net book value of
approximately $180,507 as of December 28, 2008 and were also guaranteed by substantially all of the
entities comprising the Arby’s restaurants segment. Neither Wendy’s/Arby’s Group, nor Wendy’s, was a
party to the guarantees. In addition, the Arby’s Credit Agreement contained various covenants, as amended
during 2007, relating to the Arby’s restaurants segment, the most restrictive of which (1) require periodic
financial reporting, (2) require meeting certain leverage and interest coverage ratio tests and (3) restrict,
among other matters, (a) the incurrence of indebtedness, (b) certain asset dispositions, (c) certain affiliate
transactions, (d) certain investments, (e) certain capital expenditures and (f) the payment of dividends
indirectly to Wendy’s/Arby’s. The Company was in compliance with all of the covenants as of December
28, 2008. During 2007, ARG paid $37,000 of dividends indirectly to Wendy’s/Arby’s Group as permitted
under the covenants of the Credit Agreement. None were paid in 2008, and under the terms of the Arby’s
Credit Agreement, there was no availability as of December 28, 2008 for the payment of dividends to
Wendy’s/Arby’s.
The Arby’s Credit Agreement was amended and restated as of March 11, 2009 and Wendy’s and certain of
its affiliates in addition to ARG and certain of its affiliates became parties (see “Item 1A. Risk Factors—
Risks Related to Wendy’s and Arby’s Businesses—Wendy’s and its subsidiaries, and ARG and its
subsidiaries, are subject to various restrictions, and substantially all of their non-real estate assets are
pledged, under a Credit Agreement”). Wendy’s, ARG and certain other subsidiaries are the co-borrowers
(the “Co-Borrowers”) under the amended and restated Credit Agreement. Under the amended and restated
Credit Agreement substantially all of the assets of the Co-Borrowers (other than real property, except for
mortgages on certain Wendy’s real properties), the stock of Wendy’s and ARG and certain of their
domestic subsidiaries and 65% of the stock of certain of their foreign subsidiaries (all subject to certain
limitations and exclusions) are pledged as collateral security, and the Co-Borrowers’ obligations are also
guaranteed by substantially all of the domestic entities comprising the Wendy’s and Arby’s restaurant
segments (all subject to certain limitations and exclusions). The amended and restated Credit Agreement
also contains covenants that, among other things, require the Borrowers to maintain certain maximum
leverage and minimum interest coverage ratios and restrict their ability to incur debt, pay dividends or
make other distributions to Wendy’s/Arby’s, make certain capital expenditures, enter into certain
fundamental transactions (including sales of assets and certain mergers and consolidations) and create or
permit liens.
The amended and restated Credit Agreement includes a senior secured term loan facility (the “Amended
Arby’s Term Loan”), which had $384,034 outstanding as of March 11, 2009, and a senior secured
revolving credit facility of $100,000. The Amended Arby’s Term Loan is due not later than July 2012 and
the revolving credit facility expires in July 2011. The revolving credit facility includes a subfacility for the
issuance of letters of credit up to $50,000. As of March 11, 2009, $26,182 of loans were outstanding and
letters of credit in the aggregate amount of $35,117 were issued under the amended and restated Credit
Agreement. The Amended Arby’s Term Loan and amounts borrowed under the revolving credit facility
bear interest at the borrowers’ option at either (1) LIBOR of not less than 2.75% plus 4.00% or (2) the
higher of a base rate determined by the administrative agent for the Credit Agreement or the Federal funds
rate plus 0.50% (but not less than 3.75%), in either case plus 3.00%. The borrowers are also charged a
facility fee based on the unused portion of the total credit facility of 0.50% per annum.
(b) Wendy’s senior notes (the “Senior Notes”) were adjusted to fair value at the date of and in connection with
the Wendy’s Merger based on outstanding principal of $224,638 and $199,704 and effective interest rates
of 7.0% and 6.6% for the 6.20% senior notes, 6.25% senior notes, respectively. (See Note 3). Theses notes
are unsecured and are redeemable prior to maturity at our option. These Senior Notes contain covenants
that restrict the incurrence of indebtedness secured by liens and sale-leaseback transactions. The Company
was in compliance with these covenants as of December 28, 2008.
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Wendy’s/Arby’s Group, Inc. and Subsidiaries
(Formerly Triarc Companies, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)