Wendy's 2015 Annual Report Download - page 98

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
the applicable scheduled maturity date. The Series 2015-1 Senior Notes are also subject to certain customary
events of default, including events relating to non-payment of required interest, principal, or other amounts due
on or with respect to the Series 2015-1 Senior Notes, failure to comply with covenants within certain time
frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests
to be effective, and certain judgments. The Company was in compliance with these covenants as of January 3,
2016.
In accordance with the Indenture, certain cash accounts have been established with the Indenture trustee for the
benefit of the trustee and the noteholders, and are restricted in their use. As of January 3, 2016,
Wendy’s Funding had restricted cash of $29,327, which primarily represented cash collections and cash reserves
held by the trustee to be used for payments of principal, interest and commitment fees required for the Series
2015-1 Class A-2 Notes.
The proceeds from the issuance of the Series 2015-1 Class A-2 Notes, were used to repay all amounts outstanding
on the Term A Loans and Term B Loans under the Company’s May 16, 2013 Restated Credit Agreement
amended on September 24, 2013 (the “2013 Restated Credit Agreement”). In connection with the repayment of
the Term A Loans and Term B Loans, Wendy’s terminated the related interest rate swaps with notional amounts
totaling $350,000 and $100,000, respectively, which had been designated as cash flow hedges. See Note 13 for
more information on the interest rate swaps. As a result, the Company recorded a loss on early extinguishment of
debt of $7,295 during the second quarter of 2015, primarily consisting of the write-off of deferred costs related to
the 2013 Restated Credit Agreement of $7,233 and fees paid to terminate the related interest rate swaps of $62.
During the second quarter of 2013, Wendy’s incurred a loss on the early extinguishment of debt of $21,019 as a
result of refinancing its Credit Agreement dated May 15, 2012 (the “2012 Credit Agreement”) on May 16, 2013.
The proceeds from the May 16, 2013 Restated Credit Agreement Term A Loans were used to refinance a portion
of the existing Term B Loans. The loss on early extinguishment of debt consisted of the write-off of the
unaccreted discount on Term B Loans and the deferred costs associated with the 2012 Credit Agreement, as
illustrated in the table below.
On September 24, 2013, Wendy’s entered into an amendment to its May 16, 2013 Restated Credit Agreement
to borrow an aggregate principal amount of up to $225,000 of additional Term A Loans. On October 24, 2013,
Wendy’s borrowed $225,000 of additional Term A Loans. Proceeds from the additional Term A Loans, plus cash
on hand, were used to redeem all amounts outstanding on the aggregate principal amount of the Wendy’s 6.20%
Senior Notes due in 2014 (the “6.20% Senior Notes”) at a price equal to 103.8%, as defined in the 6.20% Senior
Notes and accrued and unpaid interest to the redemption date. In connection with the redemption of the 6.20%
Senior Notes, Wendy’s terminated the related interest rate swaps with notional amounts totaling $225,000 which
had been designated as fair value hedges. As a result, Wendy’s recognized a loss on the early extinguishment of
debt of $7,544 during the fourth quarter of 2013 which consisted of (1) a premium payment, as defined in the
6.20% Senior Notes, (2) the remaining fair value adjustment previously recorded in connection with the
Wendy’s merger, partially offset by (3) a benefit from the cumulative effect of our fair value hedges, as illustrated
in the table below.
As a result of the refinancings described above, the Company incurred losses on the early extinguishment of
debt as follows:
Year End
2013
Unaccreted discount on Term B Loans ........................................... $ 9,561
Deferred costs associated with the 2012 Credit Agreement ............................ 11,458
Unaccreted fair value adjustment associated with the 6.20% Senior Notes ................ 3,168
Benefit from cumulative effect of the fair value hedges ................................ (4,063)
Premium payment to redeem the 6.20% Senior Notes ............................... 8,439
Loss on early extinguishment of debt ......................................... $28,563
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