Item 1.01 Entry Into a Material Definitive Agreement
On November 30, 2017, Bloomin’ Brands, Inc. (the “Company”) and its wholly-owned subsidiary OSI Restaurant Partners, LLC (“OSI”), as co-borrowers (the “Borrowers”), certain lenders (the “Lenders”) and Wells Fargo Bank, National Association, as administrative agent for the Lenders (in such capacity, the “Administrative Agent”), entered into a credit agreement (the “Credit Agreement”) providing for senior secured financing of up to $1.5 billion, consisting of a $500.0 million term loan A and a $1.0 billion revolving credit facility (the “New Facility”).
The New Facility replaces the Company’s prior $1.322 billion credit facility among certain of the Company’s subsidiaries, the Administrative Agent and the lenders party thereto, under which a total of approximately $1.194 billion was outstanding at the time of replacement (the “Prior Facility”).
Borrowings under the New Facility bear interest at rates ranging from 1.50% to 2.00% over Adjusted LIBOR or 0.50% to 1.00% over ABR. “ABR” is the Alternate Base Rate, which is the highest of (i) the Administrative Agent’s Prime Rate, (ii) the Federal Funds Effective Rate plus 1/2 of 1.0% and (iii) one-month Adjusted LIBOR plus 1.00%. “Adjusted LIBOR” is the London interbank offered rate for U.S. dollars, adjusted for customary Eurodollar reserve requirements, if any.
The term loan A requires scheduled quarterly amortization payments in aggregate annual amounts equal to 5.0% of the original principal amount of the term loan for the first, second and third years, 7.5% for the fourth year and 10.0% for the fifth year. These payments are reduced by the application of any prepayments, and any remaining balance will be paid at maturity. The maturity date for the New Facility is November 30, 2022.
The revolving credit facility provides sub-limits for swing-line loans of up to $50.0 million and letters of credit of up to $75.0 million. At closing, $697.0 million was drawn under the revolving credit facility and $22.9 million of the credit facility was committed for the issuance of letters of credit and not available for borrowing.
The New Facility requires the Borrowers to comply with certain covenants, including a specified quarterly Total Net Leverage Ratio (“TNLR”) not to exceed 4.50 to 1. The TNLR is the ratio of Consolidated Total Debt to Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization and certain other adjustments as defined in the Credit Agreement). The New Facility also contains customary affirmative and negative covenants and restrictions typical for a financing of this type that, among other things, requiring the Borrowers to make certain prepayments, and limit, subject to certain exceptions, Borrowers’ ability and the ability of its subsidiaries to take various actions relating to indebtedness, significant payments, mergers and similar transactions.
The New Facility is guaranteed by each of the Company’s current and future domestic 100% owned subsidiaries subject to certain exceptions (the “Guarantors”) and is secured by substantially all now owned or later acquired assets of the
Borrowers and Guarantors, including a pledge of all of the capital stock of substantially all of the Company’s domestic subsidiaries.
Certain of the Lenders and certain of their affiliates have performed investment banking, commercial lending and advisory services (“Services”) for the Company and its subsidiaries from time to time, for which they have received customary fees and expenses, including in connection with the Company’s initial public offering and credit facilities. These parties may, from time to time, engage in transactions with, and perform services for, the Company and its subsidiaries in the ordinary course of their business.
Item 1.02 Termination of a Material Definitive Agreement
Effective November 30, 2017, the Prior Facility was terminated and all outstanding amounts were repaid in full. The Company did not incur any termination penalties in connection with the early termination of the Prior Facility.
Certain of the lenders under the Prior Facility and certain of their affiliates have performed Services for the Company and its subsidiaries from time to time, for which they have received customary fees and expenses, including in connection with the Company’s initial public offering and credit facilities. These parties may, from time to time, engage in transactions with, and perform services for, the Company and its subsidiaries in the ordinary course of their business.