Red Robin International Inc., a wholly owned subsidiary of the
casual dining restaurant chain
Red Robin Gourmet Burgers Inc.
), announced the completion of a $225 million credit agreement
yesterday. The new credit facility will mature in 5
The new credit refinances Red Robin's prior line of credit
that had a term loan of $150 million as well as $100 million of
revolving line of credit and was scheduled to expire in June
The refinancing led to a 50 basis point reduction in the
spread over LIBOR based on leverage as of the end of the third
quarter of fiscal 2012. The revised credit agreement allows Red
Robin International to increase the credit facility by up to an
additional $100 million in the future, subject to lender
Hence, besides paying down the company's high-cost debt, the
new credit facility will increase the available fund and extend
the maturity period of the debt. The company believes that the
new credit facility will strengthen its financial position.
At the present level, the cash position of the company
continues to improve. In 2012, Red Robin expects to use its cash
flow to accelerate unit growth, reduce debt burden and repurchase
stock. At the end of the third quarter, Red Robin's cash and cash
equivalents were $26.9 million compared with $35.0 million at the
end of 2011. The balance outstanding under the prior credit
facility was $121.9 million.
Red Robin International expects to incur one-time non-cash,
pre-tax charge of approximately $2.9 million in the fourth
quarter of fiscal 2012 due to its new facility. The charge will
be shown as a write-off of unamortized portions of the prior
credit agreement and a fee associated to the re-designation of an
interest rate swap.
Red Robin, which competes with the likes of
Buffalo Wild Wings Inc.
AFC Enterprises Inc.
), currently, carries a Zacks #3 Rank, which translates into a
short-term 'Hold' rating.
AFC ENTERPRISES (AFCE): Free Stock Analysis
BUFFALO WLD WNG (BWLD): Free Stock Analysis
RED ROBIN GOURM (RRGB): Free Stock Analysis
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