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Del Taco Refinances Senior Credit Facility With BofA, Others

August 06, 2015, 07:46 AM
Filed Under: Restaurant

Del Taco Restaurants, Inc.,  the second largest Mexican-American QSR chain by units in the United States, announced the closing of a new five-year $250 million senior credit facility. The new revolving credit facility bears an initial interest rate of LIBOR plus 200 basis points. The company utilized $164 million of proceeds from the new facility to refinance in whole its existing senior secured debt and pay costs associated with the refinancing.

Bank of America Merrill Lynch and J.P. Morgan Securities LLC are the joint lead arrangers of the new senior credit facility.

The refinancing represents a 305 basis point reduction in the company’s borrowing costs based on current market conditions, and is expected to reduce annual interest expense by approximately $5.4 million per year.

Steven L. Brake, Chief Financial Officer of Del Taco, commented, “Del Taco’s strong performance, including twelve consecutive quarters of positive same store sales at company-owned restaurants and growth in restaurant contribution margins, along with significant debt reduction since the completion of our business combination with Levy Acquisition Corp. has enabled us to refinance our outstanding indebtedness at a substantially lower interest rate. This refinancing materially reduces our annual interest expense, enhancing our net income and free cash flow, and allowing us even greater flexibility to execute our new store development strategy.”

Paul Murphy, Chief Executive Officer of Del Taco, remarked, “We are thrilled that our great performance and exciting brand resonated so well with lenders and allowed us to quickly complete a refinancing. We were confident that as a public company we could improve our cost of borrowing, and the terms of today’s refinancing measure up to our best case scenario. Our strong second quarter results, including 7.0% revenue growth, 12.2% growth in adjusted EBITDA, 30.2% growth in operating income, and improved restaurant contribution certainly helped achieve this outcome.”

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