Business Context and Reporting Period
Company: Cracker Barrel Old Country Store, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: May 16, 2025
Reporting Period: Immediate events occurring on May 16, 2025.
This filing reports the entry into a new material definitive credit agreement, the termination of the prior credit agreement, and amendments to the Company's Bylaws regarding director elections and shareholder proxy access.
Key Financial Metrics and Debt Structure
Debt and Liquidity Facilities:
- New Revolving Facility: Maximum principal amount of $550.0 million (reduced from the prior $700.0 million). Includes a $25.0 million swingline subfacility and a $75.0 million letter of credit subfacility.
- Delayed Draw Term Loan (DDTL): New facility with a maximum principal amount of $250.0 million. Available until June 15, 2026.
- Accordion Feature: Uncommitted option to increase the facility by up to $200.0 million plus additional amounts, subject to a consolidated total leverage ratio cap of 3.50:1.00.
- Maturity: Principal payable in full on May 16, 2030, or March 16, 2026, if Convertible Notes remain outstanding and Cash Availability is less than $125.0 million.
Interest Rates:
- Base Rate Loans: Prime Rate, Federal Funds Rate + 0.5%, or Term SOFR + 1.0%, plus an applicable margin of 0.75% to 1.75% based on leverage.
- Term SOFR Loans: One-, three-, or six-month Term SOFR plus an applicable margin of 1.75% to 2.75% based on leverage.
Financial Covenants:
- Consolidated Total Leverage Ratio: Not to exceed 4.00:1.00.
- Consolidated Interest Coverage Ratio: At least 4.00:1.00.
Dividend and Repurchase Restrictions:
- Dividends and repurchases are permitted if Cash Availability is at least $100.0 million and no default exists.
- If leverage is 3.50:1.00 or less, amounts are unlimited.
- If leverage exceeds 3.50:1.00, aggregate annual amount is capped at $100.0 million.
- If any DDTL loans are outstanding, aggregate dividends/repurchases are capped at $100.0 million per consecutive twelve-month period.
Revenue, Profit, and Cash Flow: The filing text does not provide specific values for revenue, profit, operating cash flow, or margins for the current period.
Material Changes Versus Prior Period
- Facility Size Reduction: The revolving credit facility was reduced from $700.0 million under the 2022 Credit Agreement to $550.0 million under the New Credit Facility.
- New Term Loan: Introduction of a $250.0 million Delayed Draw Term Loan (DDTL), which was not present in the prior facility structure.
- Termination: The 2022 Credit Agreement was terminated effective May 16, 2025.
- Bylaw Amendments: Adoption of a majority vote standard for uncontested director elections and a new proxy access provision allowing qualifying shareholders to nominate up to 20% of the board.
Guidance, Outlook, Risks, and Unusual Items
Management Commentary and Governance:
The Board adopted new Bylaw provisions (Ineligibility and Reimbursement Provisions) in response to shareholder feedback regarding repeated contested director elections initiated by a single shareholder. The Board intends to seek shareholder ratification of these provisions at the 2025 annual meeting.
Risks and Contingencies:
- Covenant Compliance: The Company must maintain a leverage ratio below 4.00:1.00 and an interest coverage ratio above 4.00:1.00 to avoid default.
- Termination Date Risk: If the 0.625% convertible senior notes due 2026 remain outstanding on March 16, 2026, and the Company lacks $125.0 million in Cash Availability, the entire credit facility becomes due.
- Events of Default: Includes payment defaults, covenant breaches, cross-defaults, bankruptcy, and material judgments.
Unusual Items: The filing notes that the Company has faced six contested director elections since 2011, all initiated by the same shareholder, prompting the new governance restrictions.
Important Facts for Investor Verification
- Verify the Company's current consolidated total leverage ratio to ensure compliance with the 4.00:1.00 covenant and to determine the applicable interest rate margin.
- Confirm the status of the 0.625% convertible senior notes due 2026 and the Company's projected Cash Availability as of March 16, 2026, to assess the risk of early termination of the credit facility.
- Review the full text of the Third Amended and Restated Bylaws (Exhibit 3.1) to understand the specific eligibility requirements for the new Proxy Access Provision.
- Monitor the Company's ability to maintain $100.0 million in Cash Availability to retain flexibility for dividends and share repurchases.
- Check for any subsequent filings regarding the ratification vote on the new Bylaw provisions at the 2025 annual meeting.