Business Context and Reporting Period
Company: Red Robin Gourmet Burgers, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: July 24, 2002
Event: Entry into a new revolving credit agreement.
Key Financial Metrics
This filing reports on a specific financing event rather than periodic financial performance. Key metrics disclosed include:
- Facility Size: $40 million revolving credit facility.
- Initial Borrowing: $11,250,000 drawn on July 24, 2002.
- Outstanding Debt: $11,000,000 (repaid from existing indebtedness).
- Interest Rate: 3.58% on the outstanding amount.
- Facility Expiration: July 24, 2005.
- Collateral: First priority pledge of all subsidiary capital stock and a first priority lien on substantially all tangible and intangible assets.
Material Changes
The primary material change is the establishment of a new $40 million credit facility to replace or refinance existing indebtedness. The company immediately utilized $11.25 million of this facility to repay prior debt obligations.
Guidance, Covenants, and Restrictions
The credit agreement imposes significant financial covenants and operational restrictions:
- Financial Covenants:
- Maximum leverage ratio: 2.0 to 1.0.
- Minimum fixed charge coverage ratio: 1.25 to 1.0.
- Minimum EBITDA: $27.5 million or 90% of the prior twelve-month period EBITDA.
- Maximum capital expenditure restrictions apply.
- Operational Restrictions: The agreement limits the company's ability to engage in mergers, acquisitions, joint ventures, sale-leaseback transactions, asset sales, incurring additional indebtedness, making investments, creating liens, and paying dividends.
- Use of Proceeds: Funding for new restaurant construction and acquisition, refinancing existing debt, and general corporate purposes including working capital.
Note: The filing does not provide specific revenue, profit, or cash flow figures for the reporting period, nor does it contain forward-looking guidance beyond the terms of the credit agreement.
Investor Verification Checklist
- Verify the company's current EBITDA to ensure compliance with the $27.5 million minimum covenant.
- Confirm the company's leverage ratio remains below the 2.0 to 1.0 threshold.
- Review the impact of the dividend and acquisition restrictions on future growth strategies.
- Monitor the interest rate environment, as the current 3.58% rate may be variable.
- Assess the sufficiency of the $40 million facility for planned restaurant expansion.