Business Context and Reporting Period
Company: Dave & Buster's Entertainment, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: August 17, 2017
Event: Entry into a Material Definitive Agreement and Creation of a Direct Financial Obligation.
Key Financial Metrics and Debt Structure
This filing details a refinancing of the company's debt structure rather than operational financial results (revenue, profit, or cash flow are not reported in this document).
- New Facility Total: $800 million (5-year term).
- Term Loan A: $300 million.
- Revolving Credit Facility: $500 million.
- Letters of Credit: Up to $35 million available.
- Swing Line Loans: Up to $15 million available.
- Interest Rate: LIBOR plus a spread ranging from 1.25% to 2.00% per annum, based on a pricing grid tied to the total leverage ratio.
- Incremental Capacity: Potential to increase by $150 million plus additional amounts, subject to a secured leverage ratio of 2.75:1.00.
- Refinanced Amount: Replaces an existing $500 million credit facility.
Material Changes Versus Prior Period
The primary material change is the expansion and restructuring of the company's credit facility:
- Capacity Increase: Total borrowing capacity increased from $500 million under the Existing Facility to $800 million under the new Agreement.
- Structure Change: The new facility introduces a specific $300 million Term Loan A component, whereas the previous facility structure is not detailed beyond the aggregate $500 million figure.
- Term Extension: The new facility expires on August 17, 2022.
Guidance, Outlook, Risks, and Covenants
Management Commentary: Proceeds will be used to refinance the existing facility, pay related interest and expenses, and for general corporate purposes.
Covenants and Restrictions: The agreement includes customary affirmative and negative covenants, including:
- Maintenance of a maximum total leverage ratio and minimum fixed charge coverage ratio.
- Limitations on incurring additional debt, paying dividends, making restricted payments, creating liens, and making acquisitions.
- Requirements to furnish periodic financial information to lenders.
Risks and Events of Default: Standard events of default include nonpayment, material inaccuracies in representations, covenant violations, bankruptcy events, and changes of control. Upon certain insolvency events, all amounts become immediately due.
Important Facts for Investor Verification
- Verify the specific impact of the new leverage ratio covenants on future dividend capacity and acquisition flexibility.
- Confirm the exact interest rate spread applicable at the time of signing based on the company's current leverage ratio.
- Review the full text of the Amended and Restated Credit Agreement (Exhibit 10.1) for detailed definitions of "restricted payments" and "permitted indebtedness."
- Monitor the company's ability to maintain the minimum fixed charge coverage ratio required by the new facility.