Business Context and Reporting Period
Company: Red Robin Gourmet Burgers, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: March 13, 2008
Event Date: March 13, 2008 (Effective date of transaction: March 19, 2008)
This filing reports the creation of a direct financial obligation through an interest rate swap agreement entered into by Red Robin International, Inc., a subsidiary of the registrant.
Key Financial Metrics and Obligations
The filing details a specific hedging transaction rather than general financial performance metrics. Key figures include:
- Counterparty: SunTrust Bank
- Instrument: Interest Rate Swap under an ISDA Master Agreement
- Notional Amount: $120 million
- Fixed Rate: 2.7925%
- Underlying Debt: Floating rate debt under the amended and restated credit facility dated June 15, 2007
Material Changes and Transaction Details
The company entered into this transaction to mitigate floating rate interest risk. The terms are structured as follows:
- Duration: The swap has a termination date of March 19, 2010, for $50 million of the notional amount, and March 19, 2011, for the remaining $70 million.
- Mechanism: The Borrower makes fixed rate payments to SunTrust Bank and receives floating payments based on the LIBOR rate.
- Impact: This effectively fixes the annual interest rate on up to $120 million of debt for the first two years and $70 million for the final year.
The filing explicitly states that notwithstanding the swap, the Borrower remains ultimately obligated for all amounts due under the credit facility.
Guidance, Outlook, and Risks
Management Commentary: The transaction is a risk management strategy to hedge against interest rate fluctuations on existing debt.
Future Actions: The Borrower may enter into additional swap transactions in the future from time to time.
Risks: The filing does not provide specific risk factors beyond the standard obligation to pay under the credit facility regardless of the swap performance.
Investor Verification Checklist
- Verify the total outstanding balance under the amended and restated credit facility dated June 15, 2007, to confirm the $120 million exposure.
- Review the terms of the credit facility to understand the floating rate benchmark (LIBOR) and any applicable margins.
- Confirm the company's overall debt maturity schedule to assess the impact of the fixed-rate period ending in 2010 and 2011.
- Check subsequent filings for any additional swap transactions or changes to the credit facility.
Note: This filing does not provide revenue, profit, cash flow, or liquidity data. Those metrics are not present in the source text.