Business Context and Reporting Period
Company: Red Robin Gourmet Burgers, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: December 14, 2005
Event: Entry into a Material Definitive Agreement and Creation of a Direct Financial Obligation.
Key Financial Metrics and Obligations
This filing details a new credit facility rather than operational financial performance metrics (revenue, profit, cash flow). Key terms of the new obligation include:
- Total Credit Commitment: $200 million.
- Expansion Option: Up to an additional $40 million, subject to lender participation.
- Previous Facility: Replaces a May 20, 2003 agreement with a maximum principal of $85 million.
- Maturity Date: December 14, 2010.
- Security: Secured by substantially all assets of the borrower and guarantors.
- Permitted Uses: Restaurant construction, refinancing existing debt, working capital, general corporate requirements, and financing franchise restaurant acquisitions.
Material Changes Versus Prior Period
The primary material change is the significant expansion of the company's borrowing capacity:
- Capacity Increase: The credit facility increased from $85 million to $200 million (a 135% increase in base capacity).
- Term Extension: The new agreement establishes a maturity date of December 14, 2010.
- Structure: The agreement amends and restates the prior 2003 Credit Agreement.
Covenants, Risks, and Management Commentary
The Credit Agreement imposes specific financial and operational covenants:
- Financial Covenants:
- Leverage Ratio: Must be less than or equal to 2.5 to 1.0.
- Fixed Charge Coverage Ratio: Must be greater than or equal to 1.25 to 1.0.
- Operational Restrictions: The agreement limits the registrant's ability to merge, create liens, incur additional indebtedness, enter into affiliate transactions, engage in sale-leaseback transactions, pay dividends, make certain investments, sell assets, or make acquisitions without meeting specific exceptions.
- Reporting Requirements: The registrant must deliver specified annual and quarterly financial information to lenders.
The filing text does not provide specific management commentary on future earnings guidance or operational outlook beyond the announcement of the credit facility closing.
Important Facts for Investor Verification
- Verify the company's current leverage and fixed charge coverage ratios to ensure compliance with the new 2.5:1 and 1.25:1 covenants.
- Confirm the specific amount of existing debt being refinanced under the new $200 million facility.
- Review the attached Amended and Restated Credit Agreement (Exhibit 10.1) for detailed definitions of "Leverage Ratio" and "Fixed Charge Coverage Ratio."
- Monitor future filings for any utilization of the $40 million expansion option.