ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On November 23, 2020 (the "Effective Date"), Fiesta Restaurant Group, Inc. (the
"Company") entered into a (i) Credit Agreement (the "Credit Agreement") among
the Company, as borrower, the lenders from time to time party thereto (the
"Lenders") and Fortress Credit Corp. (the "Agent"), as administrative agent,
collateral agent and a Lender, (ii) Security Agreement (the "Security
Agreement") among the Company, certain direct and indirect subsidiaries of the
Company (the "Guarantors"), as guarantors, and the Agent, and (iii) Guarantee
Agreement among the Guarantors and the Agent, each as further described in "Item
2.03. Creation of a Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement of a Registrant" which is incorporated by
reference in this Item 1.01. Pursuant to the Security Agreement, the Company and
the Guarantors pledged and granted to the Agent for the benefit of the Agent and
the Lenders, a lien on and security interest in all of the right, title and
interest in substantially all of the assets of the Company and the Guarantors,
subject to certain exceptions specified therein. In addition, under the Security
Agreement all of the outstanding capital stock of the Guarantors was pledged as
security to the Agent for the benefit of the Agent and the Lenders.
ITEM 1.02. TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.
On November 23, 2020, the Company terminated the (i) Credit Agreement (the
"Initial Prior Credit Agreement") dated as of November 30, 2017 among the
Company, the Guarantors, JPMorgan Chase Bank, N.A. (the "Prior Administrative
Agent"), as administrative agent and as a lender and the other lenders party
thereto, as amended by the First Amendment to Credit Agreement (the "First
Amendment") dated as of March 9, 2018 among the Company, the Guarantors, the
Prior Administrative Agent and the lenders party thereto and the Second
Amendment to Credit Agreement (the "Second Amendment" and together with the
Initial Prior Credit Agreement and the First Amendment, the "Prior Credit
Agreement") dated as of July 10, 2020 among the Company, the Guarantors, the
Prior Administrative Agent and the lenders party thereto and (ii) First Amended
and Restated Security Agreement (the "Prior Security Agreement") dated as of
July 10, 2020 among the Company, the Guarantors and the Prior Administrative
Agent. The Prior Credit Agreement and the Prior Security Agreement are described
in Item 1.01 and Item 2.03 of the Company's Current Report on Form 8-K filed
on July 16, 2020, which description is incorporated by reference into this Item
1.02.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
On November 23, 2020, the Company and the Guarantors entered into the Credit
Agreement. The Credit Agreement provides for a term loan facility ("Term Loan")
of $75.0 million and a revolving credit facility ("Revolving Loan") of up to
$10.0 million (the "Revolving Committed Amount"). The Credit Agreement also
provides that the Company has the right from time to time during the term of the
Credit Agreement to request the Lenders (although they are under no obligation
to make any such loans) or other potential lenders for incremental term loan
borrowing increases of up to $37.5 million in the aggregate, subject to, among
other items, compliance with a Total Leverage Ratio not to exceed 2.50 to 1.00
and other terms specified in the Credit Agreement. The Credit Agreement matures
on November 23, 2025. The Company borrowed $75.0 million in Term Loan
borrowings, subject to an original issue discount, on the Effective Date. The
Company used and will use Term Loan borrowings under the Credit Agreement (i) to
repay outstanding revolving credit borrowings and accrued interest under the
Prior Credit Agreement, (ii) to pay related fees and expenses in connection with
the Credit Agreement and the refinancing of the Prior Credit Agreement and (iii)
for working capital and general corporate purposes. The Company will use
Revolving Loan borrowings under the Credit Agreement for working capital and
general corporate purposes. Capitalized terms not defined herein shall have the
meanings set forth in the Credit Agreement.
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Term Loan and Revolving Loan borrowings under the Credit Agreement will bear
interest at a rate per annum, at the Company's option, of (a) for Base Rate
Loans, the Base Rate plus the Applicable Margin of 6.75% or (b) for LIBOR Loans,
LIBOR plus the Applicable Margin of 7.75%. The Company will be subject to a
commitment fee of 0.50% per annum on the daily amount of the undrawn portion of
the Revolving Committed Amount.
The Credit Agreement provides that the Company must maintain minimum Liquidity
of $20 million beginning on the Effective Date and until January 3, 2022 (the
"Liquidity Threshold"). The Credit Agreement also provides that the Company is
required to be in compliance with a Total Leverage Ratio of (x) not to exceed
3.50 to 1.00 beginning on the date that is the earlier of (i) January 3, 2022 or
(ii) the date on which Liquidity is less than the Liquidity Threshold and (y)
not to exceed 3.00 to 1.00 from and after July 3, 2023. Under the Credit
Agreement, the Company will be permitted to exercise equity cure rights
("Specified Equity Contribution") with respect to compliance with the Total
Leverage Ratio during the ten Business Day period following the date that
financial statements for a fiscal quarter are required to be delivered under the
Credit Agreement by the Company for such fiscal quarter provided that, among
other items, (i) the equity raised is from the issuance of common or preferred
Equity Interests of the Company, (ii) no Lender shall be required to make any
extension of credit during the ten Business Day period referred to above unless
the Company has received the proceeds of such Specified Equity Contribution or
all such Defaults and Potential Defaults shall have been waived in accordance
with the terms of the Credit Agreement, (iii) (a) in each consecutive four
fiscal quarter period there will be at least two fiscal quarters in which no
Specified Equity Contribution is made, (b) Specified Equity Contributions may
not be made in consecutive fiscal quarters, and (c) there shall be no more than
four Specified Equity Contributions made in the aggregate after the Effective
Date, (iv) the amount of any Specified Equity Contribution will be no greater
than the amount required to cause the Company and its Subsidiaries to be in
compliance with the Total Leverage Ratio and (v) all Specified Equity
Contributions (a) will be disregarded for all other purposes, including the
calculation of EBITDA for the purpose of calculating basket levels, pricing and
other items governed by reference to EBITDA and (b) will be in readily available
funds.
The outstanding Revolving Loan borrowings under the Credit Agreement are
voluntarily prepayable by the Company without penalty or premium (other than
customary breakage costs). The outstanding Term Loan borrowings under the Credit
Agreement are voluntarily prepayable by the Company, provided, that each of the
following shall require a mandatory prepayment of outstanding Term Loan
borrowings by the Company as follows: (i) 100% of any cash Net Proceeds in
excess of $2 million individually or in the aggregate over the term of the
Credit Agreement in respect of any Casualty Event affecting Collateral provided
that the Company shall be permitted to reinvest such Net Proceeds in accordance
with the Credit Agreement, (ii) 100% of any Net Proceeds of a Specified Equity
Contribution, (iii) 100% of any cash Net Proceeds from the issuance of Debt
issued by the Company or its Subsidiaries other than Permitted Debt, (iv) 100%
of any Net Proceeds from the Disposition of certain assets individually, or in
the aggregate, in excess of $2 million in any fiscal year provided that the
Company shall be permitted to reinvest such Net Proceeds in accordance with the
Credit Agreement and (v) beginning with the fiscal year ending January 2, 2022,
an amount equal to the Excess Cash Flow in accordance with the Credit Agreement.
Voluntary prepayments of Term Loan borrowings, mandatory prepayments of Term
Loan borrowings pursuant to items (i)-(iv) above and certain other events
specified in the Credit Agreement are subject to payment of an Applicable
Premium as follows (i) during the period from the Effective Date up to and
including the date that is the first anniversary of the Effective Date, three
percent (3%) of the Term Loan principal amount prepaid, (ii) during the period
from the date immediately following the first anniversary of Effective Date up
to and including the date that is the second anniversary of the Effective Date,
two percent (2%) of the Term Loan principal amount prepaid, (iii) during the
period from the date immediately following the second anniversary of Effective
Date up to and including the date that is the third anniversary of the Effective
Date, one percent (1%) of the Term Loan principal amount prepaid (iv) following
the third anniversary of the Effective Date, zero percent (0%) of the Term Loan
principal amount prepaid.
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The Credit Agreement contains certain covenants, including, without limitation,
those limiting Company's and the Guarantors' ability to, among other things,
incur indebtedness, incur liens, sell or acquire assets or businesses, change
the character of its business in any material respects, engage in transactions
with related parties, make certain investments, make certain restricted payments
or pay dividends.
The Company's obligations under the Credit Agreement are secured by all of the
assets of the Company and the Guarantors (including a pledge of all of the
capital stock and equity interests of the Guarantors) pursuant to the Security
Agreement.
Under the Credit Agreement, the Lenders may terminate their obligation to
advance and may declare the unpaid balance of borrowings, or any part thereof,
immediately due and payable upon the occurrence and during the continuance of
customary defaults which include, without limitation, payment default, covenant
defaults, bankruptcy type defaults, defaults on other indebtedness, certain
judgments or upon the occurrence of a change of control (as specified therein).
The foregoing description does not purport to be complete and is qualified in
its entirety by reference to the Credit Agreement, the Security Agreement and
the Guarantee Agreement, which are attached hereto as Exhibit 10.1 ,
Exhibit 10.2 and Exhibit 10.3 , respectively, and are incorporated by
reference herein.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
10.1 Credit Agreement dated as of November 23, 2020 among Fiesta Restaurant
Group, Inc. Fortress Credit Corp., as administrative agent and
collateral agent, and the lenders party thereto.
10.2 Security Agreement dated as of November 23, 2020 among Fiesta
Restaurant Group, Inc., the guarantors named therein and Fortress Credit
Corp., as administrative agent and collateral agent.
10.3 Guarantee Agreement dated as of November 23, 2020 among the guarantors
named therein and Fortress Credit Corp., as administrative agent and
collateral agent.
104 Cover Page Interactive Data File (formatted as Inline XBRL).
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