Debt

The Company’s debt consisted of the following (in thousands):



	December 31, 2013		December 25, 2012
Term Loan	$	368,125	$	368,125
Senior Notes	190,000		190,000
Revolving Facility⁽¹⁾	7,000		—
	565,125		558,125
Less current portion	3,438		—
	$	561,687	$	558,125


⁽¹⁾	At December 31, 2013, the Company had $84.7 million of borrowing capacity available under its Revolving Facility, net of $18.3 million of outstanding letters of credit and borrowings of $7.0 million. At December 25, 2012, the Company had $81.1 million of borrowing capacity available under its Revolving Facility, net of $18.9 million of outstanding letters of credit.

Maturities of long-term debt are as follows (in thousands):



Fiscal years:
	2014	$	3,438
	2015	3,750
	2016	3,750
	2017	10,750
	2018	353,437
	Thereafter	190,000
		$	565,125

The Company’s Senior Secured Credit Facilities were entered into as part of the Transactions on December 28, 2011 and consisted of a $100.0 million Revolving Facility and a $375.0 million Term Loan. Outstanding borrowings under the Revolving Facility bear interest at the London Interbank Offered Rate (“LIBOR”) or the base rate (as defined), plus in each case an applicable margin based upon a leverage ratio as defined in the credit agreement for the Senior Secured Credit Facilities.

The principal amount of the Term Loan amortizes in equal quarterly installments of $937,500 in an aggregate annual amount equal to 1% of the original principal amount of the Term Loan, with the balance payable at maturity. These quarterly installments may be reduced as a result of any voluntary or required prepayments made by the Company, with any such reductions applied in accordance with the terms of the credit agreement for the Senior Secured Credit Facilities. Prior to the November 21, 2012 refinancing the Company made a voluntary prepayment of $5.0 million on the Term Loan which eliminated the quarterly principal payment for fiscal 2013 and a portion of the first quarter payment for 2014. The Term Loan note is secured by substantially all of the Company’s assets and is due December 28, 2018.

Availability under the Revolving Facility is reduced by letters of credit, of which $18.3 million were issued at December 31, 2013. Commitment fees are paid equal to 0.50% of the unused balance of the Revolving Facility. Commitment fees and letter of credit fees are reflected as interest expense. The Revolving Facility is secured by substantially all of the Company’s assets and is due December 28, 2017.

On December 16, 2013, the Company refinanced its Senior Secured Credit Facilities lowering the spread over LIBOR by 0.25% to 3.00% on the Term Loan and reducing the Term Loan LIBOR floor by 0.25% to 1.00%, which resulted in a combined interest rate of 4.00% per annum at December 31, 2013. The refinancing also lowered the spread for LIBOR or base rate loans by 0.25% on the Revolving Facility. At December 31, 2013, the interest rate on the Revolving Facility was the prevailing LIBOR rate plus the margin of 3.00% or the base rate (as defined) plus the margin of 2.00%. The weighted average interest rate was 3.17% per annum at December 31, 2013. Additionally, the refinancing also increased the capacity on the Revolving Facility by $10.0 million to $110.0 million and eliminated the annual limitation on the capital expenditures covenant, although all other existing covenants remain in place. The Company paid transaction related expenses of approximately $0.9 million to effectuate the latest refinancing. Based on the terms of this transaction, $0.8 million of these costs were capitalized as debt issuance costs and will be amortized over the term of the related debt and the remaining $0.1 million was recorded as debt issuance expense.

On November 21, 2012 the Company completed its second refinancing, which lowered the spread over LIBOR by 0.75% to 3.25% Term Loan for a combined rate of 4.50%. The refinancing also lowered the spread for LIBOR and base rate loans by 1.75% to 3.25% and 2.25%, respectively, on the Revolving Facility. Additionally, the refinancing also extended the maturity date on the Revolving Facility by one year. The Company paid a soft call premium of $3.7 million in accordance with the terms of the Senior Secured Credit Facilities plus transaction related expenses of approximately $0.9 million to effectuate the second refinancing. Based on the terms of this transaction, $2.6 million of these costs was capitalized as debt issuance costs and will be amortized over the term of the related debt. The remaining $2.0 million was recorded as debt extinguishment expense during the fourth quarter of 2012. Additionally, related debt issuance costs of approximately $7.1 million were written off to debt extinguishment expense during the fourth quarter of fiscal 2012.

On March 28, 2012, the Company completed its first refinancing, which lowered the spread over LIBOR by 1.25% to 4.00% on the Term Loan, and lowered the Term Loan LIBOR floor by 0.25% to 1.25% , which resulted in a combined interest rate of 5.25%. For this refinancing, the Company paid a soft call premium of $3.8 million in accordance with the terms of the Senior Secured Credit Facilities plus related expenses of approximately $1.1 million to effectuate the refinancing. Based on the terms of this transaction, $3.2 million of these costs were capitalized as debt issuance costs and will be amortized over the term of the related debt. The remaining $1.7 million was recorded as debt extinguishment expense during the second quarter of 2012. Additionally, related debt issuance costs of approximately $3.4 million were written off to debt extinguishment expense during the second quarter of fiscal 2012.

The Senior Notes bear interest at the rate of 10.50% payable semi-annually in arrears on January 15 and July 15 until maturity of the Notes on December 28, 2020. These Senior Notes are unsecured. The Senior Notes may be redeemed at any time prior to January 15, 2016 at a redemption price equal to 100% of the principal amount of Senior Notes redeemed plus a premium equal to the greater of (i) 1.00% of such amount or (ii) the excess of the present value of the redemption price payable for redemption as of January 15, 2016 and the interest payments through such date over the principal amount of the Senior Notes to be redeemed, plus accrued and unpaid interest as of the date of redemption. Effective January 15, 2016, these Notes may be redeemed at a redemption price of 105.250% of the principal amount of the Senior Notes to be redeemed plus accrued and unpaid interest until January 15, 2017, when the redemption price becomes 102.625% plus accrued and unpaid interest and remains such until January 15, 2018, when these Senior Notes can be redeemed at the face amount, plus accrued and unpaid interest. In June 2012 the Company completed an exchange offer which allowed the holders of Senior Notes to exchange the notes for an equal principal amount of Senior Notes that are registered under the Securities Act of 1933.

The Company’s debt facilities contain restrictions on additional borrowings, certain asset sales, capital expenditures, dividend payments, certain investments and related-party transactions, as well as requirements to maintain various financial ratios. At December 31, 2013, the Company was in compliance with all of its debt covenants.

Based upon the amount of excess cash flow generated during the fiscal year and the Company’s leverage at the fiscal year end, each of which is defined in the credit agreement governing the Term Loan, the Company may be required to make an excess cash flow mandatory prepayment. The excess cash flow mandatory prepayment is an annual requirement under the credit agreement and is due 95 days after the end of each fiscal year. The Company’s excess cash flow for fiscal 2013 was significantly reduced by the investment to acquire 91 Wendy’s units during the year which resulted in no excess cash flow payment for fiscal 2013.