Note 14. Borrowings

3 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Note 14. Borrowings

Steak n Shake Credit Facility

On March 19, 2014, Steak n Shake and its subsidiaries entered into a new credit agreement. This credit agreement provides for a senior secured term loan facility in an aggregate principal amount of $220,000 and a senior secured revolving credit facility in an aggregate principal amount of up to $30,000.

The term loan is scheduled to mature on March 19, 2021. It amortizes at an annual rate of 1.0% in equal quarterly installments, beginning June 30, 2014, at 0.25% of the original principal amount of the term loan, subject to mandatory prepayments from excess cash flow, asset sales and other events described in the credit agreement. The balance will be due at maturity. The revolver will be available on a revolving basis until March 19, 2019.

Steak n Shake has the right to request an incremental term loan facility from participating lenders and/or eligible assignees at any time, up to an aggregate total principal amount not to exceed $70,000 if certain customary conditions within the credit agreement are met.

Borrowings bear interest at a rate per annum equal to a base rate or a Eurodollar rate (minimum of 1%) plus an applicable margin. Interest on the term loan is based on a Eurodollar rate plus an applicable margin of 3.75% or on the prime rate plus an applicable margin of 2.75%. Interest on loans under the revolver is based on a Eurodollar rate plus an applicable margin ranging from 2.75% to 4.25% or on the prime rate plus an applicable margin ranging from 1.75% to 3.25%. The applicable margins on revolver loans are contingent on Steak n Shake’s total leverage ratio. The revolver also carries a commitment fee ranging from 0.40% to 0.50% per annum, according to Steak n Shake’s total leverage ratio, on the unused portion of the revolver.

The interest rate on the term loan was 4.75% on December 31, 2014.

The credit agreement includes customary affirmative and negative covenants and events of default, as well as a financial maintenance covenant, solely with respect to the revolver, relating to the maximum total leverage ratio.

Both the term loan and the revolver have been secured by first priority security interests in substantially all the assets of Steak n Shake. Biglari Holdings is not a guarantor under the credit facility. Approximately $118,589 of the proceeds of the term loan were used to repay all outstanding amounts under Steak n Shake’s former credit facility and to pay related fees and expenses, $50,000 of such proceeds were used to pay a cash dividend to Biglari Holdings, and the remaining term loan proceeds of approximately $51,411 will be used by Steak n Shake for working capital and general corporate purposes. As of December 31, 2014, $218,350 was outstanding under the term loan, and no amount was outstanding under the revolver. As of December 31, 2013, $104,813 was outstanding under the former term loan, and $7,000 was outstanding under the previous revolver.

We recorded losses of $1,133 and $1,955 in interest expense for the extinguishment of debt for fiscal years 2014 and 2012, respectively, related to the write-off of deferred loan costs associated with former credit facilities. We capitalized $4,754 in debt issuance costs in 2014.

We had $10,188 in standby letters of credit outstanding as of December 31, 2014 and September 24, 2014 and $6,588 outstanding as of September 25, 2013.

Western Revolver

As of December 31, 2014, Western has $980 due June 13, 2015.

Interest Rate Swap

During fiscal year 2013, Steak n Shake entered into an interest rate swap for a notional amount of $65,000 through September 30, 2015. The agreement hedges potential changes in the Eurodollar rate. The fair value of the interest rate swap was a liability of $132, $170 and $214 on December 31, 2014, September 24, 2014 and September 25, 2013, respectively, and is included in accrued expenses on the consolidated balance sheet.

During fiscal year 2011, Steak n Shake entered into an interest rate swap agreement for a notional amount of $20,000, which effectively fixed the interest rate on a prior credit facility at 3.25% through February 15, 2016. The notional amount decreases $1,000 quarterly through its maturity on February 15, 2016. The notional amount of the interest rate swap was $5,000 on December 31, 2014. The fair value of the interest rate swap was a liability of $43, $63 and $187on December 31, 2014, September 24, 2014 and September 25, 2013, respectively, and is included in accrued expenses on the consolidated balance sheet.

The carrying amounts for debt reported in the consolidated balance sheet did not differ materially from their fair values at December 31, 2014, September 24, 2014 and September 25, 2013. The fair value was determined to be a Level 3 fair value measurement.

Expected principal payments for all outstanding borrowings as of December 31, 2014, are as follows.

2015	$ 3,180
2016	2,200
2017	2,200
2018	2,200
2019	2,200
2020	2,200
2021	205,150
Total	$ 219,330

Interest

No interest was capitalized in connection with financing additions to property and equipment during the 2014 and 2013 transition periods. Interest paid on debt amounted to $2,841 for the 2014 transition period and $1,956 for the 2013 transition period. Interest paid on obligations under leases was $2,577 and $2,612 for the 2014 and 2013 transition periods, respectively. No interest was capitalized in connection with financing additions to property and equipment during fiscal years 2014, 2013, and 2012. Interest paid on debt amounted to $8,158 in fiscal year 2014, $4,950 in fiscal year 2013 and $7,359 in fiscal year 2012. Interest paid on obligations under leases was $9,720, $9,829 and $10,073 in fiscal years 2014, 2013, and 2012, respectively.