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Cracker Barrel closes $750M credit facility

Cracker Barrel Old Country Story Inc. has entered into a five-year $750 million credit facility to garner greater financial flexibility, the company said Monday.

The multi-bank refinancing is comprised of a $250 million term loan and a $500 million revolving line of credit, the Lebanon, Tenn.-based company said. Cracker Barrel operates 603 family-dining restaurants in 42 states.

“It’s a deal that extends the maturity on all of the company’s borrowings,” Cracker Barrel spokeswoman Julie Davis told Nation’s Restaurant News Monday.

The new credit facility replaces term loans totaling $575 million, and a $165 million revolving line of credit.

“This is one of the two largest all-bank financing transactions ever completed by a full-service restaurant company,” Lawrence E. Hyatt, senior vice president and chief financial officer of Cracker Barrel Old Country Store, said in a statement.

“We believe that the successful completion of this transaction demonstrates the confidence of the financial community in our company, the Cracker Barrel brand, and our strategic direction,” Hyatt said.

The joint lead arrangers for the deal are Wells Fargo Securities LLC, Merrill Lynch, Pierce Fenner & Smith Inc., and SunTrust Robinson Humphrey Inc.

Cracker Barrel estimated the closing of its new bank facility will result in additional interest charges of about $5 million in the fourth quarter of its 2011 fiscal year.

Securities analyst Stephen Anderson at Miller Tabak & Co. said the one-time $5 million charge will pay off in long-term gains for Cracker Barrel.

“The one-time charges incurred in [the fourth quarter] are a small price to pay as (1) we think the window of opportunity is likely to close in the next 6-12 months on favorable financing terms; (2) CBRL gains flexibility in financing [capital expenditures] and other needs; and (3) management continues to strengthen the balance sheet,” Anderson wrote in a report to clients Monday.

Anderson has a buy rating on Cracker Barrel and does not hold any shares of the restaurant company. Miller Tabak does not own 1 percent or more, nor is a registered market maker in the stock.

Contact Alan Snel at [email protected].
Follow him on Twitter: @AlanSnelNRN

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