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4. LONG-TERM DEBT
As of September 23, 2012 and December 25, 2011, our long-term debt consisted of the following:
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Carrying Value |
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Face Value at
September 23, |
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September 23, |
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December 25, |
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(in thousands) |
|
2012 |
|
2012 |
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2011 |
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Notes: |
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11.50% senior secured notes due in 2017 |
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$ |
846,000 |
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$ |
839,758 |
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$ |
843,652 |
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4.625% notes due in 2014 |
|
66,438 |
|
64,015 |
|
77,406 |
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5.750% notes due in 2017 |
|
286,138 |
|
272,837 |
|
318,624 |
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7.150% debentures due in 2027 |
|
89,188 |
|
83,185 |
|
82,891 |
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6.875% debentures due in 2029 |
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276,230 |
|
255,824 |
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254,903 |
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Long-term debt |
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$ |
1,563,994 |
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$ |
1,515,619 |
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$ |
1,577,476 |
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During the nine months ended September 23, 2012, we repurchased $70.5 million of notes in privately negotiated transactions, as follows:
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(in thousands) |
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Face Value |
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11.50% senior secured notes due in 2017 |
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$ |
5,000 |
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4.625% notes due in 2014 |
|
15,000 |
|
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5.750% notes due in 2017 |
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50,500 |
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Total notes repurchased |
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$ |
70,500 |
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We repurchased most of these notes at a price lower than par value and wrote off historical discounts related to the notes we purchased, which resulted in a gain on extinguishment of debt. This gain was offset by the write-off of fees related to the Second Amended and Restated Credit Agreement described below. These combined events resulted in a net gain on the extinguishment of debt of $6.1 million for the nine months ended September 23, 2012.
Our outstanding notes are stated net of unamortized discounts totaling $48.4 million and $57.0 million as of September 23, 2012 and December 25, 2011, respectively.
Debt Refinancing
On June 22, 2012, we entered into a Second Amended and Restated Credit Agreement (“Credit Agreement”) to amend and replace our Amended and Restated Credit Agreement from January 26, 2010. The Credit Agreement terms, among other things, (i) reduced the size of the revolving loan facility from $125.0 million to $36.1 million to cover our issuances of standby letters of credit and (ii) extended the maturity of the Credit Agreement to January 31, 2015. The new committed amount is only available for the issuance of standby letters of credit. At September 23, 2012, we had outstanding standby letters of credit, under the Credit Agreement, totaling $36.1 million securing estimated obligations arising from insurance claims.
The Credit Agreement contains quarterly financial covenants including requirements that we maintain a defined minimum consolidated interest coverage ratio of 1.50 to 1.00. We are required to maintain a defined maximum consolidated leverage ratio of 6.25 to 1.00 from the quarter ending in June 2012 through the quarter ending in December 2012, decreasing to 6.00 to 1.00 thereafter. Under the Credit Agreement, we are required to maintain at least $10.0 million of cash equivalents as of the last day of each fiscal quarter beginning in the quarter ending in December 2012 and thereafter. The Credit Agreement includes limitations on additional indebtedness.
The Credit Agreement also prohibits the payment of a dividend if a payment would not be permitted under the indenture for the senior secured notes (discussed below). Dividends under the indenture for the senior secured notes are allowed as a “Restricted Payment” if the consolidated leverage ratio (as defined in the Credit Agreement and the indenture) is less than 5.50 to 1.00 and the priority leverage ratio (as defined in the indenture) is less than 3.25 to 1.00. At September 23, 2012, we were in compliance with all financial debt covenants.
Senior Secured Notes
Our aggregate principal amount of senior secured notes, are governed by an indenture, which includes a number of covenants that are applicable to the Company and our restricted subsidiaries. The covenants are subject to a number of important exceptions and qualifications set forth in the indenture for the senior secured notes. These covenants include, among other things, restrictions on the ability to incur additional debt; make investments and other restricted payments; pay dividends on capital stock or redeem or repurchase capital stock or subordinated obligations; sell assets or enter into sale/leaseback transactions; create specified liens; create or permit restrictions on the ability of our restricted subsidiaries to pay dividends or make other distributions; engage in certain transactions with affiliates; and consolidate or merge with or into other companies or sell all or substantially all of the Company’s and our subsidiaries’ assets, taken as a whole.
Substantially all of our subsidiaries guarantee the obligations under the senior secured notes and the Credit Agreement (collectively, “senior secured debt”). We own 100% of each of the guarantor subsidiaries. Following the sale of land in Miami (see Note 2) on May 27, 2011, we have no significant independent assets or operations separate from the subsidiaries that guarantee our senior secured debt. The guarantees provided by the guarantor subsidiaries are full and unconditional and joint and several, and any of our subsidiaries, other than the subsidiary guarantors, are minor.
In addition, we have granted a security interest to the banks that are a party to the Credit Agreement and the trustee under the indenture governing the senior secured notes that include, but are not limited to, intangible assets, inventory, receivables and certain minority investments as collateral for the debt. The security interest does not include any land; buildings; machinery and equipment (“PP&E”); leasehold interests and improvements with respect to such PP&E, which would be reflected on our consolidated balance sheet; and shares of stock and indebtedness of our subsidiaries.
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