Long-Term Debt

Long-term debt consisted of the following:



	July 1, 2012			January 1, 2012
Term Loan, due in 2019	$	619,691		$	—
Senior Notes, repaid in July 2012	433,598			554,901
Term Loan, repaid in May 2012	—			466,062
6.20% senior notes, due in 2014	225,600			224,643
7% debentures, due in 2025	1,462			1,466
Capitalized lease obligations, due through 2040	30,303			15,222
Sale-leaseback obligations, due through 2029	82,917			82,342
6.54% aircraft term loan, repaid in June 2012	707			1,060
Other	—			11,303
	1,394,278			1,356,999
Less amounts payable within one year	(9,905		)	(6,597		)
Total long-term debt	$	1,384,373		$	1,350,402

Except as described below, the Company did not have any significant changes to its long-term debt as disclosed in the notes to our consolidated financial statements included in the Form 10-K.

Credit Agreement

On May 15, 2012, Wendy’s entered into a Credit Agreement (the “Credit Agreement”), which includes a senior secured term loan facility (the “Term Loan”) of $1,125,000 and a senior secured revolving credit facility of $200,000 and contains provisions for an uncommitted increase of up to $275,000 principal amount of the revolving credit facility and/or Term Loan subject to the satisfaction of certain conditions. The revolving credit facility includes a sub-facility for the issuance of up to $70,000 of letters of credit. The obligations under the Credit Agreement are secured by substantially all of the non-real estate assets and stock of Wendy’s and its domestic subsidiaries (other than certain unrestricted subsidiaries), and 65% of the stock of certain of its foreign subsidiaries in each case subject to certain limitations and exceptions.

The Term Loan was issued at 99.0% of the principal amount, representing an original issue discount of 1.0% resulting in net proceeds of $1,113,750 with draws on May 15, 2012 and July 16, 2012 (subsequent to the end of our second quarter). The discount of $11,250 will be accreted and the related charge included in “Interest expense” through the maturity of the Term Loan.

The net proceeds and respective discounts for draws under the Term Loan are as follows:



	May 15, 2012		Subsequent Event		Total
Net proceeds	$	619,437	$	494,313	$	1,113,750
Discount	6,257		4,993		11,250
Total	$	625,694	$	499,306	$	1,125,000

The Term Loan is due not later than May 15, 2019 and amortizes in an amount equal to 1% per annum of the total principal amount outstanding, payable in quarterly installments beginning in the fourth quarter of 2012, with the remaining balance payable on the maturity date. In addition, the Term Loan requires prepayments of principal amounts resulting from certain events and excess cash flow on an annual basis from Wendy’s as defined under the Credit Agreement. The revolving credit facility expires not later than May 15, 2017. An unused commitment fee of 50 basis points per annum is payable quarterly on the average unused amount of the revolving credit facility until the maturity date. As of July 1, 2012, there were no amounts outstanding under the revolving credit facility, except for $19,000 of letters of credit issued in the normal course of business.

The interest rate on the Term Loan and amounts borrowed under the revolving credit facility is based on the Eurodollar Rate as defined in the Credit Agreement (but not less than 1.25%), plus 3.50%, or a Base Rate, as defined in the Credit Agreement plus 2.50%. Since the inception of the Term Loan, we have elected to use the Eurodollar Rate, which resulted in an interest rate on the Term Loan of 4.75% as of July 1, 2012.

Wendy’s incurred $15,602 in costs related to the Credit Agreement, which are being amortized to “Interest expense” through the maturity of the Term Loan utilizing the effective interest rate method. No costs related to the Credit Agreement were incurred from the Term Loan draw on July 16, 2012.

Proceeds from the Term Loan draw on May 15, 2012 were used (1) to repay all amounts outstanding under the prior credit agreement, (2) to purchase $124,225 aggregate principal amount of Wendy’s Restaurants’ 10.00% Senior Notes due 2016 (the “Senior Notes”) at a redemption price of 108.125% of the principal amount plus accrued and unpaid interest and (3) to pay fees and expenses. Proceeds from the Term Loan draw on July 16, 2012, subsequent to the end of our second quarter, were used to purchase $440,775 aggregate principal amount of remaining Senior Notes outstanding at a redemption price of 107.5% of the principal amount plus accrued and unpaid interest.

The Company incurred a loss on the early extinguishment of debt for the draws on the Term Loan, as described above, as follows:



	Three Months Ended July 1, 2012		Subsequent Event
Premium payment to redeem Senior Notes	$	10,093	$	33,058
Unaccreted discount on Senior Notes	2,086		7,186
Deferred costs associated with the Senior Notes	2,796		9,562
Unaccreted discount on prior credit agreement	1,695		—
Deferred costs associated with the prior credit agreement	8,525		—
Loss on early extinguishment of debt	$	25,195	$	49,806

The affirmative and negative covenants in the Credit Agreement include, among others, preservation of corporate existence; payment of taxes; maintenance of insurance; and limitations on: indebtedness (including guarantee obligations of other indebtedness); liens; mergers, consolidations, liquidations and dissolutions; sales of assets; dividends and other payments in respect of capital stock; investments; payments of certain indebtedness; transactions with affiliates; changes in fiscal year; negative pledge clauses and clauses restricting subsidiary distributions; and material changes in lines of business. The financial covenants contained in the Credit Agreement are (1) a consolidated interest coverage ratio and (2) a consolidated senior secured leverage ratio. Wendy’s was in compliance with all covenants of the Credit Agreement as of July 1, 2012.

Aircraft Term Loan

During the first quarter of 2012, the Company made a $3,911 prepayment on its aircraft financing facility to comply with a requirement that the outstanding principal balance be no more than 85% of the appraised value of the aircraft. On June 25, 2012, the Company voluntarily repaid the remaining outstanding principal, including accrued interest thereon related to this facility, totaling $6,656.