The Restaurant Group PLC, or TRG, has signed a £500 million loan financing package to refinance all its debt, including notes at its Japanese-themed subsidiary Wagamama, according to a statement today.
The new debt is split between a £380 million term loan due 2026 and a £120 million super senior revolver due 2025. The revolver features a minimum liquidity covenant set at £40 million until June 30, 2022, when net leverage based testing will apply. There is no leveraged based testing in the term loan until the period ending Dec. 31, 2022, when the covenant will be set at 5x, decreasing every six months to 4x for the period ending Dec. 31, 2023.
Pricing is linked to leverage, and the initial weighted average cost of debt is expected to be roughly 7%. This will fall to about 6% if net leverage falls below 2x. There is no contractual amortization on the term loan, but the facility does give flexibility around pre-payment including for a significant portion in the first 18 months without penalty.
The deal is designed to simplify TRG's capital structure and will refinance all the company's debt including the TRG CBILS facility and revolver as well as Wagamama's notes and revolver. The 4.125% Wagamama notes due July 2022 are callable at par on March 31, where they are now marked, up from 98.83 on Feb. 26.
TRG also gave an update on the latest impact from the pandemic. Guidance from the end of last year of a £5.5 million cash burn rate per four-week period of national U.K. lockdown is unchanged. TRG does not expect this to change until government restrictions on hospitality across the U.K. are lifted, which will be no earlier than May 17, according to most recent guidance. The group has roughly 200 sites trading for delivery, and according to the company, performance has been encouraging, with average stand-alone delivery and takeaway sales at about 2.5x and 5x pre-COVID-19 levels, respectively. Net debt at year-end was in line with expectations at £340 million.
The Restaurant Group operates approximately 400 restaurants and pub restaurants through its principal brands of Wagamama, Frankie & Benny's and Brunning & Price. It also operates a concession business that trades principally in British airports as well as a stake in a U.S. joint venture and franchise business.
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