8-K/AMaterial Agreements

DARDEN RESTAURANTS INC 8-K/A Report, Material Agreement (Sep 24, 2007)

Filed September 24, 2007For Securities:DRI

Summary

This Form 8-K/A filing from Darden Restaurants, Inc. serves as an amendment to a previously filed 8-K, primarily correcting details regarding the company's transfer agent and investment program. The core information remains the establishment of significant new credit facilities totaling $1.9 billion: a $750 million revolving credit facility maturing in 2012 and a $1.15 billion 364-day credit facility. The new credit lines are crucial for Darden's strategic initiatives, specifically to finance the previously announced acquisition of RARE Hospitality International, Inc. The Interim Facility is dedicated to funding this acquisition and related expenses, while the Revolving Credit Facility offers flexibility for various corporate purposes including commercial paper back-up, working capital, capital expenditures, and a portion of the RARE acquisition funding. These facilities are senior unsecured debt obligations and are secured by a revolving commitment from Bank of America, N.A. as administrative agent.

Key Highlights

  • 1Darden Restaurants entered into two new credit agreements on September 20, 2007, totaling $1.9 billion.
  • 2A $750 million revolving credit facility matures on September 20, 2012, providing flexibility for general corporate purposes, working capital, capital expenditures, and acquisition financing.
  • 3A $1.15 billion 364-day credit facility is specifically earmarked to finance the acquisition of RARE Hospitality International, Inc. and related expenses.
  • 4Both credit facilities are senior unsecured debt obligations.
  • 5Covenants include limitations on liens, subsidiary debt, and a maximum consolidated lease-adjusted total debt to total capitalization ratio of 0.75 to 1.00.
  • 6Interest rates are based on LIBOR plus a margin determined by credit ratings, with an initial applicable margin of 0.35% for the Revolving Credit Facility and 0.32% for the Interim Facility at a 'triple-B flat' rating.
  • 7The Revolving Credit Facility has an option to increase commitments by up to $250 million.

Frequently Asked Questions

The primary purpose of these new credit facilities is to finance the previously announced acquisition of RARE Hospitality International, Inc. The $1.15 billion Interim Facility is specifically dedicated to this, while the $750 million Revolving Facility can also contribute and offers broader corporate flexibility.

The Interim Credit Facility matures 364 days from the closing date, indicating a short-term financing solution. The Revolving Credit Facility matures on September 20, 2012, providing longer-term financial flexibility.

Interest rates are tied to LIBOR plus a margin based on Darden's credit rating. At a 'triple-B flat' rating, the margin is 0.35% for the Revolving Credit Facility and 0.32% for the Interim Facility. The company also pays facility fees (0.070% to 0.175%) and potential utilization fees (0.050% to 0.150%) based on ratings and usage.

Yes, the Credit Agreements contain customary covenants including limitations on liens and subsidiary debt, and a maximum consolidated lease-adjusted total debt to total capitalization ratio of 0.75 to 1.00. The Interim Credit Agreement also requires mandatory prepayments upon asset sales or debt issuances, subject to certain conditions.