For Immediate Release Toronto Stock Exchange: BPF.UN
BOSTON PIZZA ROYALTIES INCOME FUND ANNOUNCES RENEWAL OF CREDIT FACILITY
VANCOUVER, BC, July 23, 2012 - Boston Pizza Royalties Income Fund (the “Fund”) (TSX:
BPF.UN) announced today that its subsidiary, Boston Pizza Royalties Limited
Partnership (the “Partnership”) has entered into an agreement with a Canadian
Chartered Bank (the “Lender”) pursuant to which the Lender has provided the
Partnership with up to $56.0 million of credit facilities (the “New Credit
Facilities”) having a five year term expiring on July 19, 2017 to
supersede and replace the Partnership’s previous credit facilities. The Partnership had $30 million of
indebtedness drawn on its previous credit facilities. At today’s interest rates, the New Credit
Facilities, assuming existing debt to EBITDA levels are maintained, provide an
improvement of 92 basis points over the Partnership’s previous credit
facilities. In connection with the New
Credit Facilities, the Partnership has concurrently entered into an interest
rate swap under the International Swap Dealers Association Master Agreement
previously entered into between the Partnership and the Lender (a copy of which
is available on www.sedar.com), to fix the
interest rate at 2.69% per
annum (assuming existing debt to EBITDA levels are maintained) for a term of
five years for the Partnership’s existing $30 million of debt (the “Swap
Agreement”).
“We
are very pleased that this new credit agreement provides the Fund with both
lower effective interest rates and $25 million of additional borrowing capacity,”
said Wes Bews, Chief Financial Officer of BPI and the Fund. “In addition, given
the current low interest rate environment, we’ve elected to lock in the lower
rates via an interest rate swap to provide certainty and protection against
future interest rate increases. This
will minimize cash flow variances and ensure an accretive benefit to Fund
unitholders over the next five years”.
The
New Credit Facilities are comprised of: (a) a $1 million operating
facility to replace the Partnership’s previous $1 million operating
facility that was scheduled to expire on September 22, 2012; (b) a
$30 million revolving credit facility to replace the Partnership’s previous
$5 million term loan, $20 million non-revolving normal course issuer
bid credit facility and $5 million non-revolving supplementary normal
course issuer bid credit facility, all of which were fully drawn and were
scheduled to expire on September 22, 2012; and (c) a new
$25 million revolving credit facility to facilitate the Fund repurchasing
and canceling additional units of the Fund should it choose to do so in the
future. There are no plans at this time
for the Fund to use the additional debt capacity provided by the New Credit
Facilities. After entering into the Swap
Agreement, the $30 million of debt currently drawn on the New Credit Facilities
bears interest at a fixed rate of 1.44% plus between 1.00% and 1.50%, depending
upon the amount drawn on the New Credit Facilities. The remaining $26 million
of available debt capacity will, if drawn, bear interest at fixed or variable
interest rates, as selected by the Partnership, comprised of either or a
combination of the Lender’s bankers’ acceptance rates plus between 1.00% and
1.50%, depending upon the amount drawn on the New Credit Facilities, or prime
rate plus between 0.00% and 0.50%, depending upon the amount drawn on the New
Credit Facilities.
The
Partnership's obligations under the New Credit Facilities are secured by a
first charge over the assets of the Partnership, similar to the security previously
granted by the Partnership to secure performance of its previous credit
facilities. The material covenants of
the Partnership in respect of the New Credit Facilities are substantially
similar to the Partnership’s previous credit facilities except that the
Partnership’s debt to EBITDA covenant has changed from 1.25 to 1 under the
previous credit facilities to 2.00 to 1 under the New Credit Facilities. The New Credit Facilities are guaranteed by
the Fund and its other subsidiaries, some of whom have granted security for
their obligations under those guarantees, again in a manner similar to the
guarantees and security previously granted by the Fund and its other
subsidiaries to support the Partnership’s previous credit facilities.
Full
particulars of the New Credit Facilities, including applicable interest rates,
security, guarantees and other terms and conditions are contained within the
amended and restated credit agreement governing the New Credit Facilities, a
copy of which is available on www.sedar.com.
The trustees of the Fund have approved the contents of this news release.
FOR FURTHER INFORMATION PLEASE CONTACT:
Boston Pizza Royalties Income Fund
Jordan Holm - Vice President of Investor Relations
Tel: 604-303-6083
investorrelations(at)bostonpizza.com
www.bpincomefund.com
® Boston Pizza Royalties Limited Partnership. All Boston Pizza registered Canadian trade-marks and unregistered Canadian trade-marks containing the words "Boston", "BP", and/or "Pizza" are trade-marks owned by the Boston Pizza Royalties Limited Partnership and licensed by the Boston Pizza Royalties Limited Partnership to Boston Pizza International Inc.
© Boston Pizza International Inc. 2012