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Boston Pizza Royalties Income Fund and Boston Pizza International Announce Amended and Extended Credit Facilities

Toronto Stock Exchange: BPF.UN

VANCOUVER , Jan. 24, 2020 /CNW/ - Boston Pizza Royalties Income Fund (the "Fund") (BPF-UN.TO) and Boston Pizza International Inc. ("BPI") today announced that the Fund's subsidiaries, Boston Pizza Royalties Limited Partnership ("Royalties LP") and Boston Pizza Holdings Limited Partnership ("Holding LP", and together with Royalties LP, the "Partnerships"), and BPI each entered into an amended and restated credit agreement (collectively, the "Amended and Restated Credit Agreements") with a Canadian chartered bank (the "Bank") to amend and extend the credit facilities of the Partnerships (the "Fund's Amended and Extended Credit Facilities") and to amend and extend the credit facilities of BPI ("BPI's Amended and Extended Credit Facilities").

"The amended and extended credit facilities provide both the Fund and BPI with lower fees and interest rates along with more favourable financial covenants.  Also, the borrowing capacity of the Fund's credit facility was increased by approximately $6 .7 million to enable opportunistic NCIB purchases," said Michael Harbinson , Chief Financial Officer of BPI and the Fund.  "The favourable terms and early renewals, each with new five-year tenures, contributes to our continued management of a strong and stable business for all stakeholders".

Key highlights of the Amended and Restated Credit Agreements are as follows:

The Fund's Amended and Extended Credit Facilities:

  1. The maturity date was extended from May 5, 2020 to January 24, 2025;

  2. The total amount of credit available was increased by approximately $6 .7 million, from $90 .3 million to approximately $97 .0 million, by increasing the size of Facility B (defined below) from $55 .0 million to approximately $61 .7 million;

  3. The permitted uses of Facility B were expanded beyond financing normal course issuer bids and substantial issuer bids (among other existing permitted uses) to provide flexibility to repay the Deferred Amount (defined below) to BPI;

  4. The availment options for Facility B and Facility D (defined below) were changed to include, among others, availment by way of (i) Canadian dollar prime rate loans, (ii) bankers' acceptances for one (1) month or three (3) months, and (iii) Canadian dollar offered rate loans with terms of one (1) month or three (3) months, with fixed rate operating loans being eliminated as an availment option; and

  5. The interest rates (or margins, as applicable) applicable to Canadian dollar prime rate loans, bankers' acceptances and Canadian dollar offered rate loans were reduced. In the case of Canadian prime rate loans, the interest rate is now equal to the Bank's prime rate plus between 0.00% and 0.40% (depending on the total funded net debt to EBITDA ratio) and, in the case of bankers' acceptances and Canadian dollar offered rate loans, the interest rate is equal to a variable interest rate based on the Bank's bankers' acceptance rates or Canadian dollar offered rates plus between 0.90% and 1.40% (depending on the total funded net debt to EBITDA ratio).


The Fund's Amended and Extended Credit Facilities are comprised of, among other facilities, (i) a $2 .0 million committed revolving operating facility issued to Royalties LP ("Facility A"); (ii) an approximately $61 .7 million committed revolving credit facility issued to Royalties LP for the purpose of refinancing previous credit facilities, facilitating the Fund's repurchasing and canceling of units of the Fund under normal course issuer bids ("NCIBs") or substantial issuer bid arrangements, financing the cash component of any exchange of general partnership units of Boston Pizza Canada Limited Partnership or to repay BPI's deferred out of pocket expenses (the "Deferred Amount") owing to it pursuant to the terms of the limited partnership agreement governing Royalties LP ("Facility B"); and (iii) a an approximately $33 .3 million committed revolving credit facility issued to Holding LP for the purpose of subscribing for Class 1 LP Units and Class 2 LP Units of Boston Pizza Canada Limited Partnership ("Facility D").  No amounts are drawn on Facility A, approximately $55 .0 million is drawn on Facility B and approximately $33 .3 million is drawn on Facility D.

The obligations of the Partnerships under the Fund's Amended and Extended Credit Facilities are secured by a first charge over the assets of the Partnerships, consistent with the security previously granted by the Partnerships to secure the performance of their obligations under their previous credit facilities.  The material covenants of the Partnerships in respect of the Fund's Amended and Extended Credit Facilities are substantially similar to the material covenants in the Partnerships' previous credit facilities and the Partnerships' maximum total funded net debt to EBITDA covenant remains the same at 2.25 to 1.  The Fund's Amended and Extended Credit Facilities are also guaranteed by the Fund and its other subsidiaries and such guarantees are secured by a first charge over the assets of the Fund and its subsidiaries, as applicable, again in a manner similar to the guarantees and security previously granted by the Fund and its other subsidiaries to support the Partnerships' previous credit facilities.  As well, no changes to the swaps were made as part of the Fund's Amended and Extended Credit Facilities.

BPI's Amended and Extended Credit Facilities:

  1. The maturity date was extended from September 27, 2022 to January 24, 2025;

  2. The total amount of credit available was decreased $6 .0 million, from $50 .0 million to $44 .0 million, by decreasing the size of the Term Loan (defined below) from $40 .0 million to $34 .0 million to reflect repayments of principal that BPI previously paid the Bank;

  3. The availment options for the Operating Line (defined below) were changed to include, among others, availment by way of (i) Canadian dollar prime rate loans, (ii) bankers' acceptances with a maturity between 30 and 182 days, (iii) Canadian dollar offered rate loans with terms of one (1) month or three (3) months, and (iv) letter of credit advances;

  4. The interest rates (or margins, as applicable) applicable to Canadian dollar prime rate loans, bankers' acceptances and Canadian dollar offered rate loans were reduced. In the case of Canadian prime rate loans, the interest rate is now equal to the Bank's prime rate plus between 0.00% and 1.50% (depending on the total funded net debt to EBITDA ratio) and, in the case of bankers' acceptances and Canadian dollar offered rate loans, the interest rate is equal to a variable interest rate based on the Bank's bankers' acceptance rates or Canadian dollar offered rates plus between 1.00% and 2.50% (depending on the total funded net debt to EBITDA ratio). The fees applicable to Letter of Credit advances are equal to the maximum amount that the lender may be called upon to disburse under a Letter of Credit multiplied by the applicable margin between 1.00% and 2.50% (depending on the total funded net debt to EBITDA ratio) multiplied by the number of days in which the Letter of Credit advances were outstanding in the given fiscal quarter;

  5. Certain financial covenants and other provisions were modified; and

  6. The guarantees and security supporting BPI's Amended and Extended Credit Facilities remain unchanged from those provided in respect of BPI's prior credit facilities.


BPI's Amended and Extended Credit Facilities are comprised of, among other facilities: (i) a $10 million committed revolving facility to cover BPI's day-to-day operating requirements if needed (the "Operating Line"); and (ii) a $34 million committed non-revolving term facility that was used to finance the reorganization of BPI and its shareholders on September 30, 2017 (the "Term Loan").  BPI's Amended and Extended Credit Facilities bear interest at variable interest rates comprised of either, or a combination of, the Bank's bankers' acceptance rates or Canadian dollar offered rates plus between 1.00% and 2.50%, or the Bank's prime rate plus between 0.00% and 1.50%, depending upon the total funded net debt to EBITDA ratio, and interest is payable monthly in arrears.  The Term Loan and the principal amount drawn on the Operating Line are due and payable upon maturity.  The principal amount drawn on the Term Loan must be reduced by quarterly payments amortized over 15 years.  The Term Loan is currently fully drawn.

BPI's Amended and Extended Credit Facilities are guaranteed by BPI's wholly-owned subsidiaries, all of whom have granted security for their obligations under those guarantees.  No security has been given by Boston Pizza Canada Limited Partnership in respect of BPI's Amended and Extended Credit Facilities.

The principal financial covenants of BPI's Amended and Extended Credit Facilities are: (i) BPI and its subsidiaries, taken as a whole, shall maintain a Total Funded Net Debt to EBITDA ratio of not greater than: 3.50:1 on closing, increasing to 4.00:1 immediately after closing, reducing to 3.00:1 by June 30, 2020 (tested on a trailing 12-month basis); (ii) BPI and its subsidiaries, taken as a whole, shall not permit its debt service coverage ratio to be less than 1.25:1 (tested on a trailing 12-month basis); and (iii) the Class B general partnership units of Boston Royalties LP and the Class 2 general partnership units of Boston Pizza Canada Limited Partnership that a subsidiary of BPI has pledged to the Bank and which are exchangeable for units of the Fund must have a value, at any time, equal to at least 100% of the outstanding advances under certain of the credit facilities advanced pursuant to BPI's Amended and Extended Credit Facilities and certain credit facilities advanced by the Bank to another subsidiary of BPI.  "Total Funded Net Debt" is defined as all indebtedness excluding accounts payable, short‑term non-interest bearing unsecured debt, deferred income taxes and certain related party debt net of cash on the balance sheet, generated from operations and held in accounts at the Bank.

Neither the Fund nor any of its subsidiaries has guaranteed or provided any security in respect of BPI's Amended and Extended Credit Facilities, and neither BPI nor any of its subsidiaries has guaranteed or provided any security in respect of the Fund's Amended and Extended Credit Facilities.  Full particulars of the Fund's Amended and Extended Credit Facilities, including applicable interest rates, security, guarantees and other terms and conditions are contained within the Amended and Restated Credit Agreement governing the Fund's Amended and Extended Credit Facilities, a copy of which is available on www.sedar.com.

ABOUT US

The Fund is a limited purpose open ended trust with an excellent track record for investors since its IPO in 2002.  Including the December 2019 distribution which is payable on January 31, 2020, the Fund has delivered 18 distribution increases and 210 consecutive monthly distributions totaling $336 .9 million or $22.02 per Unit.  The Fund earns revenue based on the franchise system sales of the 395 Boston Pizza restaurants in the Fund's royalty pool.

BPI is Canada's number one casual dining brand with annual gross sales of over $1 .1 billion serving more than 50 million guests through 395 mainly franchisee operated restaurants.  The Boston Pizza brand has successfully existed for over 55 years since opening its first restaurant in Edmonton, Alberta in 1964.  BPI has been recognized as a Platinum Member of Canada's 50 Best Managed Companies and has been a Franchisees' Choice Designation winner for eight consecutive years.

The trustees of the Fund approved the contents of this press release.

® 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. 2020

SOURCE Boston Pizza Royalties Income Fund


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