Portillo’s gets $300 million term loan A, $100 million revolver

By Mary-Katherine Stinson

Lexington, Ky., Feb. 6 – Portillo’s Inc.’s indirect subsidiaries Portillo’s Holdings, LLC and PHD Intermediate LLC entered a replacement credit agreement on Feb. 2 which provides for an initial $300 million term loan A and an initial $100 million revolving credit facility both maturing five years from closing, according to a press release and an 8-K filing with the Securities and Exchange Commission.

The revolver facility permits the issuance of one or more letters of credit from time to time and the making of one or more swingline loans.

The term loan will amortize in equal quarterly installments in total annual amounts equal to 0.625% of the original principal for the first two years following closing ($7.5 million annually or $1,875,000 quarterly), 1.25% for the third and fourth years following the closing ($15 million annually or $3.75 million quarterly) and 2.5% for the fifth year following closing ($30 million or $7.5 million quarterly) starting on the last day of the first full fiscal quarter ended after the closing date.

As of closing, the term loan and the revolver facility will accrue interest at SOFR plus a margin of 275 basis points determined on the consolidated total net rent adjusted leverage ratio, subject to a floor of 0%, plus a credit spread adjustment of 10 bps annually for one-month interest periods and 15 bps for three-month interest periods. The interest rate will range from SOFR plus 250 bps to 325 bps plus the credit spread adjustment.

The commitment fee on the revolver will be between 20 bps and 30 bps.

The facilities can be prepaid anytime without penalty.

The new credit agreement is guaranteed by all the company’s domestic subsidiaries subject to customary exceptions and secured by liens on substantially all of the assets of PHD Intermediate LLC, Portillo’s and the subsidiary guarantors.

Fifth Third Bank, NA is the administrative agent, letter of credit issuer and swingline lender.

Fifth Third Bank, NA, BofA Securities, Inc., MUFG Bank, Ltd. and Wells Fargo Bank, NA are the joint lead arrangers and joint bookrunners.

Flagstar Bank, NA is the documentation agent.

The revolver will be available for any purpose not otherwise prohibited under the agreement, including general corporate purposes, working capital needs, the repayment of debt, making of restricted payments and the making of investments.

At closing, the company borrowed $15 million under the revolver and has over $80 million of remaining borrowing capacity, net of letters of credit of approximately $4.4 million.

Concurrent with closing, all outstanding debt under the company’s first-lien credit agreement, dated as of Aug. 1, 2014 will be repaid, redeemed, discharged, refinanced, replaced or terminated. The proceeds of the term loan, together with the proceeds of the revolver borrowed on the closing date, will be used to pay the transaction expenses and to fund the closing date refinancing.

The company’s existing credit facility was based on Libor plus 550 bps.

At prevailing rates, the all-in interest rate on the term debt has been reduced by approximately 270 bps.

Portillo’s is an Oak Brook, Ill.-based restaurant company.

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