UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report: October 31, 2005
(Date of earliest event reported)
MAIN STREET RESTAURANT GROUP, INC.
(Exact name of registrant as specified in its charter)
Commission File Number: 000-18668
DELAWARE 11-2948370
(State or other jurisdiction of (I.R.S. Employer
incorporation) Identification No.)
5050 N. 40TH STREET, SUITE 200, PHOENIX, ARIZONA 85018
(Address of principal executive offices, including zip code)
(602) 852-9000
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b)
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01. Entry into a Material Definitive Agreement.
On October 31, 2005, Main Street Restaurant Group, Inc. (the
"Company") consummated a new $45 million credit facility with a
group of financial institutions. The disclosure provided in Item
2.03 of this Form 8-K is hereby incorporated by reference into
this Item 1.01.
Item 1.02. Termination of a Material Definitive Agreement
The disclosure provided in Item 2.03 of this Form 8-K is hereby
incorporated by reference into this Item 1.02. On October 31,
2005, in connection with the credit facility described in Item
2.03, the Company terminated its Loan and Security Agreement
dated January 31, 2001 with Bank of America, N.A. (the "Prior
Agreement"). The Company's obligations under the Prior Agreement
were repaid using a portion of the proceeds from the credit
facility. There were no prepayment penalties incurred by the
Company in connection with the termination of the Prior
Agreement.
The Company also used proceeds from the credit facility described
in Item 2.03 and cash to repay other outstanding long-term debt
of the Company owed to Merrill Lynch, GE Franchise Finance, and
GMAC. The Company paid an aggregate of $513,000 in early payment
penalties to Merrill Lynch, GE Franchise Finance, and GMAC in
connection with the repayment of this other long-term debt.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under
an Off-Balance Sheet Arrangement of a Registrant.
CREDIT FACILITY
On October 31, 2005, the Company entered into a Credit Agreement
(the "Credit Agreement") with Bank of America, N.A., as
administrative agent and letter of credit issuer, and other
lenders named therein, including GE Capital Franchise Finance
Corporation and Wells Fargo, National Association. The Credit
Agreement provides for a new $45 million credit facility ("Credit
Facility") for the Company. The description of the Credit
Agreement and the Credit Facility are qualified in their entirety
by reference to the Credit Agreement, a copy of which is filed
herewith as Exhibit 10.42.
The proceeds available under the Credit Facility have been and
will be used (i) to refinance certain existing long-term debt,
(ii) to fund the development of new T.G.I. Friday's restaurant
locations and remodel existing T.G.I. Friday's restaurants, and
(iii) for capital expenditures and general corporate working
capital purposes.
The Credit Facility consists of the following:
(1) a $25 million term loan, with principal to be amortized over
a ten-year period and a five-year balloon payment of unpaid
principal. The term loan bears interest at a rate of Eurodollar
rate (LIBOR) plus 250 basis points.
(2) a $20 million revolving line of credit to be used for new
restaurant construction and expansion, and remodeling of existing
T.G.I. Friday's restaurants, which includes a $4 million
sub-limit for letters of credit issued by Bank of America for the
benefit of the Company. Letters of credit are limited to $4
million sub-limit amount so that the total amount of the
revolving line of credit is not exceeded. Loans under the
revolving line of credit will bear interest at a rate of
Eurodollar rate (LIBOR) plus 250 basis points.
SECURITY
As security for the Credit Facility, the Company and its
subsidiaries have pledged certain personal property and fixtures
of the Company's subsidiaries, including all furniture, fixtures,
and equipment used at the Company's business locations. Also, the
Company has granted a first lien on all the assets and leaseholds
of 28 T.G.I. Friday's restaurant locations, four Redfish
restaurant locations, and one Bamboo Club restaurant location.
The description of the security for the Credit Facility is
qualified in its entirety by reference to the Security Agreement,
dated as of October 31, 2005, among the Company, each of its
subsidiaries, and Bank of America, N.A., as Administrative Agent,
a copy of which is filed herewith as Exhibit 10.43. In addition,
each of the Company's subsidiaries has guaranteed the obligations
of the Company under the Credit Agreement. A copy of the Guaranty
Agreement, dated as of October 31, 2005, among each of the
Company's subsidiaries and Bank of America, N.A., as
Administrative Agent, is filed herewith as Exhibit 10.44.
PREPAYMENT
The Company may prepay in whole or in part any of the loans under
the Credit Facility without penalty, except if the loans are
repaid within the first six months, there is a $250,000
prepayment penalty.
COVENANTS
The Credit Agreement contains customary affirmative covenants for
transactions of these types, some of which are (i) the timely
delivery of financial statements, (ii) compliance with all
franchise agreements and material contracts, and (iii) notice to
the Administrative Agent upon the signing of any new leases.
The Credit Agreement also contains customary negative covenants,
including that the Company will not permit:
(i) the creation of other liens on its assets or revenues;
(ii) investments or the extensions of credit to others,
including employees and officers;
(iii) the incurrence of any indebtedness, except as
permitted under the Credit Agreement;
(iv) any fundamental change in its business, such as a
merger, acquisition or disposition of assets or
restaurants, except as are permitted under the Credit
Agreement; or
(v) the payment of cash dividends, distributions to
stockholders, or the repurchase of the Company's common
stock.
The Credit Facility also contains customary financial covenants
including (i) Consolidated Debt Coverage, as defined in the
Credit Agreement, to be no greater than 3.00 to 1.00, (ii) Fixed
Charge Coverage Ratio, as defined in the Credit Agreement, to
1.15 to 1.00 through September 2006, 1.20 to 1.00 through
September 2007, and 1.25 to 1.00 thereafter, and (iii) all
capital expenditures to be limited to $15 million.
EVENTS OF DEFAULT
The Credit Agreement contains usual and customary events of
default, including (i) non-payment of any amounts owed under the
Credit Agreement, (ii) violation of certain covenants of the
Company under the Credit Agreement, (iii) cross-default with
other indebtedness, including the guarantees by the Company's
subsidiaries, and (iv) the occurrence of any "change in control"
of the ownership or key management of the Company. Upon the
occurrence of an event of default, the outstanding obligations
under the Credit Facility may be accelerated and become due and
payable immediately.
Item 9.01. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
Not applicable
(b) Pro Forma Financial Information
Not applicable
(c) Shell Company Transactions
Not applicable
(d) Exhibits
Exhibit
Number Description
------ ----------------------
10.42 Credit Agreement, dated as of October 31, 2005,
among the Registrant, Bank of America, N.A., as
Administrative Agent and L/C Issuer, and The
Other Lending Parties Thereto
10.43 Security Agreement, dated as of October 31,
2005, among the Registrant, each of its
subsidiaries, and Bank of America, N.A., as
Administrative Agent
10.44 Guaranty Agreement, dated as of October 31,
2005, among each of the Registrant's
subsidiaries and Bank of America, N.A., as
Administrative Agent
99.1 Press Release dated November 1, 2005 entitled
"Main Street Restaurant Group Inc. Announces
New $45 Million Credit Facility"
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Main Street Restaurant Group, Inc.
Dated: November 4, 2005 By: /s/ Michael Garnreiter
--------------------------
Michael Garnreiter
Executive Vice President and Chief Financial Officer
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
10.42 Credit Agreement, dated as of October 31, 2005, among the
Registrant, Bank of America, N.A., as Administrative Agent and
L/C Issuer, and The Other Lending Parties Thereto
10.43 Security Agreement, dated as of October 31, 2005, among the
Registrant, each of its subsidiaries, and Bank of America, N.A.,
as Administrative Agent
10.44 Guaranty Agreement, dated as of October 31, 2005, among each of
the Registrant's subsidiaries and Bank of America, N.A., as
Administrative Agent
99.1 Press Release dated November 1, 2005 entitled "Main Street
Restaurant Group, Inc. Announces new $45 Million Credit Facility"