Wingstop Inc., an award-winning wing restaurant concept with more than 900 locations worldwide, announced it has closed on a new $180 million senior secured debt facility and that its board of directors has declared a special cash dividend of $2.90 per share to shareholders, which represents approximately 10% of Wingstop, Inc.'s total market capitalization. The new senior secured debt facility replaces the existing March 2015 debt facility. According to an 8-K filing, Wells Fargo Bank is serving as adminstrative agent on the debt facility. Wells Fargo Securities, LLC and Citizens Bank, National Association acted as the joint lead arrangers and book runners of the senior secured debt facility.
Chief Financial Officer Mike Mravle commented, "In addition to the special cash dividend of $2.90 per share, we are pleased with the terms and interest rates we were able to achieve with the new financing. On a pro-forma basis for the new facility, our net debt to Q1 2016 trailing twelve months Adjusted EBITDA ratio is 5.2x. This amount of leverage is appropriate for a primarily-franchised business like ours and puts us comfortably within our historical debt ratio range."
Wingstop's new five-year debt facility bears an initial interest rate of LIBOR + 275 bps and consists of a $70 million senior secured term loan with a 5% mandatory amortization and a $110 million senior secured revolving credit facility. The new debt facility refinanced $85.5 million of indebtedness under the Company's March 2015 debt facility. The company will utilize proceeds from the new senior secured debt facility in combination with available cash on its balance sheet to fund the special cash dividend. Upon payment of the dividend, a total of $165 million will be drawn on the new debt facility, including $95 million drawn on the revolving facility. The interest rate is subject to a grid with step downs of 25 basis points as leverage declines.
The special cash dividend will be paid on July 15, 2016 to shareholders of record as of July 12, 2016. The ex-dividend date will be July 8, 2016. Shareholders who sell their shares prior to the July 8, 2016 ex-dividend date will also be selling their right to receive the special dividend.
As a result of this announcement, Wingstop is now projecting total interest expense of approximately $4.5 million to $5.0 million in fiscal year 2016. Additionally, the retirement of the March 2015 debt facility will result in a non-cash write off of approximately $0.2 million in debt issuance costs and one-time charges (inclusive of the expected cash bonus to vested option holders) of approximately $1.4 million for a total of approximately $1.6 million in the fiscal third quarter 2016. The company expects to provide further and related updates to its annual guidance when it reports fiscal second quarter 2016 financial results in August.
Founded in 1994 and headquartered in Dallas, Texas, Wingstop has more than 900 restaurants open across the United States, Mexico, Singapore, the Philippines, Indonesia and United Arab Emirates.