UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): September 21, 2004
Denny's Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-18051 13-3487402
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
203 East Main Street, Spartanburg, SC 29319-0001
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (864) 597-8000
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(Former name or former address, if changed since last report)
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 (see General Instruction A.2. below):
[ ] 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))
Item 1.01. Entry into a Material Definitive Agreement.
On September 21, 2004, the operating subsidiaries of Denny's
Corporation (the "Company"), Denny's, Inc. and Denny's Realty, Inc. (the
"Borrowers"), entered into new senior secured credit facilities in an aggregate
principal amount of $420 million. The new credit facilities consist of a first
lien facility and a second lien facility. The new first lien facility consists
of a $225 million five-year term loan facility (the "Term Loan Facility") and a
$75 million four-year revolving credit facility, of which $45 million is
available for the issuance of letters of credit (the "Revolving Facility" and
together with the Term Loan Facility, the "New First Lien Facility"). The second
lien facility consists of an additional $120 million six-year term loan facility
ranking pari passu with the New First Lien Facility in right of payment, but
being in a second lien position with respect to the collateral securing the New
First Lien Facility (the "Second Lien Facility," and together with the New First
Lien Facility, the "New Credit Facilities").
The Term Loan Facility will mature on September 30, 2009 and will
amortize in equal quarterly installments at a rate equal to approximately 1% per
annum (commencing March 31, 2005) with all remaining amounts due on the maturity
date. The Revolving Facility will mature on September 30, 2008. The Second Lien
Facility will mature on September 30, 2010 with no amortization of principal
during the six year term.
The proceeds of loans made under the New Credit Facilities will be used
(i) to repay all amounts owed under the Company's prior credit facility, (ii) to
pay fees and expenses incurred in connection with certain of the Company's
refinancing transactions, (iii) to repurchase or redeem a portion of the 11 1/4%
Notes (as defined below) and all of the 12 3/4% Notes (as defined below), and
(iv) with respect to the Revolving Facility and any remaining portion of the
term loan facilities, for working capital and other general corporate purposes.
Letters of credit issued under the Revolving Facility will be used by the
Borrowers solely for general corporate purposes.
The interest rates under the New First Lien Facility will be as
follows: At the option of the Borrowers, Adjusted LIBOR plus a spread of 3.25%
per annum (3.50% per annum for the Revolving Facility) or ABR (the Alternate
Base Rate, which is the highest of the Bank of America Prime Rate and the
Federal Funds Effective Rate plus 1/2 of 1%) plus a spread of 1.75% per annum
(2.0% per annum for the Revolving Facility). The interest rate on the Second
Lien Facility, at the Borrowers' option, is Adjusted LIBOR plus a spread of
5.125% per annum or ABR plus a spread of 3.625% per annum.
The New Credit Facilities are guaranteed by the Company and its other
subsidiaries and are secured by substantially all of the assets of the Company
and its subsidiaries, including the stock of the Company's subsidiaries.
The Company will be required to make certain mandatory prepayments
under certain circumstances and will have the option to make certain prepayments
under the New Credit Facilities and may be assessed a prepayment premium upon
optional or certain mandatory prepayments.
The New Credit Facilities include negative covenants that are usual for
facilities and transactions of this type, including but not limited to
limitations on dividends on capital stock; limitations on redemptions and
repurchases of capital stock; limitations on prepayments, redemptions and
repurchases of debt; limitations on liens, sale-leaseback transactions, loans,
investments, debt (including hedging and other derivative agreements), operating
leases, mergers, acquisitions and asset sales; limitations on transactions with
affiliates; limitations on restrictions on liens and other restrictive
agreements; limitations on changes in business conducted by the Company, the
Borrowers and the Company's subsidiaries; limitations on assets of the Company
and its wholly-owned subsidiary, Denny's Holdings, Inc. ("Denny's Holdings");
restrictions on changing fiscal year, accounting policies, and organizational,
debt and other material agreements.
The New Credit Facilities include the following financial covenants:
(a) a maximum total debt to EBITDA ratio, (b) a maximum senior secured debt to
EBITDA ratio, (c) a minimum fixed charge coverage ratio, and (d) limitations on
capital expenditures.
The New Credit Facilities include events of default (and related
remedies, including acceleration and increased interest rates following an event
of default) that are usual for facilities and transactions of this type. In
addition, an event of default will result on the date that is six months prior
to the maturity date of any senior or subordinated notes of the Company, Denny's
Holdings, the Borrowers or any of their subsidiaries that mature prior to the
latest maturity date of any of the New Credit Facilities, from the failure to
repay or refinance the aggregate amount of any such senior or subordinated notes
outstanding in excess of $25,000,000, or amend the maturity thereof to a date at
least six months after the maturity date of such New Credit Facilities.
The terms of the New First Lien Facility, are set forth in (1) the
Credit Agreement dated as of September 21, 2004, among Denny's, Inc., Denny's
Realty, Inc., as Borrowers, the Company, Denny's Holdings, DFO, Inc., as
Guarantors, the Lenders named therein, Bank of America, N.A., as Administrative
Agent, and UBS Securities LLC, as Syndication Agent, and Banc of America
Securities LLC and UBS Securities LLC, as Joint Lead Arrangers and Joint
Bookrunners, and (2) the Guarantee and Collateral Agreement dated as of
September 21, 2004, among Denny's, Inc., Denny's Realty, Inc., the Company,
Denny's Holdings, DFO, Inc., each other Subsidiary Loan Party and Bank of
America, N.A., as Collateral Agent. The terms of the Second Lien Facility are
set forth in (1) the Credit Agreement dated as of September 21, 2004, among
Denny's, Inc., Denny's Realty, Inc., as Borrowers, the Company, Denny's
Holdings, DFO, Inc., as Guarantors, the Lenders named therein, Bank of America,
N.A., as Administrative Agent, and UBS Securities LLC, as Syndication Agent, and
Banc of America Securities LLC and UBS Securities LLC, as Joint Lead Arrangers
and Joint Bookrunners and (2) the Guarantee and Collateral Agreement dated as of
September 21, 2004, among Denny's, Inc., Denny's Realty, Inc., the Company,
Denny's Holdings, DFO, Inc., each other Subsidiary Loan Party and Bank of
America, N.A., as Collateral Agent.
In connection with the previously announced cash tender offers and
consent solicitations by the Company for any and all of the outstanding 12 3/4%
Senior Notes due 2007 issued by it and Denny's Holdings (the "12 3/4% Notes"),
and for any and all of the outstanding 11 1/4% Notes Due 2007 (the "11 1/4%
Notes"), which commenced on September 7, 2004, the Company received the
requisite consents from the holders of the 12 3/4% Notes and the 11 1/4% Notes
to approve certain amendments (the "Amendments") to the indentures under which
the 12 3/4% Notes and the 11 1/4% Notes were issued. The Amendments eliminate
substantially all of the restrictive covenants and related events of default in
the respective indentures and, in each case, reduce the minimum notice period
for the redemption of the 12 3/4% Notes and the 11 1/4% Notes from 30 days to
three days.
The Amendments to the indenture governing the 12 3/4% Notes are set
forth in the 12 3/4% Senior Notes due 2007 Supplemental Indenture dated as of
September 21, 2004 between Denny's Corporation (f/k/a Advantica Restaurant
Group, Inc., as Issuer and Denny's Holdings, Inc., as Issuers, and U.S. Bank
National Association, as Trustee, and became operative and binding on the
holders of the 12 3/4% Notes as of September 21, 2004, in connection with the
closing of the New Credit Facilities referenced above and the acceptance of
12 3/4% Notes tendered pursuant to the tender offer through 5:00 p.m. on
September 20, 2004.
The Amendments to the indenture governing the 11 1/4% Notes are set
forth in the 11 1/4% Senior Notes due 2008 Supplemental Indenture dated as of
September 21, 2004 between Denny's Corporation (f/k/a Advantica Restaurant
Group, Inc., as Issuer and U.S. Bank National Association (successor to First
Trust National Association, as Trustee), but are not yet operative. The
Amendments will only become operative upon (1) completion of the additional
financing as described in the Offer to Purchase and Consent Solicitation
Statement dated September 7, 2004 relating to the 11 1/4% Notes and (2) the
Company's acceptance of 11 1/4% Notes tendered pursuant to the tender offer.
The Company does not expect to accept 11 1/4% Notes tendered pursuant to the
tender offer, if at all, until promptly following the expiration time for the
tender offer, currently set as 12:00 midnight on October 4, 2004.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under
an Off-Balance Sheet Arrangement of a Registrant.
See Item 1.01 above.
Item 3.03. Material Modification to Rights of Security Holders.
As discussed above under Item 1.01, the Amendments to the indenture
governing the 12 3/4% Notes eliminated substantially all of the restrictive
covenants and related events of default, and reduced the minimum notice period
for the redemption of the 12 3/4% Notes from 30 days to three days.
The New Credit Facilities contain negative covenants that are usual for
facilities and transactions of that type, including, but not limited to,
limitations on dividends on capital stock (including the Company's common stock)
and other restrictions on uses of working capital.
Item 7.01. Regulation FD Disclosure.
On September 22, 2004, the Company issued a press release regarding the
New Credit Facilities, the supplemental indentures relating to the 11 1/4% Notes
and 12 3/4% Notes, the acceptance of tendered 12 3/4% Notes and the call for
redemption of the 12 3/4% Notes.
The information furnished in this Item 7.01 and the related exhibit
furnished in Item 9.01, shall not be deemed "filed" for purposes of Section 18
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
otherwise subject to the liabilities of that section. Such information may only
be incorporated by reference in another filing under the Exchange Act or the
Securities Act of 1933, as amended, if such subsequent filing specifically
references such information.
Item 9.01. Financial Statements and Exhibits.
(a) Not Applicable
(b) Not Applicable
(c) Exhibits.
The exhibit listed below and in the accompanying Exhibit Index is filed
as part of this Current Report on Form 8-K.
Exhibit No. Description
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99.1 Press Release of Denny's Corporation dated
September 22, 2004
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 hereunto duly authorized.
DENNY'S CORPORATION
By: /s/ Rhonda J. Parish
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Rhonda J. Parish
Executive Vice President, General Counsel and
Secretary
Date: September 22, 2004
EXHIBIT INDEX
Exhibit No. Description
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99.1 Press Release of Denny's Corporation dated September 22, 2004