Jack in the Box (JACK) Amends Credit Agreement and Approves Additional $300M Buyback

September 22, 2016 4:06 PM EDT

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Jack in the Box Inc. (NASDAQ: JACK) today announced completion of an amendment to its existing senior credit facility. Under the terms of the amendment, the credit facility was increased to $1.6 billion, which consists of a $700 million term loan and $900 million revolving credit facility.

Following the amendment on September 16, 2016, $700 million was outstanding on the term loan and approximately $307.5 million was drawn or used for letters of credit under the revolving credit facility.

The maturity date for both the revolving credit facility and the term loan will remain in March 2019. The interest rate on the senior credit facility is based on the company’s leverage ratio and can range from LIBOR plus 1.25 percent to LIBOR plus 2.25 percent. The interest rate as of the date of the amendment was LIBOR plus 2.00 percent.

The amendment also raised the maximum leverage ratio covenant from 3.5 times to 4.0 times, and allows unlimited cash dividends and share repurchases if pro forma leverage is less than 3.5 times (from 3.0 times previously), subject also to pro forma fixed charge covenant compliance.

“The amended credit agreement provides us with more than $400 million of additional borrowing capacity to support the company’s strategic priorities,” said Jerry Rebel, executive vice president and chief financial officer. “We are pleased that our lenders have the confidence in our business model to increase our borrowing capacity to 4 times EBITDA without waiting for our refranchising strategy to be completed.”

In addition, the company announced that its Board of Directors has authorized an additional $300 million stock buyback program expiring in November 2018. As of the end of the third quarter of fiscal 2016, the company had $150.0 million remaining under stock buyback programs previously authorized by its Board of Directors in February and May 2016 that expire in November 2017.

Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Coöperatieve Rabobank U.A., New York Branch (f/k/a Cooperative Centrale Raiffesisen-Boerenleenbank B.A. “Rabobank International” New York Branch) served as joint lead arrangers and joint lead bookrunners.



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