Ruth’s Hospitality ups revolver to $150 million, borrows full amount

By Sarah Lizee

Olympia, Wash., March 30 – Ruth’s Hospitality Group, Inc. amended its credit facility on Friday with Wells Fargo Bank, NA as administrative agent, lifting the revolver to $150 million from $120 million, according to an 8-K filing with the Securities and Exchange Commission.

The amounts of the letter-of-credit subfacility and swingline subfacility are unchanged from the existing credit agreement at $5 million each.

The amended credit agreement prohibits the company from paying any dividends or repurchasing any shares of its common stock if the company cannot demonstrate that its consolidated leverage ratio is less than 2.5 to 1.0 both before and after giving effect to the proposed repurchase or dividend.

The amended credit agreement also prohibits the company from making any capital expenditures other than maintenance capital expenditures if the company cannot demonstrate that its consolidated leverage ratio is less than 2.5 to 1.0 both before and after giving effect to the proposed capital expenditure.

Following closing of the amended credit agreement, the company provided notice to the lenders to borrow the remaining available amount under the revolver so that a total of $149.8 million, including $4.8 million of letters of credit, is currently outstanding.

The current interest rate for borrowings is 2.74%.

In conjunction with the amendment, the company’s lending group have relaxed the leverage covenant restrictions to 4 times bank adjusted EBITDA through the first quarter of 2021.

As of Friday, the company had about $71.5 million of cash on hand. The primary cause of change to the company’s cash balance from its update on March 16 was the drawdown of $30 million from the credit facility, the payment of previously committed dividends and the settlement on share repurchases that were completed earlier in March.

The company said it increased its capacity and borrowings under the revolver as a precautionary measure in order to increase its cash position and preserve financial flexibility in light of current uncertainty in the global markets resulting from the Covid-19 outbreak.

Borrowings may in the future be used for working capital, general corporate or other purposes permitted by the credit agreement.

Ruth’s Hospitality is a Winter Park, Fla.-based restaurant company focused on the upscale dining segment.

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