Ruth's Hospitality amends loan to downsize revolver, extend maturity

By Sara Rosenberg

New York, Dec. 22 - Ruth's Hospitality Group Inc. amended its credit facility, reducing the revolver to $130 million from $175 million and extending the maturity by two years to February 2015, according to a news release.

In addition, the amendment provides for no financial covenant testing until the end of fiscal year 2010, less restrictive leverage and coverage covenants thereafter, and permanently eliminates the minimum EBITDA covenant.

Pricing on the amended facility was increased to a range of Libor plus 325 basis points to 500 bps based on leverage.

The amendment will become effective upon satisfaction of various closing conditions, including successful completion of a proposed private investment in public equity transaction and a proposed rights offering that raise a total of at least $42.5 million in net proceeds, and the repayment of bank debt with those proceeds.

Ruth's has entered into an agreement with Bruckmann, Rosser, Sherrill & Co. Management LP to purchase $25 million of its newly created series A 10% convertible preferred stock in a PIPE transaction.

And, the company plans to commence a shareholder rights offering with targeted gross proceeds of up to $35 million in cash.

Also on Tuesday, the company announced that it successfully completed the sale of its corporate headquarters and intends to relocate to another location in Heathrow, Fla.

The transaction generated net proceeds of about $9.7 million, which were used to reduce borrowings under the credit facility.

After giving effect to this repayment, the credit facility stood at $130.5 million as of Dec. 21, down from $160.2 million as of Dec. 28, 2008.

Ruth's is a restaurant company focused exclusively on the upscale dining segment.

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