Item 1.01
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Entry into a Material Definitive Agreement.
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Purchase Agreement
On September 20, 2016, Brinker International, Inc., a Delaware corporation (the Company), and certain of the Companys
wholly-owned
subsidiaries Brinker Restaurant Corporation, Brinker Texas, Inc. and Brinker Florida, Inc. (collectively, the Guarantors) entered into a Purchase Agreement (the Purchase
Agreement) with J.P. Morgan Securities LLC, on behalf of itself and the initial purchasers listed in Schedule 1 therein, under which the Company has agreed to sell $350 million aggregate principal amount of its 5.000% Senior Notes due 2024
(the Notes) which will be guaranteed by the Guarantors on a senior unsecured and joint and several basis.
The Purchase Agreement contains
customary representations, warranties and agreements by the Company and the Guarantors. Under the terms of the Purchase Agreement, the Company and the Guarantors have agreed to indemnify the initial purchasers against certain liabilities.
Certain of the initial purchasers and their affiliates have engaged, and may in the future engage, in investment banking, commercial banking and other
financial advisory and commercial dealings with the Company and its affiliates. In particular, affiliates of certain of the initial purchasers are the administrative agent and the joint lead arrangers, bookrunners and lenders under the
Companys senior unsecured revolving credit facility.
The summary of the Purchase Agreement set forth in this Item 1.01 does not purport to be
complete and is qualified in its entirety by reference to the text of the Purchase Agreement, a copy of which is attached as Exhibit 10.1 hereto and is incorporated herein by reference.
Senior Notes
General
On September 23, 2016 (the Closing Date), the Company completed the issuance and sale of $350 million aggregate principal amount of the Notes
in a previously announced private offering. The Notes were sold only to qualified institutional buyers in compliance with Rule 144A of the Securities Act of 1933, as amended (the Securities Act), and to non-U.S. persons outside of the
United States in compliance with Regulation S of the Securities Act.
Indenture
The Notes were issued under the indenture, dated as of the Closing Date (the Indenture), by and among the Company, the Guarantors and U.S. Bank
National Association, as trustee (the Trustee). A copy of the Indenture is filed as Exhibit 4.1 to this Current Report on Form 8-K and incorporated herein by reference.
Principal, Maturity and Interest
. The Company issued $350 million aggregate principal amount of the Notes on the Closing Date. The Notes are general,
unsecured, senior obligations of the Company. The Notes will mature on October 1, 2024. Interest on the Notes is payable at a rate of 5.000% per annum, payable semi-annually in arrears on each April 1 and October 1, beginning on
April 1, 2017, to holders of record for such Notes on the immediately preceding March 15 and September 15, respectively.
Optional
Redemption
. The Company may redeem all or part of the Notes at any time prior to July 1, 2024, at its option, upon not less than 10 nor more than 60 days notice, at a redemption price equal to 100% of the principal amount of such
Notes plus the Applicable Premium (as defined in the Indenture) plus accrued and unpaid interest, if any, to but excluding the redemption date.
At any time and from time to time on or after July 1, 2024, the Company may redeem the Notes in whole or in
part, at its option, upon not less than 10 nor more than 60 days notice, at a redemption price equal to 100% of the principal amount of such Notes plus accrued and unpaid interest, if any, to but excluding the redemption date.
The Company will have the right to redeem the Notes at the applicable purchase price, upon not more 30 days notice following the consummation of any
tender for the Notes, if holders of not less than 90% in aggregate principal amount of the outstanding Notes validly tender and do not withdraw such Notes in such tender offer and the Company, or any other person making such tender offer, purchases
all of the Notes validly tendered and not withdrawn.
Change of Control
. Upon the occurrence of a Change of Control Triggering Event (as defined in
the Indenture), the Company will be required to offer to repurchase the Notes at a purchase price equal to 101% of the aggregate principal amount of such Notes plus accrued and unpaid interest, if any, to but excluding the date of such purchase.
Note Guarantees
. As of the issue date, the Notes are guaranteed fully and unconditionally, jointly and severally, on a senior unsecured basis (the
Note Guarantees), by the Guarantors. After the issue date, the Company will cause each of its Subsidiaries (as defined in the Indenture) that guarantees certain other debt to guarantee payment of the Notes on the same terms and
conditions as those set forth in the Indenture. In the future, the Note Guarantees may be released or terminated under certain circumstances.
Covenants and Restrictions.
The Indenture contains certain covenants, including, but not limited to, limitations and restrictions on the ability of the
Company and its Restricted Subsidiaries (as defined in the Indenture) to (i) create liens on Principal Property (as defined in the Indenture), (ii) enter into any Sale and Leaseback Transaction (as defined in the Indenture) with respect to
any property, and (iii) merge, consolidate or amalgamate with or into any other person or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all of their property. These covenants are subject to a number of
important conditions, qualifications, exceptions and limitations.
Neither the Notes nor the Note Guarantees have been or will be registered under the
Securities Act and may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.
The descriptions and provisions of the Indenture set forth above are summaries only, are not complete and are qualified in their entirety by reference to the
full and complete terms contained in the Indenture and the form of Notes, copies of which are attached as Exhibits 4.1 and 4.2 to this Current Report on Form 8-K and are incorporated herein by reference.
Accelerated Share Repurchase Agreement
On
September 23, 2016, the Company entered into a $300 million accelerated share repurchase agreement (the ASR Agreement) with Bank of America, N.A. (BofA). The Company will acquire shares under the ASR Agreement as part of
its previously announced share repurchase program.
Pursuant to the terms of the ASR Agreement, the Company will pay BofA $300 million in cash and will
initially receive approximately 4.6 million shares of the Companys common stock. At and/or prior to final settlement, BofA may be required to deliver additional shares of common stock to the Company or, under certain circumstances, the Company
may be required to deliver shares of its common stock at final settlement or may elect to make a cash payment to BofA, based generally on the average of the daily volume-weighted average prices
of the Companys common stock during the term of the ASR Agreement, less a discount. The ASR Agreement contains provisions customary for agreements of this type, including provisions for adjustments to the transaction terms, the circumstances
generally under which the ASR Agreement may be accelerated, extended or terminated early by BofA and various acknowledgments, representations and warranties made by the parties to one another. Final settlement of the ASR Agreement is expected to be
completed by the end of the Companys fiscal 2017 third quarter, although the settlement may be accelerated at BofAs option.
The foregoing
description of the ASR Agreement is qualified in its entirety by reference to the ASR Agreement, a copy of which is attached as Exhibit 10.2 and incorporated herein by reference.