Item 1.01
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Entry Into a Material Definitive Agreement
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Senior
Credit Facility Seventh Amendment and Waiver
On
January 31, 2017, Ruby Tuesday, Inc. (the “Company”) entered into a seventh amendment and waiver (the “Seventh
Amendment and Waiver”) relating to its previously-disclosed four-year revolving credit agreement with Bank of America, N.A.,
as Administrative Agent; Wells Fargo, National Association; and Regions Bank (the “Senior Credit Facility”). The description
of the Senior Credit Facility set forth under Item 1.01 in the Company’s Current Report on Form 8-K dated December 3, 2013
(the “2013 8-K”) is incorporated by reference herein.
The
Company previously entered into a waiver with the Administrative Agent and the lenders on December 31, 2016 pursuant to which
the Administrative Agent and the lenders under the Senior Credit Facility granted the Company a limited waiver relating to the
covenant requiring the Company to maintain a consolidated fixed charge coverage ratio of not less than 1.65:1.00. As of November
29, 2016, the Company was not in compliance with this covenant (such non-compliance, the “Senior Credit Facility Event of
Default”). The description of such waiver set forth under Item 1.01 in the Company’s Current Report on Form 8-K dated
January 3, 2017 is incorporated by reference herein.
Under
the Seventh Amendment and Waiver, the Administrative Agent and the lenders under the Senior Credit Facility have granted the Company
a permanent waiver relating to the Senior Credit Facility Event of Default. There are no assurances that the lenders under the
Senior Credit Facility will waive any future covenant violations of, or agree to any amendments to, the Senior Credit Facility.
Among
other things, the Seventh Amendment and Waiver amends the termination date of the Senior Credit Facility from December 3, 2017
to June 2, 2017, increases the flexibility of the financial covenants under the Senior Credit Facility for the fiscal quarter
ending February 28, 2017 (including reducing the minimum consolidated fixed charge coverage ratio from 1.65:1:00 to 1:25:1:00
and raising the maximum adjusted total debt to EBITDAR ratio from 4.30:1:00 to 4.65:1.00), restricts the ability of the Company
to make certain acquisitions, dispositions, investments, capital expenditures and guarantees of indebtedness, requires certain
additional monthly financial reporting by the Company to the Administrative Agent, and reduces the amount the Company may borrow
pursuant to the revolving loan commitment under the Senior Credit Facility from $50.0 million
(including a $25.0 million sublimit
for standby letters of credit), to $30.0 million (including a $15.0 million sublimit for standby letters of credit).
The
Seventh Amendment and Waiver is effective as of January 31, 2017. As of January 31, 2017, the Company has no amounts drawn under
the revolving loan commitment under the Senior Credit Facility, and has $11.1 million drawn under standby letters of credit under
the Senior Credit Facility.
The
Company plans to replace the Senior Credit Facility with collateralized debt, subject to market conditions.
Mortgage
Loan Modification and Waiver
On
January 31, 2017, the Company entered into a loan modification amendment and waiver (the “Mortgage Loan Modification and
Waiver”) relating to certain of its mortgage loan obligations (the “Loan Documents”) with First Tennessee
Bank, N.A., as lender (“First Tennessee”). The Company previously entered into a waiver with First Tennessee
on December 31, 2016, pursuant to which First Tennessee granted the Company a limited waiver relating to compliance with the covenant
in the Loan Documents requiring the Company to maintain a minimum consolidated fixed charge coverage ratio of not less than 1.65:1.00.
As of November 29, 2016, the Company was not in compliance with this covenant (such non-compliance, the “Loan Documents
Event of Default”). The description of such waiver set forth under Item 1.01 in the Company’s Current Report on Form
8-K dated January 3, 2017 is incorporated by reference herein.
Under
the Mortgage Loan Modification and Waiver, First Tennessee has granted the Company a permanent waiver relating to the Loan Documents
Event of Default. There are no assurances that the lenders under the Loan Documents will waive any future covenant violations
of, or agree to any amendments to, the Loan Documents.
Among
other things, the Mortgage Loan Modification and Waiver increases the flexibility of the financial covenants under the Loan Documents
for the fiscal quarter ending February 28, 2017 and thereafter (including reducing the minimum consolidated fixed charge coverage
ratio from 1.65:1:00 to 1:25:1:00 and raising the maximum adjusted total debt to EBITDAR ratio from 4.30:1:00 to 4.65:1.00), restricts
the ability of the Company to make certain capital expenditures, and requires certain additional monthly financial reporting by
the Company to First Tennessee.
As
of January 31, 2017, the Company had $7.8 million in mortgage loan obligations outstanding.
The
foregoing descriptions of the Seventh Amendment and Waiver and the Mortgage Loan Modification and Waiver are summaries only, and
are qualified in their entirety by reference to the complete text of the Seventh Amendment and Waiver and the Mortgage Loan Modification
and Waiver.