(The headline of a story on Brinker's new credit pact, published
at 8:26 a.m. EST, gave an incorrect value for the credit line.)
DOW JONES NEWSWIRES
Brinker International Inc. (EAT) entered a smaller $215 million
unsecured, three-year revolving credit line to replace an existing
pact, which was set to expire in October.
The company had about $90 million outstanding on the old credit
line as of Dec. 24. The company chose to reduce the size of the
credit line because it anticipates lower borrowing needs due to the
divestiture of Romano's Macaroni Grill, slowing restaurant growth
and its focus on paying back debt. The size of the old line wasn't
disclosed by Brinker on Monday and a spokesman couldn't immediately
be reached.
As consumers cut back on restaurant visits and spend less when
they do go, Brinker has been coming up with ways to cut spending,
including reducing spending for remodeling stores and closing
underperforming ones. Brinker became the latest chain to announce
it would close some locations, something analysts are calling on
the casual-dining sector to accelerate to overcome a glut of
eateries in the U.S.
Brinker will use the new credit line primarily for
working-capital needs.
In November, Fitch Ratings slapped a junk rating on the company
and simultaneously withdrew all ratings. Fitch said at the time
that Brinker's credit statistics weren't likely to improve in the
near term, even with reduced spending and the Macaroni Grill
divestiture, because of declining same-store sales and high food
costs.
Brinker's shares closed Friday at $11 and haven't traded
premarket. The stock has nearly tripled since hitting an 18-year
low in November but is still down by nearly half since
September.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com