The Cheesecake Factory Incorporated (NASDAQ: CAKE) today announced that the Company has entered into a new revolving credit facility (“Facility”) to replace its prior credit facility. The new Facility provides for both increased financial flexibility and a lower cost of capital as compared to the prior facility. In addition, during the fourth quarter of 2010, the Company paid off the remaining amount outstanding on its prior credit facility while maintaining a cash balance of approximately $50 million.
The unsecured five-year Facility, which matures on December 3, 2015, has a commitment of $200 million with a commitment increase feature that has the possibility to provide for an additional $50 million of borrowing capacity under certain circumstances. The Facility, which is effective as of December 3, 2010, significantly expands the Company’s ability to make share repurchases and grant dividends, doubles the permitted acquisition consideration to $500 million, allows for an incremental $200 million of subordinated debt and reduces the applicable interest rate and fees on both drawn and undrawn balances.
“We made tremendous strides strengthening our balance sheet during the past two years. Our consistent and robust cash flow enabled us to pay down the entire $275 million previously outstanding on our credit line in just twenty-one months,” said David Overton, Chairman and CEO. “With the new Facility in place, our liquidity and capital structure are even stronger and more flexible, and we are well positioned to pursue our strategy to accelerate growth in 2011 and beyond.”