Bloomin’ Brands expands credit facility to $1.2 billion By Investing.com

Bloomin’ Brands, Inc. (NASDAQ:), a leading restaurant company, has entered into a revised credit agreement that increases its revolving credit facility from $1.0 billion to $1.2 billion and extends the maturity date by five years to September 19, 2029. The announcement was made on Monday following the formalization of the agreement on September 19, 2024.

The new arrangement, a Third Amended and Restated Credit Agreement, was signed with Wells Fargo Bank, National Association, acting as the administrative agent, along with certain lenders. Despite the increase in the credit facility, the total indebtedness and the interest rate applied to Bloomin’ Brands’ borrowings remain unchanged.

Under the new terms, Bloomin’ Brands has the option to further increase the commitments under the New Credit Agreement by either $550.0 million or an unlimited amount, as long as the company maintains a Consolidated Senior Secured Net Leverage Ratio of no more than 3.00 to 1.00.

The revised credit agreement also introduces flexible interest rate options based on the Base Rate or Term SOFR, with applicable spreads ranging from 50 to 250 basis points above the chosen rate. The agreement includes a financial covenant that limits the company’s Total Net Leverage Ratio to a maximum of 4.50 to 1.00, with temporary allowances for increases in connection with significant acquisitions.

The New Credit Agreement is guaranteed by Bloomin’ Brands’ current and future domestic 100% owned subsidiaries, excluding the co-borrower, and is secured by substantially all assets owned or later acquired by the Borrowers and Guarantors.

This strategic financial move is part of Bloomin’ Brands’ broader efforts to strengthen its financial position and support its future growth initiatives. The company’s subsidiaries, which include well-known restaurant brands, have a significant presence in the retail eating places sector.

In other recent news, Bloomin’ Brands reported mixed financial results with second-quarter earnings per share (EPS) of $0.51, falling short of the consensus forecast. The company’s overall revenue also declined to $1.1 billion, a 3% drop from last year, leading to a downward revision of its full-year 2024 outlook for comparable sales and EPS. In response to these results, both Citi and BMO Capital Markets reduced their price targets for Bloomin’ Brands, maintaining a neutral stance and market perform rating respectively.

In leadership changes, Michael L. Spanos has been appointed as the new CEO of Bloomin’ Brands, succeeding Dave Deno. Spanos, who previously held leadership roles at Delta Air Lines (NYSE:), Six Flags (NYSE:) Entertainment, and PepsiCo (NASDAQ:), will take over effective September 3, 2024. This transition is expected to be smooth, with Deno committing to stay on through December 31 to assist.

Despite the mixed financial results and leadership changes, Bloomin’ Brands is making strategic moves. The company is progressing on the potential refranchising of its operations in Brazil and plans to open 40-45 new restaurants and remodel 60-65 existing ones in 2024.

InvestingPro Insights

Bloomin’ Brands, Inc. (NASDAQ:BLMN) has shown a commitment to enhancing shareholder value, as indicated by management’s aggressive share buyback strategy. This is an important consideration for investors looking for companies with a proactive approach to capital allocation. Furthermore, the company offers a significant dividend yield of 5.73%, which is attractive to income-focused investors, especially in the context of the company’s recent strategic financial moves to strengthen its position.

InvestingPro Data highlights that Bloomin’ Brands has a market capitalization of $1.42 billion and is trading at a price-to-earnings (P/E) ratio of 44.93, which suggests a higher valuation compared to the adjusted P/E ratio for the last twelve months as of Q2 2024, which stands at 8.59. This discrepancy may be due to expectations of future earnings growth or recent market adjustments. Additionally, the company’s revenue for the last twelve months as of Q2 2024 is reported at $4.59 billion, with a modest growth of 0.88%.

For those interested in delving deeper into Bloomin’ Brands’ financials and future prospects, there are 11 additional InvestingPro Tips available at https://www.investing.com/pro/BLMN, including insights on earnings revisions, profit margins, and stock price volatility. These tips can provide a more nuanced understanding of the company’s performance and potential investment risks or opportunities.

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