8-K: Cracker Barrel Secures $550 Million Revolving Credit and $250 Million Term Loan, Amends Bylaws

Cracker Barrel Old Country Store, Inc. entered into a Second Amended and Restated Credit Agreement, reducing its revolving credit facility to $550 million and establishing a $250 million term loan, while also amending its bylaws to include a majority vote standard for director elections and a proxy access provision.

Summary

• Cracker Barrel Old Country Store, Inc. has entered into a Second Amended and Restated Credit Agreement on May 16, 2025.
• The new credit facility replaces the previous agreement from June 17, 2022.
• The new agreement reduces the revolving credit facility from $700 million to a maximum principal amount of $550 million.
• It includes a $25 million swingline subfacility and a $75 million letter of credit subfacility.
• The agreement also provides for a new $250 million delayed draw term loan facility (DDTL) available until June 15, 2026.
• An uncommitted accordion feature allows the company to increase the facility by up to $200 million, subject to leverage ratio conditions.
• Borrowings under the new credit facility will bear interest at either a base rate (prime rate, Federal Funds Rate plus 0.5%, or Term SOFR plus 1.0%) plus an applicable margin, or the Term SOFR Rate plus an applicable margin.
• The applicable margin for Base Rate loans varies from 0.75% to 1.75%, while for Term SOFR Rate loans, it varies from 1.75% to 2.75%, depending on the company's consolidated total leverage ratio.
• Principal on the new credit facility is payable in full on the earlier of May 16, 2030, or if the company's convertible senior notes due 2026 remain outstanding on March 16, 2026, then on such date, subject to cash availability conditions.
• The company terminated the 2022 Credit Agreement on May 16, 2025, in connection with entering into the new credit facility.
• The Board of Directors approved amendments to the company's bylaws, including adopting a majority vote standard in uncontested director elections, a proxy access provision, and provisions regarding re-nomination ineligibility and cost reimbursement for shareholder nominations.
• The Board intends to seek advisory ratification of the ineligibility, reimbursement, and proxy access provisions at the 2025 annual meeting.

Sentiment

Score: 7

Explanation: The document is neutral to positive. Securing a new credit facility provides financial flexibility, and the bylaw amendments reflect positive corporate governance practices. However, the reduced revolving credit facility and restrictions on dividends and share repurchases temper the overall sentiment.

Positives

• The new credit facility provides Cracker Barrel with access to significant capital through a $550 million revolving credit facility and a $250 million term loan.
• The accordion feature allows for potential expansion of the credit facility by up to $200 million, providing flexibility for future needs.
• The amended bylaws incorporate modern corporate governance practices, such as a majority vote standard for director elections and a proxy access provision.
• The credit facility's terms include flexibility in interest rate options, with rates tied to either a base rate or Term SOFR.

Negatives

• The revolving credit facility has been reduced from $700 million to $550 million.
• The company faces potential restrictions on dividends and share repurchases if DDTL loans or commitments are outstanding.
• The new credit facility includes financial covenants that the company must meet, including a consolidated total leverage ratio and a consolidated interest coverage ratio.
• The company is subject to restrictions on its ability to incur debt and liens, merge, dispose of assets, and undertake certain transactions with affiliates.

Risks

• Failure to comply with financial covenants could trigger an event of default, allowing lenders to accelerate the debt.
• The company's ability to pay dividends and repurchase shares is restricted by the terms of the new credit facility, particularly if DDTL loans or commitments are outstanding.
• The company's leverage ratio affects the applicable margin on borrowings, so increased leverage could lead to higher interest expenses.
• The company's bylaws now include a provision that could require it to reimburse certain shareholders for up to $5 million in documented out-of-pocket costs and expenses incurred in connection with such shareholders nomination of candidates for election at such second meeting, if any such nominee who is not recommended by the Board is elected.

Future Outlook

The company intends to seek non-binding, advisory ratification of the Ineligibility Provision, the Reimbursement Provision and the Proxy Access Provision from the shareholders of the Company entitled to vote at the 2025 annual meeting of shareholders.

Management Comments

• The Board believes the Ineligibility Provision and the Reimbursement Provision, coupled with a majority voting standard and the Proxy Access Provision, represent a reasonable, balanced, and common-sense approach to address these concerns and are in the best interests of all shareholders.

Industry Context

This announcement reflects a common practice of companies refinancing existing debt to potentially lower interest rates, extend maturity dates, and gain more flexible terms. The amendment of bylaws also aligns with trends in corporate governance, emphasizing shareholder rights and board accountability.

Comparison to Industry Standards

• Comparable companies in the restaurant and retail sectors often utilize revolving credit facilities and term loans for working capital, acquisitions, and general corporate purposes.
• The leverage and coverage ratios outlined in the credit agreement are typical for companies of Cracker Barrel's size and financial profile.
• The inclusion of a proxy access provision in the bylaws is becoming increasingly common among publicly traded companies, reflecting a broader trend towards greater shareholder empowerment.
• The specific terms of the credit facility, such as interest rate margins and fees, would need to be compared against industry benchmarks to assess their competitiveness.

Corporate Governance

Stakeholder Impact

• Shareholders: The new credit facility provides financial stability and flexibility, while the bylaw amendments enhance shareholder rights.
• Employees: The company's continued financial health supports job security and potential growth opportunities.
• Customers: The company's ability to invest in its operations and brand ensures a consistent customer experience.
• Suppliers: The company's financial stability ensures timely payments and continued business relationships.
• Creditors: The new credit facility provides clarity on the company's debt structure and repayment obligations.

Next Steps

• The company intends to file a preliminary and definitive proxy statement and accompanying WHITE proxy card in connection with the solicitation of proxies for the Annual Meeting.
• The Board intends to seek the non-binding, advisory ratification of each of the Ineligibility Provision, the Reimbursement Provision and the Proxy Access Provision from the shareholders of the Company entitled to vote at the 2025 annual meeting of shareholders.

Key Dates

Keywords

credit agreement, revolving credit facility, term loan, bylaws, corporate governance, financial covenants, proxy access, cracker barrel, debt, financing