News

Einstein Noah completes multiyear deleveraging

December 21, 2010

Einstein Noah Restaurant Group Inc. announced that it has completed a multiyear period of deleveraging its balance sheet and will now re-allocate its available cash flows to growth priorities and shareholder paybacks.

"The capital efficiency of our franchise first growth model, coupled with the expectation that our cash taxes will be immaterial over the next several years, allows us the flexibility to accelerate our growth plans and return capital to our shareholders," said Jeff O'Neill, CEO and president of Einstein Noah. "This total-return strategy positions Einstein Noah to reward shareholders in a variety of ways over the long run as we execute our plan."

The company has entered into a new senior $125 million credit facility with a syndicate of banks. The new senior credit facility has a five-year term expiring Dec. 20, 2015, and a commitment of up to $125 million, including a term loan of up to $75 million and a revolving credit facility of up to $50 million.

The loan extends the maturity of the company's long-term debt and will enable the company to improve liquidity and strengthen its capital structure, O'Neill said.

Additionally, Einstein Noah's board of directors declared an initial quarterly cash dividend on its common stock in the amount of $0.125 per share, payable April 15, 2011, to shareholders of record as of March 1, 2011. The board also announced the authorization of up to $20 million in share repurchases of the company's common stock. This authorization expires in two years.

Additionally, the board approved the expansion of the capital expenditure budget from a projected $17 million to $19 million in 2010 to a projected $28 million to $30 million in 2011. The capital expenditure budget includes the opening of 10 to 14 new corporate stores and the relocation of an additional 10 to 14 stores, along with the continued roll-out of a new coffee program.

"The Board of Directors believes that the company has a sustainable amount of debt along with strong cash flows, which provides for the commencement of a quarterly dividend, the flexibility for future share repurchases, as well as continued investment in our accelerated growth," said Nelson Heumann, board chairman and managing member of Greenlight Capital LLC. Greenlight Capital and its affiliates became company shareholders in 2003.