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Debt Obligations
 12 Months Ended
Dec. 30, 2011
Debt Obligations [Abstract]  
Debt Obligations

Note 10 – Debt Obligations

Debt obligations as of December 30, 2011 and December 24, 2010 consisted of the following:

 

                 
    December 30,
2011		     December 24,
2010		  

Revolving credit facility

   $ 17,382     $ 12,219  

Term loan

     28,000       73,750  

Original issue discount-term loan

     —         (2,127 ) 

Note payable

     —         183  

Capital lease

     315       —    

Senior subordinated PIK note

     —         15,500  
   

 

 

    

 

 

  

Total debt obligations

     45,697       99,525  
   

 

 

    

 

 

  

Less: current installments

     (6,107 )      (16,945 ) 

Total debt obligations excluding current installments

   $ 39,590     $ 82,580  
   

 

 

    

 

 

  

On April 15, 2010, the Company entered into a term loan and revolving credit facility (the “Prior Credit Agreement”). The term loan commitment was in the amount of $7,500, while the revolving credit facility provided the Company with up to $37,500 in borrowing capacity. In line with the redemption of Class A units on October 22, 2010, the $7,500 term note was paid in full and the credit facility was amended to provide the Company with up to $25,000 in revolving borrowing capacity. The Prior Credit Agreement, which was replaced on August 2, 2011 as described below, had a maturity date of October 22, 2013. The outstanding revolver balance as of December 24, 2010 was classified on the balance sheet in accordance with ASC 470, “Debt”. The Prior Credit Agreement contained certain events of default that under certain circumstances could call for the immediate repayment of the outstanding revolver balance. These “subjective acceleration clauses”, in addition to the Prior Credit Agreement requiring full dominion of lockbox receipts, required that the outstanding revolver balance be presented in current portion of long-term debt. Borrowings under the Prior Credit Agreement bore interest, at the Company’s option, at the CB Floating Rate (defined as the Administrative Agent’s prime rate, never to be less than the adjusted one month London Interbank Offered Rate, or LIBOR, plus applicable rate) or LIBOR plus applicable rate. The applicable rate was contingent upon the Company’s leverage ratio. The Prior Credit Agreement also provided for an annual fee of 0.25% of unused commitments. The Prior Credit Agreement contained various covenants that required the maintenance of certain financial ratios, as described in the Prior Credit Agreement, and also contained customary events of default. Balances outstanding on the credit facility were secured against the assets of the Company.

On October 22, 2010, the Company entered into a $75,000 second lien term note (the “Prior Term Loan Agreement”). The Prior Term Loan Agreement required principal payments of $1,250 in 2010, $5,250 in 2011, $6,250 in 2012, $7,000 in 2013 with the balance being paid in 2014. Borrowings under the Prior Term Loan Agreement, which was replaced on August 2, 2011 as described below, bore interest at the Company’s option of ABR Loan (defined as the greater of the Federal funds rate, the adjusted one month LIBOR rate or 3%) plus 8% or LIBOR plus 9%, with LIBOR having a floor of 2%. The Prior Term Loan Agreement contained various covenants that required the maintenance of certain financial ratios, as described in the Prior Term Loan Agreement, and also contained customary events of default. Balances outstanding on the term note were secured by a second lien on trade receivables and inventory, as well as a first lien on all other assets of the Company. This Prior Term Loan Agreement was issued with an OID of $2,250, which is classified with the debt and charged to interest expense, using the effective interest method.

On October 22, 2010, the Company issued $15,000 of unsecured PIK notes (the “PIK Notes”) due October 22, 2014. The PIK Notes, which were replaced on August 2, 2011 as described below, bore interest at 20% and accrued interest every six months. The balance at December 30, 2011 was $15,500, which included accrued interest. The PIK Notes contained various covenants that required the maintenance of certain financial ratios, as described in the note agreement, and customary events of default.

On August 2, 2011, Dairyland, The Chefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’ Warehouse West Coast, LLC, The Chefs’ Warehouse of Florida, LLC (each a “Borrower” and collectively, the “Borrowers”), the Company and Chefs’ Warehouse Parent, LLC (together with the Company, the “Guarantors”) entered into a senior secured credit facility (the “Credit Agreement”) with the lenders from time to time party thereto, JPMorgan Chase Bank, N.A. (“Chase”), as Administrative Agent, and the other parties thereto.

 

The Credit Agreement provides for a senior secured term loan facility (the “Term Loan Facility”) in the aggregate amount of up to $30,000 (the loans thereunder, the “Term Loans”) and a senior secured revolving loan facility (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Credit Facilities”) of up to an aggregate amount of $50,000 (the loans thereunder, the “Revolving Credit Loans” and, collectively with the Term Loans, the “Loans”), of which up to $2,000 is available for letters of credit and up to $3,000 is available for short-term borrowings on a swingline basis. The Credit Agreement also provides that the Borrowers may, at their option, increase the aggregate amount of the Revolving Credit Facility in an amount up to $20,000 (but in not less than $10,000 increments) without the consent of any lenders not participating in such increase, subject to certain customary conditions and lenders committing to provide the increase in funding. There can be no assurance that additional funding will become available. Unutilized commitments under the Revolving Credit Facility portion of the Credit Agreement are subject to a per annum fee of 0.375%. A fronting fee of 0.25% per annum is payable on the face amount of each letter of credit issued under the Credit Facilities.

On August 2, 2011, the Borrowers incurred $30,000 in borrowings under the Term Loan Facility of the Credit Agreement to repay existing indebtedness that certain Borrowers and Guarantors were refinancing in connection with the Company’s IPO. The final maturity of the Term Loans is August 2, 2015. Subject to adjustment for prepayments, the Company is required to make monthly principal payments on the Term Loans equal to $500, with the remaining balance due upon maturity.

On August 2, 2011, the Borrowers incurred approximately $14,000 in borrowings under the Revolving Credit Facility portion of the Credit Agreement to repay existing indebtedness that certain Borrowers and Guarantors were refinancing in connection with the Company’s IPO. During the remainder of 2011, borrowings under the Revolving Credit Facility portion of the Credit Agreement were for Capital Expenditures (as defined in the Credit Agreement), Permitted Acquisitions (as defined in the Credit Agreement), working capital and general corporate purposes of the Borrowers. The commitments under the Revolving Credit Facility expire on August 2, 2015 and any Revolving Credit Loans then outstanding will be payable in full at that time.

The Credit Facilities are jointly and severally guaranteed by the Borrowers and the Guarantors, including the Company. In addition, the Credit Agreement is secured pursuant to a Pledge and Security Agreement, dated as of August 2, 2011, by first priority liens on substantially all of the Borrowers’ and each Guarantor’s assets and includes a pledge of the equity interests of each of the Company’s subsidiaries. Borrowings under the Credit Facilities will bear interest at the Company’s option of either (i) the Chase Bank floating rate plus the applicable margin of 0.25% for Revolving Credit Loans or 2.0% for Term Loans or (ii) in the case of Eurodollar Borrowings (as defined in the Credit Agreement), the Adjusted LIBO Rate plus the applicable margin of 2.25% for Revolving Credit Loans or 4.0% for Term Loans. The Chase Bank floating rate means the prime rate of interest announced from time to time by Chase, changing when and as that prime rate changes; provided that such rate shall never be less than the adjusted one month LIBO Rate on such day. The LIBO Rate is the rate for Eurodollar deposits for a period equal to one, two, three, six or nine months (as selected by the Borrowers) appearing on Reuters Screen LIBOR01 Page (or any successor or substitute page of such service), two business days prior to the first day of the applicable interest period.

The Credit Agreement includes negative covenants that limit, among other things, additional indebtedness, transactions with affiliates, additional liens, sales of assets, dividends, investments and advances, prepayments of debt, mergers and acquisitions. The Credit Agreement also includes financial covenants that require (i) the ratio of the Company’s consolidated EBITDA (as defined in the Credit Agreement) minus the unfinanced portion of capital expenditures to the Company’s consolidated Fixed Charges (as defined in the Credit Agreement) on a trailing twelve month basis not be less than 1.15 to 1.00 and (ii) the ratio of the Company’s consolidated total indebtedness to its consolidated EBITDA for the then trailing twelve months be greater than (A) 2.75 to 1.00 for any fiscal month ending in the Company’s 2011 or 2012 fiscal years, (B) 2.50 to 1.00 for any fiscal month ending in the Company’s 2013 fiscal year and (C) 2.25 to 1.00 for any fiscal month ending in the Company’s 2014 fiscal year or thereafter.

The Credit Agreement also contains customary representations and warranties that must be accurate in order for the Borrowers to borrow under the Revolving Credit Facility. In addition, the Credit Agreement contains customary events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, defaults under other material debt, events of bankruptcy and insolvency, failure of any guaranty or security document supporting the Credit Facilities to be in full force and effect, and a change of control. If an event of default occurs and is continuing, the Borrowers may be required immediately to repay all amounts outstanding under the Credit Agreement. Lenders holding at least 66 2/3% of the loans and commitments under the Credit Agreement may elect to accelerate the maturity of the loans and/or terminate the commitments under the Credit Agreement upon the occurrence and during the continuation of an event of default.

As of December 30, 2011, the Borrowers and Guarantors were in compliance with all debt covenants under the Credit Agreement and the Company had reserved $120 of the Revolver for the issuance of a letter of credit.