Portillo’s Inc. Completes Successful Debt Refinancing Transaction

Rhea-AI Summary

Portillo's Inc. (NASDAQ: PTLO) announced a successful refinancing of its credit facility, securing a new 5-year $300 million Term A Loan. This refinancing reduces the all-in interest rate by approximately 270 basis points, enhancing financial flexibility for expansion efforts. The new loan relies on the Secured Overnight Financing Rate (SOFR), paired with a margin of 275 basis points. Additionally, Portillo's has increased its short-term borrowing capacity through a new 5-year Revolving Credit Facility, expanding from $50 million to $100 million. The company has borrowed $15 million under this facility, maintaining over $80 million in available borrowing capacity.

Positive

• Refinanced credit facility leading to a 270 basis point reduction in interest expense.
• Increased short-term borrowing capacity from $50 million to $100 million.

Negative

• None.

OAK BROOK, Ill., Feb. 06, 2023 (GLOBE NEWSWIRE) -- Portillo’s Inc. (Nasdaq: PTLO), the fast-casual restaurant concept known for its menu of Chicago-style favorites, today announced that it has successfully refinanced its existing credit facility with a new 5-year $300 million Term A Loan, resulting in a significant reduction in interest expense. At prevailing rates, the all-in interest rate on the term debt has been reduced by approximately 270 basis points. The refinancing provides Portillo’s with greater financial flexibility in support of the Company’s ongoing expansion.

The new Term A Loan has an interest rate based on the Secured Overnight Financing Rate (SOFR), plus a credit spread adjustment of 10 to 15 basis points depending on the commitment term, plus a margin of 275 basis points (subject to adjustments based upon the Company’s consolidated total net rent adjusted leverage ratio). The new rate compares favorably to the existing credit facility’s margin, which was based on the London Interbank Offered Rate (LIBOR) plus 550 basis points.

The Company also entered into a new 5-year Revolving Credit Facility, increasing its short-term borrowing capacity from $50 million to $100 million. At closing, the Company borrowed $15 million under the Revolving Credit Facility and has over $80 million of remaining borrowing capacity, net of letters of credit of approximately $4.4 million.

“Since our IPO in 2021, we’ve prudently managed our capital structure by reducing leverage and securing more favorable terms on our debt obligations,” said Michelle Hook, Portillo’s Chief Financial Officer. “Completing a successful refinancing in the current environment reflects well on the strength of our brand and the stability of our business and provides us with additional financial flexibility to execute our growth strategy and operational enhancement initiatives.”

Fifth Third Bank, N.A. served as Joint Lead Arrangers and Joint Bookrunners with BofA Securities, Inc., Wells Fargo Bank, N.A., and MUFG Bank, Ltd. Fifth Third Bank, N.A. also served as the Administrative Agent, L/C Issuer and Swing Line Lender.

About Portillo’s

In 1963, Dick Portillo invested $1,100 into a small trailer to open the first Portillo’s hot dog stand in Villa Park, IL, which he called “The Dog House.” Years later, Portillo’s (NASDAQ: PTLO) has grown to more than 70 restaurants across 10 states. Portillo’s is best known for its Chicago-style hot dogs, Italian beef sandwiches, char-grilled burgers, fresh salads and famous chocolate cake. Download the Portillo’s App for iOS or Android or visit the Portillo’s website to get the best dill on these bun-believably delicious Chicago-style favorites and more. Order ahead for Portillo’s Pickup or delivery. Portillo’s also ships food to all 50 states via its website.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"). All statements other than statements of historical fact are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial position, results of operations, plans, objectives, future performance and business, and are based on currently available operating, financial and competitive information which are subject to various risks and uncertainties, so you should not place undue reliance on forward-looking statements. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "aim," "anticipate," "believe," "commit," "estimate," "expect," "forecast," "outlook," "potential," "project," "projection," "plan," “pursue,” "intend," "seek," "may," "could," "would," "will," "should," "can," "can have," "likely," the negatives thereof and other similar expressions.

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions and our ability to maintain our lower interest expense, expand our store footprint, execute our strategy and achieve our goals, among the other risks identified in our most recent Annual Report on Form 10-K (the “Form 10-K”) and subsequent filings with the Securities and Exchange Commission (the “SEC”), which filings are available on the SEC’s website at www.sec.gov.

The forward-looking statements in this press release are expressly qualified in their entirety by these cautionary statements and are made only as of the date hereof. Portillo’s undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

Investor Contact:
Barbara Noverini, CFA
Investors@portillos.com

Media Contact:
ICR, Inc.
PortillosPR@icrinc.com

FAQ

What recent financial update did Portillo's Inc. (PTLO) provide?

Portillo's refinanced its credit facility with a new 5-year $300 million Term A Loan, significantly reducing interest expenses.

How much did Portillo's reduce its interest rate after refinancing?

Portillo's reduced its interest rate by approximately 270 basis points.

What is the new borrowing capacity for Portillo's short-term needs?

Portillo's increased its short-term borrowing capacity from $50 million to $100 million.

What interest rate is Portillo's new Term A Loan based on?

The new Term A Loan's interest rate is based on the Secured Overnight Financing Rate (SOFR) plus a margin.

How much did Portillo's borrow under its new Revolving Credit Facility?

Portillo's borrowed $15 million under the new Revolving Credit Facility.