December 1, 2020 – Further to their restructuring support agreement ("RSA"), the Debtors have now filed the proposed terms of a $52.0mn Exit Facility to fund their Amended Joint Prepackaged Chapter 11 Plan of Reorganization [Exhibit B to Docket No. 224].

Key Terms of the Exit Facility:

• Borrower: Rubio’s Restaurants, Inc.
• Guarantors: MRRC Hold Co.
• Lenders: Golub Capital BDC Holdings LLC, GC Finance Operations LLC and GC SBIC IV, LP
• Administrative Agent and Sole Bookrunner: Golub Capital LLC.
• Commitment: (a) As to any Lender, the aggregate of that Lender's Revolving Loan Commitment and Term A Loan Commitment, as of the Closing Date, and (b) as to all Lenders, the aggregate of all Lenders' Revolving Loan Commitments and Term A Loan Commitments which aggregate commitments are equal to Fifty Two Million Dollars ($52,000,000) on the Closing Date. The commitment amount comprises a $47.0mn Term Loan A and $5.0mn in Revolving Loan Commitments.
• Date and Location: Included in November 30, 2020 Plan Supplement [Docket No. 224 Exhibit B]
• Interest and Applicable Margin: With respect to the outstanding Advances and all other Obligations (other than the Term A Loan), the Index Rate plus 6.75% per annum or, at the election of Borrower with respect to the outstanding Advances, the LIBOR Rate plus 8% per annum. With respect to the Term A Loan, the Index Rate plus 6.75% per annum or, at the election of Borrower, the LIBOR Rate plus 8%.
• Default Interest: If any event of default has occurred or is continuing, the interest rate shall be increased by two percentage points (2%) per annum (increased to four percentage points (4%) per annum on and after December 31, 2024) above the rates otherwise applicable.
• Maturity/Termination: The earliest to occur of December 2024, the Term A Loan Maturity Date, the date of termination of Revolving Lenders' obligations to make Advances or permit existing Advances to remain outstanding and (d) the date of indefeasible prepayment in full by Borrower of the Advances and the permanent reduction of the Revolving Loan Commitment to zero Dollars ($0).
• Fees: The Borrower shall pay to the Administrative Agent, for the Administrative Agent's own account, fees in the amounts and at the times set forth in a letter agreement between Borrower and the Administrative Agent dated as of the Closing Date (as amended from time to time, the "Fee Letter"). As additional compensation for the Revolving Lenders, Borrower agrees to pay to Administrative Agent on the first Business Day of each month prior to the Commitment Termination Date and on the Commitment Termination Date, a fee in respect of the Lenders' Revolving Loan Commitments in an amount equal to one percent (1.00%) per annum (calculated on the basis of a 360-day year for actual days elapsed) of the difference between (x) the Maximum Amount (as it may be reduced from time to time) and (y) the average for the period of the daily closing balances of the aggregate Revolving Loan outstanding (including in such outstanding daily closing balances, Letters of Credit and, without duplication, corresponding Letter of Credit Obligations) during the period for which such fee is due. 
• Use of Proceeds: Borrower shall utilize the proceeds of the Loans solely (a) to repay and replace as part of the Plan of Reorganization certain existing Indebtedness outstanding under the Prepetition Credit Agreement, (b) to repay and replace certain existing Indebtedness outstanding under the DIP Credit Agreement, (c) for payment of fees, costs and expenses associated with the closing of the Exit Facility Agreement and (d) to provide for working capital and for other general corporate purposes of the Borrower and Borrower’s Subsidiaries. 

Plan Background

The Plan implements a prepackaged restructuring agreed to among the Debtors and the Debtors’ major stakeholders, including the "Consenting Secured Lenders" [i.e. holders of more than 66.6% of the aggregate amount of all outstanding Loan Claims] and the Investor. The restructuring will result in a deleveraging of the Debtors’ capital structure, as reflected in the chart below:

³ This amount includes: (i) $37.0 million in accordance with treatment of Class 3 Secured Loan Claims under the Plan; (ii) $8.0 million in DIP Claims to be converted on a dollar-for-dollar basis into loans under the Exit Facility; and (iii) an additional $7.0 million in available liquidity.

The Disclosure Statement provides: "The anticipated benefits of the Plan include, without limitation, the following:

(a) Conversion of approximately $55.0 million of Secured Loan Claims to equity and an exit facility;

(b) Treatment of approximately $18.0 million of Secured Lender Deficiency Claims as General Unsecured Claims under the Plan; 

(c) A $8.0 million DIP Facility from the DIP Lenders; and 

(d) Prompt emergence from chapter 11.

The Plan provides for a comprehensive restructuring of the Debtors’ prepetition obligations, preserves the going-concern value of the Debtors’ business, maximizes all creditor recoveries, and protects the jobs of the Debtors’ invaluable employees, including Management. As described in further detail below, under the terms of the Plan, among other things, each Holder of Secured Loan Claims will receive, on account of their Secured Loan Claims, a Pro-Rata Share of (A) a portion of the Exit Facility (after accounting for the Exit Conversion Amount) in a principal amount equal to $37.0 million and (B) the Reorganized Equity Interests."

About the Debtors

The Kibler Declaration states: “The Debtors are operators and franchisors of approximately 170 limited service restaurants in California, Arizona and Nevada under the Rubio’s Coastal Grill concept. 

Ralph Rubio co-founded Rubio’s in 1983 after repeated trips to Mexico as a college student…. The first Rubio’s location was a walk-up stand in Mission Bay, San Diego….After tremendous growth in the late 1980s and 1990s, Rubio’s completed an initial public offering in May 1999, trading on the NASDAQ National Exchange under the ticker symbol “RUBO.” Ralph stepped down as CEO in 2001 but remained actively involved as head of the culinary team, co-founder and Chairman. In 2010, Mill Road Capital, L.P. (the “Investor”) acquired Rubio’s in a “take- private” transaction for $91 million.

The Debtors employ more than 3,400 hourly and salaried employees at their restaurants and corporate offices located in Carlsbad, California.

Read more Bankruptcy News