Wingstop Inc. filed SEC Form 8-K: Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation, Financial Statements and Exhibits
$WING
Restaurants
Consumer Discretionary
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 3, 2024
(Exact name of registrant as specified in its charter)
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| Item 1.01. | Entry into a Material Definitive Agreement | ||||
General
As previously announced, on November 19, 2024, Wingstop Inc. (the “Company,” “we,” “our,” or “us”) entered into a definitive agreement relating to an existing securitized financing facility pursuant to a privately placed securitization transaction (the “2024 Securitization”). To complete the 2024 Securitization, on December 3, 2024 (the “Closing Date”), Wingstop Funding LLC, a Delaware limited liability company (the “Issuer”), a limited purpose, bankruptcy-remote, indirect wholly owned subsidiary of the Company issued $500 million of its Series 2024-1 5.858% Fixed Rate Senior Secured Notes, Class A-2 (the “2024 Class A-2 Notes”). The offering was exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). In connection with the 2024 Securitization, the Issuer also increased the capacity of its revolving financing facility of Series 2022-1 Variable Funding Senior Notes, Class A-1 (the “Variable Funding Notes”) from $200 million to $300 million. Following the increase, borrowing capacity under the Variable Funding Notes permits borrowings of up to a maximum principal amount of $300 million, a portion of which may be used to issue letters of credit. The 2024 Class A-2 Notes and the Variable Funding Notes are referred to collectively as the “Notes.” Subject to certain limitations, the Notes are secured by certain of the Company’s domestic and foreign revenue-generating assets, consisting principally of franchise-related agreements, intellectual property, and vendor rebate contracts (collectively, the “Securitized Assets”), that were previously contributed or otherwise transferred to the Issuer and certain other limited-purpose, bankruptcy-remote, wholly owned indirect subsidiaries of the Company (collectively, the “Securitization Entities”) that act as guarantors pursuant to a guarantee and collateral agreement previously entered into.
2024 Class A-2 Notes
The 2024 Class A-2 Notes were issued pursuant to a second amended and restated Base Indenture, dated as of March 9, 2022, as amended by the First Supplement to the Second Amended and Restated Base Indenture (the “Base Indenture”) and the related Series 2024-1 Supplement thereto (the “Series 2024-1 Supplement”), each dated December 3, 2024, by and between the Issuer and Citibank, N.A., as trustee (in such capacity, the “Trustee”) and securities intermediary. The Base Indenture and the Series 2024-1 Supplement (collectively with the Series 2022-1 Supplement and any other series supplements to the Base Indenture, the “Indenture”) will allow the Issuer to issue additional series of notes in the future, subject to certain conditions set forth therein.
Interest and principal payments on the 2024 Class A-2 Notes are payable on a quarterly basis. The requirement to make such quarterly principal payments on the 2024 Class A-2 Notes is subject to certain financial conditions set forth in the Indenture. The legal final maturity date of the 2024 Class A-2 Notes is in December 2054, but, unless earlier prepaid to the extent permitted under the Indenture, the anticipated repayment date of the 2024 Class A-2 Notes will be in December 2031. If the Issuer has not repaid or refinanced the 2024 Class A-2 Notes prior to the anticipated repayment date, additional interest will accrue on the 2024 Class A-2 Notes in an amount equal to the greater of (A) 5.00% per annum and (B) a per annum interest rate equal to the excess, if any, by which the sum of the following exceeds the original interest rate of the 2024 Class A-2 Notes (i) the yield to maturity (adjusted to a quarterly bond-equivalent basis) on such anticipated repayment date of the United States Treasury Security having a term closest to 10 years, plus (ii) 5.00%, plus (iii) 1.60%.
Variable Funding Notes
In connection with the Securitization, the Issuer also entered into an amendment and restatement to the revolving financing facility consisting of Variable Funding Notes, which, subject to certain financial and other borrowing conditions set forth in the Variable Funding Note Purchase Agreement, permits borrowings of up to a maximum principal amount of $300 million, a portion of which may be used to issue letters of credit. The Variable Funding Notes were issued under the Indenture and allow for borrowings on a revolving basis. Borrowings and certain additional terms related to the Variable Funding Notes are governed by the Amended and Restated Class A-1 Note Purchase Agreement, dated December 3, 2024, by and among the Issuer, the Guarantors, Wingstop Restaurants Inc., as manager (the “Manager”), certain conduit investors, financial institutions, and funding agents, Morgan Stanley & Co. LLC, as swingline lender, administrative agent and provider of letters of credit (the “Variable Funding Note Purchase Agreement”). The Variable Funding Notes will be governed by both the Variable Funding Note Purchase Agreement and the Indenture. Depending on the type of borrowing under the Variable Funding Notes, interest on the Variable Funding Notes will be based on (i) the prime rate, (ii) overnight federal funds rates, (iii) the secured overnight financing rate or (iv) with respect to advances made by conduit investors, the weighted average cost of, or related to, the issuance of commercial paper allocated to fund or maintain such advances, in each case plus any applicable margin, as more fully set forth in the Variable Funding Note Purchase Agreement and the Series 2022-1 Supplement to the Base Indenture, as supplemented by the First Supplement to Series 2022-1 Supplement, dated December 3, 2024, by and between the Issuer and the Trustee (the "Series 2022-1 Supplement"). The Issuer has not drawn on the Variable Funding Notes as of the Closing Date.
Commitment fees and other usage fees apply to the Variable Funding Notes facility depending on the type of borrowing requested. There is a 60-basis points draw fee on borrowings requested pursuant to the terms of the Variable Funding Note Purchase Agreement. Additionally, during a commitment availability period, there is a 30-basis point commitment fee on the committed portion of the Variable Funding Notes facility which is payable quarterly. It is anticipated that the principal and interest on the Variable Funding Notes will be repaid in full on or prior to December of 2029, subject to two additional one-year extensions at the option of the Manager. Following the anticipated repayment date (and any extensions thereof), additional interest will accrue on the Variable Funding Notes equal to 5.00% per annum.
Covenants and Restrictions
The Notes are subject to a series of covenants and restrictions customary for transactions of this type, including (i) that the Issuer maintains specified reserve accounts to be used to make required payments in respect of the Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, including specified make-whole payments in the case of the 2024 Class A-2 Notes under certain circumstances, (iii) certain indemnification payments in the event, among other things, that the assets pledged as collateral for the Notes are in stated ways defective or ineffective, and (iv) covenants relating to recordkeeping, access to information, and similar matters. The 2024 Class A-2 Notes are also subject to customary rapid amortization events provided for in the Indenture, including events tied to failure to maintain stated debt service coverage ratios, the sum of global gross sales for specified restaurants being below certain levels on certain measurement dates, certain change of control and manager termination events, an event of default, and the failure to repay or refinance the 2024 Class A‑2 Notes on the applicable anticipated repayment date or scheduled maturity date. The Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal or other amounts due on or with respect to the Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective, and certain judgments.
Use of Proceeds
On the Closing Date, a portion of the net proceeds of the offering were used to pay fees and expenses related to the issuance of the 2024 Notes. The Company intends to use the remaining proceeds for general corporate purposes, which may include the repurchase of shares of the Company's common stock.
The foregoing summaries do not purport to be complete and are subject to, and qualified in their entirety by reference to, the complete copies of the Base Indenture, the Series 2024-1 Supplement, the Series 2022-1 Supplement, the Variable Funding Note Purchase Agreement, the Guarantee and Collateral Agreement and the Management Agreement, which have been filed as Exhibits 4.1, 4.2, and 10.1, respectively, hereto and are hereby incorporated herein by reference. Interested parties should read the documents in their entirety.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant | ||||
The information set forth under Item 1.01 above is hereby incorporated by reference into this Item 2.03.
| Item 9.01. | Financial Statements and Exhibits | ||||
| (d) | Exhibits | ||||
| 4.1 | |||||
| 4.2 | Series 2024-1 Supplement to Base Indenture, dated as of December 3, 2024, by and between Wingstop Funding LLC, as Issuer of the Series 2024-1 fixed rate senior secured notes, Class A-2, and Series 2022-1 variable funding senior secured notes, Class A-1, and Citibank, N.A., as Trustee and Series 2024-1 Securities Intermediary. | ||||
| 4.3 | |||||
| 10.1 | |||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL Document) | ||||
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Wingstop Inc. | ||||||||||||||
| Date: | December 3, 2024 | By: | /s/ Alex R. Kaleida | |||||||||||
Chief Financial Officer (Principal Financial and Accounting Officer) | ||||||||||||||