Morton's Obtains Credit Facility - Analyst Blog

Morton's Restaurant Group Inc. (MRT) recently announced a credit and guaranty agreement with Goldman Sachs Bank USA, a part of Goldman Sachs Group, Inc. (GS). Under this agreement, the restaurant company received a new five-year $70 million credit facility, which carries a short-term variable interest rate along with a leverage-based margin.

The agreement includes a $60 million senior term loan and $10 million senior revolving credit facility. It replaces the company's previous $70 million credit facility, which was scheduled to mature in early 2011.

The facility comprises customary representations and warranties, as well as affirmative and negative covenants. The term loan and a portion of the revolver are being used to refinance the company's borrowings outstanding under the previous credit facility.

As of September 30, 2010, long-term debt of the company was $84.4 million, up from $78.2 million as of December 31, 2009.

We believe the new credit facility will increase available fund and extend the maturity period of debt. The company also plans to use this new debt to fund its expansion program. The first Morton's Steakhouse was recently opened in mainland China, in Shanghai. A new location in Dallas is slated for launch in February 2011.    

Last week, one of the company's peers, Cheesecake Factory Inc. (CAKE) announced the receipt of a $200 million credit facility. Morton's Restaurant Group currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

 
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