O'Charley's amends credit facility

NASHVILLE, Tenn. - Restaurant chain O'Charley's Inc. said Friday it amended its revolving credit facility to make sure it meets its financial obligations given the slow consumer spending and high costs affecting restaurant sales and profits.

O'Charley's said its secured revolving credit facility has been reduced to $90 million from $100 million and will be cut again to $65 million by the end of the first quarter of fiscal 2010.

The company said it will use part of its cash flow and proceeds from selling and leasing locations to franchisees to lower its balances, which totaled $34 million, plus $13 million in letters of credit.

The chain also changed several of its covenants, which are financial guidelines the company must meet for its lenders such as its debt to earnings ratio.

"Although we currently project that we will remain in compliance with the covenants in our existing facility, given current conditions in the general economy and the casual dining industry, and the resulting uncertainty about future performance, we felt it prudent to ensure that we maintained our financial flexibility," said Chief Executive Gregory L. Burns.

Sit-down chains like O'Charley's have been hit hard by consumers' reluctance to spend on small luxuries like a dinner out. The company has also had to deal with higher costs for ingredients in the past year.

O'Charley's shares fell 15 cents, or 9.7 percent, to $1.39 in afternoon trading, rebounding from a fresh 52-week low of $1.35. The stock traded as high as $15.30 in January.

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