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Dave & Buster’s Entertainment, Inc. Announces Opportunistic Term and Revolving Loan Repricing

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Dave & Buster's successfully amended its credit agreement, reducing the interest rate margin by 60 basis points, resulting in over $5 million of annual cash interest savings. The amendment is expected to provide added financial flexibility and benefit shareholders. Joint lead arrangers and bookrunners for the transaction included Deutsche Bank Securities Inc., JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, BMO Capital Markets Corp., Truist Securities Inc., Capital One, N.A., and Fifth Third Bank, National Association.
Positive
  • Successful amendment of credit agreement
  • Reduction in interest rate margin by 60 basis points
  • Over $5 million of annual cash interest savings
  • Added financial flexibility and benefit for shareholders
Negative
  • None.

From a financial perspective, the amendment of a credit agreement with a reduced interest rate margin is a significant development for Dave & Buster's Entertainment, Inc. The 60 basis points reduction, coupled with the potential additional 25 basis point decrease contingent on credit ratings, indicates a favorable credit risk reassessment by lenders. This refinancing strategy can enhance the company's debt profile by lowering the cost of capital, which directly translates into increased net income due to reduced interest expenses. The expected $5 million in annual cash interest savings can be allocated to other strategic initiatives, such as business expansion or debt reduction, thus improving the company's financial health and potentially its stock valuation.

Investors typically view such financial maneuvers positively, as they reflect a company's proactive management of its liabilities. However, it's crucial to consider the broader economic context, such as interest rate trends and credit market conditions, to fully assess the impact. If the company secured these terms in a rising interest rate environment, it would be particularly advantageous. On the other hand, if market rates are falling, the benefits might be less pronounced as other companies could also be securing similar terms.

From a market research standpoint, the amendment of the credit agreement by Dave & Buster's could be indicative of broader trends within the entertainment and dining industry. Companies able to renegotiate their credit terms successfully often have a competitive edge. The interest rate savings may provide Dave & Buster's with additional liquidity to invest in innovative entertainment offerings or enhance customer experience, which is crucial in an industry that thrives on novelty and differentiation.

Additionally, the company's ability to renegotiate terms without extending the maturity of its debt suggests a strong bargaining position and financial stability. This action could signal to investors and competitors alike that Dave & Buster's is managing its finances effectively, which might influence market dynamics. Competitors might feel pressured to reassess their own financial strategies and investors could view Dave & Buster's as a more attractive investment option.

An economist would consider the macroeconomic implications of Dave & Buster's credit agreement amendment. The reduction in interest rates might reflect a lower risk premium, suggesting confidence in the company's future earnings and overall economic stability. Moreover, the ability to secure such terms could also be a sign of ample liquidity in the credit markets, allowing firms to negotiate better conditions.

Long-term, the cost savings from lower interest rates can contribute to the company's resilience against economic downturns. In an industry sensitive to discretionary consumer spending, financial flexibility is paramount. The additional cash flow could be utilized to cushion against future economic shocks or fund capital expenditures, which could stimulate economic activity and employment within the sector.

DALLAS, Jan. 19, 2024 (GLOBE NEWSWIRE) -- Dave & Buster's Entertainment, Inc., (NASDAQ: PLAY), ("Dave & Buster's" or "the Company"), an owner and operator of entertainment and dining venues, today announced that the Company successfully amended its credit agreement, achieving a reduction in the interest rate margin applicable to its term loans and revolving loans outstanding under its credit agreement by 60 basis points (inclusive of the removal of the 10 basis point credit spread adjustment) with an additional 25 basis point reduction with respect to the term loans upon achieving certain ratings from Moody’s and S&P. Term loans now bear an interest rate of SOFR + 325 basis points (versus SOFR + 375 prior to the amendment). The amendment is expected to result in over $5 million of annual cash interest savings. There are no changes to the maturity of the outstanding term loans and revolving loans as a result of the repricing.

“We are pleased with the outcome of this purely opportunistic repricing and would like to thank our lender group for their support in a swift execution as we continue to reduce cash interest costs for added financial flexibility and the benefit of our shareholders,” said Michael Quartieri, Dave & Buster’s Chief Financial Officer.

Deutsche Bank Securities Inc., JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, BMO Capital Markets Corp., Truist Securities Inc., Capital One, N.A. and Fifth Third Bank, National Association acted as joint lead arrangers and joint bookrunners for the transaction.

Please refer to the Form 8-K filed with the SEC for additional information on the amended credit agreement.

About Dave & Buster’s Entertainment, Inc.

Founded in 1982 and headquartered in Coppell, Texas, Dave & Buster's Entertainment, Inc., is the owner and operator of 220 venues in North America that offer premier entertainment and dining experiences to guests through two distinct brands: Dave & Buster’s and Main Event. The Company has 162 Dave & Buster’s branded stores in 42 states, Puerto Rico, and Canada and offers guests the opportunity to "Eat Drink Play and Watch," all in one location. Each store offers a full menu of entrées and appetizers, a complete selection of alcoholic and non-alcoholic beverages, and an extensive assortment of entertainment attractions centered around playing games and watching live sports and other televised events. The Company also operates 58 Main Event branded stores in 20 states across the country, and offers state-of-the-art bowling, laser tag, hundreds of arcade games and virtual reality, making it the perfect place for families to connect and make memories. For more information about each brand, visit daveandbusters.com and mainevent.com.

Forward-Looking Statements

The Company cautions that this release contains forward-looking statements, including those related to expected cash interest savings. These forward-looking statements involve risks and uncertainties, including: our ability to continue as a going concern; our ability to obtain waivers, and thereafter continue to satisfy covenant requirements, under our revolving credit facility; our ability to access other funding sources; our overall level of indebtedness; general business and economic conditions, including as a result of the coronavirus pandemic and any new coronavirus variants; the impact of competition; the seasonality of the Company’s business; adverse weather conditions; future commodity prices; guest and employee complaints and litigation; fuel and utility costs; labor costs and availability; changes in consumer and corporate spending; changes in demographic trends; changes in governmental regulations; unfavorable publicity, our ability to open new stores, acts of God and other risks and uncertainties described the Company’s Annual Report on Form 10-K filed with the SEC on March 28, 2023. Accordingly, actual results may differ materially from the forward-looking statements, and the Company therefore cautions you against relying on such forward-looking statements. Dave & Buster’s intends these forward-looking statements to speak only as of the time of this release and does not undertake to update or revise them as more appropriate information becomes available, except as required by law.

For Investor Relations Inquiries:

Cory Hatton, VP Investor Relations & Treasurer
Dave & Buster’s Entertainment, Inc.
cory.hatton@daveandbusters.com


FAQ

What is the ticker symbol for Dave & Buster's Entertainment, Inc.?

The ticker symbol for Dave & Buster's Entertainment, Inc. is PLAY.

What was the result of the amendment to the credit agreement?

The amendment resulted in a reduction of the interest rate margin by 60 basis points, leading to over $5 million of annual cash interest savings.

Who were the joint lead arrangers and bookrunners for the transaction?

Deutsche Bank Securities Inc., JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, BMO Capital Markets Corp., Truist Securities Inc., Capital One, N.A., and Fifth Third Bank, National Association acted as joint lead arrangers and joint bookrunners for the transaction.

Dave & Buster's Entertainment, Inc.

NASDAQ:PLAY

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2.01B
29.36M
1.45%
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10.76%
Food Service Contractors
Accommodation and Food Services
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United States of America
DALLAS

About PLAY

eat. drink. play. watch. fun at dave & buster's means dining on great food. grabbing a drink with friends. and winning big. real big. best of all, once you've been to dave & buster's, the fun stays with you. dave & buster's is the place for great food, signature drinks & one-of-a kind fun under one enormous roof! with beautiful private rooms, full service av, bars, a world-class billiards table, and over 250 of the latest and greatest games, plus teambuilding activities, there's no better place to take your team to eat, drink, and play!