Industry News | March 27, 2009

Sbarro Enters into Second Lien Credit Facility

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Sbarro Inc. today announced that it has entered into an amendment to its senior secured credit facilities (which include a $183 million term loan facility and a $25 million revolving facility). The principal features of the amendment include revising the financial covenants in the senior credit facilities to increase the Company's operating flexibility for the remaining term of the facilities, providing a waiver of non-compliance with the total net leverage covenant for the fiscal quarter ended December 28, 2008, and increasing the margin on both the term loan and the revolver by 200 basis points. The amendment also permitted the Company to refinance a portion of the first lien term loan by entering into a new $25.5 million second lien credit facility, which has been signed and was funded by an affiliate of the Company's equity sponsor. Borrowings under the second lien credit facility bear interest at an annual rate of 15 percent, payable in kind only for the first three years, and carry a 1.96 percent original issue discount (resulting in net cash proceeds of $25 million). The company used borrowings under the second lien credit facility to prepay $25 million of the outstanding first lien term loan. In addition, as required by the amendment, the Company has repaid $3.5 million of the outstanding revolving facility from cash on hand, and the commitment under the revolver has been permanently reduced by $3.5 million to $21.5 million.

Complete details of the amendment and the new second lien credit facility, together with copies of the material agreements, will be included in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2008, which the Company expects to file with the Securities and Exchange Commission on March 30, 2009.