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  "documentTitle": "Darden Restaurants, Inc. (DRI)",
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  "authorName": "Starboard Value",
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  "presentationDate": "2014-03-31 00:00:00",
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  "notes": "Uses a specific financial argument to challenge management's narrative on debt covenants.",
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      "kind": "callout",
      "text": "Compares to $1.9bn outstanding public bonds",
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      "text": "Management is either confused regarding Darden's covenants or is misleading shareholders.",
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      "text": "As shown in detail in Section VI of our real estate presentation, A Primer on Darden’s Real Estate, at the average leverage ratio of triple-net lease peers, a Darden REIT could support virtually all of the public bonds.",
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      "text": "Second, and more importantly, a transfer of assets “substantially as an entirety” does not trigger Make-Whole Payments. Instead, it triggers the “Mergers” covenant, which stipulates that the debt will become an obligation of the spin-off, rather than the parent company.",
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      "text": "First, a full REIT spin might not in fact constitute a transfer of Darden’s assets “substantially as an entirety,” which is the technical test.",
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      "text": "This simply means that the public bonds would “travel” with the real estate, which is not necessarily an adverse consequence, as the real estate is capable of supporting substantial debt.",
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      "text": "Mergers covenant: Management has repeatedly told shareholders that any real estate transaction would necessitate costly Make-Whole Payments on Darden’s debt because the real estate constitutes “all or substantially all” of Darden’s assets.",
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      "text": "Debt Capacity: $1,798",
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      "text": "REIT Debt Capacity: Darden REIT EBITDA $281, REIT Peer Average Leverage 6.4x, Debt Capacity $1,798",
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