Question-and-Answer Session
Operator
Thank you, sir. (Operator Instructions). We'll go first to Brad Ludington with KeyBanc Capital Markets.
Brad Ludington - KeyBanc Capital Markets
Good morning. I have a question first and see if we can get any more clarification on the sales leaseback. On that is -- since the net proceeds are 55 to 60 million, is that the expected sale price or would that be selling a little bit of a loss in using a little bit of a tax benefit along with that?
P. Doug Couvillion
That's just net proceeds, that does not include the tax effect or any gain with the transaction.
Brad Ludington - KeyBanc Capital Markets
Okay. And do you expect to be able to sell it for cost or better or will there be impairment charge that goes along with that?
P. Doug Couvillion
We expect to sell at a gain.
Brad Ludington - KeyBanc Capital Markets
Okay. Good to hear, especially in this environment. What about -- do you know what kind of cap rate you expect out of that?
P. Doug Couvillion
We're in the middle of negotiating, so we're not prepared to put a cap rate out just yet.
Brad Ludington - KeyBanc Capital Markets
Okay. And looking after the financing is already in place or is that still being worked on as well?
P. Doug Couvillion
That's being worked on, but we're quite confident we're going to be able to put this deal up, close this deal.
Brad Ludington - KeyBanc Capital Markets
Okay. And last think; I know I'm hitting you for a lot of detail on this, is it third the party transaction or will it be an LLC that Cracker Barrel's involved with?
Michael Woodhouse
It's a third party transaction.
Brad Ludington - KeyBanc Capital Markets
All right, thank you very much.
Michael Woodhouse
Welcome.
Operator
We'll go next to Joe Buckley with Bank of America.
Unidentified Analyst
Hi, it's actually Steven Barlow (ph) for Joe. On the sales leaseback again, how are the -- how were the proceeds spilt between the 15 stores and the distribution center?
P. Doug Couvillion
Distribution center is about 12 million of the total.
Unidentified Analyst
Okay. And then on the covenants, what are the -- I guess with the timing in May, what are the ramifications if you break through them?
Michael Woodhouse
Well I don't think that's something that's relevant. We have no intention of breaking through. Our projection shows to be very comfortable relative to the covenants. The reason that we're doing the sale leaseback is to provide as more cushion, not to provide us the only cushion. We said at our last conference call, what we expected to be fine with our covenants based on our guidance. At that point our guidance, you will note, on earnings, has not changed. So we have -- we don't see any issues. We obviously have thought about what the implications might be but we don't think that's the topic that's worthy of discussion at this point.
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