UPDATE 1-Cheesecake Factory says credit terms amended

LOS ANGELES, Jan 6 (Reuters) - The Cheesecake Factory Inc (CAKE.O) said on Tuesday it had entered into new terms for its revolving credit facility with a lower leverage limit and revised interest-setting formula.

The changes apply to the company's $300 million five-year revolving credit facility due in 2012.

Mid-tier restaurant operators have been hard hit by a weak economy and rising job losses, which have led consumers to dine out less.

Known for its generous portions and extensive menu, the Cheesecake Factory reported in October that third-quarter net income fell to $11.8 million from $18.5 million a year earlier.

"Given our reduced development plans for fiscal 2009, as well as a healthy level of cash flow that we anticipate our restaurants will generate next year, we should be well positioned to increase the amount of cash on our balance sheet and/or reduce our debt level, both of which we view as favorable options," said Chief Executive David Overton in a statement.

The Cheesecake Factory said the applicable leverage ratio -- defined as funded debt to trailing 12-month earnings before interest, taxes, depreciation, amortization and non-cash stock option compensation expense (EBITDA) -- has been reset from a maximum of 2.25 to a maximum of 1.75 through the end of the company's first quarter, and a maximum of 1.50 thereafter.

Under the amendment, the company will pay interest on drawn balances at a rate equal to LIBOR plus a maximum of 2.75 percent, depending on the Company's leverage ratio. The company also will pay a commitment fee on undrawn balances of a maximum of 0.45 percent, also depending on its leverage ratio.

Previously, it paid interest rates equal to LIBOR plus a maximum of 1 percent on drawn balances and commitment fees on undrawn balances of a maximum of 0.2 percent, both tied to its leverage ratio. (Reporting by Lisa Baertlein; Editing by Tim Dobbyn)