What is the future maturity of long-term debt for 360 Painting in 2024?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2024 | 2023 | |
|---|---|---|
| Term loan | $ 11,864,500 $ | 12,293,250 |
| Delayed draw term loans | 8,140,875 | 8,475,375 |
| Revolving loans | 1,200,000 | - |
| Total debt | 21,205,375 | 20,768,625 |
| Less: Current portion | (609,375) | (599,500) |
| Less: Unamortized deferred loan costs | (159,339) | (250,400) |
| Long-term debt, net | $ 20,436,661 $ | 19,918,725 |
As of December 31, 2024, all borrowing under the Amended Credit Facility were SOFR loans with effective interest rates ranging from 7.92% to 12.08% for term, delayed draw term, and revolving loans. The Amended Credit Agreement provides for an annual commitment fee of 0.5% per annum on the excess of the maximum available credit on the revolving loans over average borrowings.
Substantially all of the assets of the Company collateralize the Amended Credit Agreement. The Amended Credit Agreement requires, among other things, maintenance by the Company of minimum levels of cash flow coverage, leverage to EBITDA ratios, and also limits capital expenditures. As of December 31, 2024, the Company was in compliance with these covenants. The Credit Agreement expires on September 17, 2026.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, as of December 31, 2024, the company had several components to its long-term debt. These included a term loan of $11,864,500, delayed draw term loans amounting to $8,140,875, and revolving loans totaling $1,200,000. The total debt before deductions was $21,205,375. After subtracting the current portion of $609,375 and unamortized deferred loan costs of $159,339, the net long-term debt was $20,436,661.
In 2024, 360 Painting's borrowings under the Amended Credit Facility were SOFR loans with effective interest rates ranging from 7.92% to 12.08% for term, delayed draw term, and revolving loans. The Amended Credit Agreement includes an annual commitment fee of 0.5% on the excess of the maximum available credit on the revolving loans over average borrowings. The credit agreement is set to expire on September 17, 2026.
For a prospective franchisee, understanding the debt structure of 360 Painting is crucial. The company's compliance with covenants related to cash flow coverage and leverage ratios indicates financial stability. However, the expiration of the credit agreement in 2026 means that 360 Painting may seek to renew or refinance its debt, which could affect its financial condition and, potentially, its ability to support franchisees. It would be prudent for potential franchisees to inquire about the company's plans for debt management and its potential impact on the franchise system.