What secures the indebtedness under the Aplus Credit Facility?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
in the event the Partnership engages in certain specified acquisitions of not less than $50 million (as permitted under the Credit Facility). The Credit Facility also requires the Partnership to maintain an Interest Coverage Ratio (as defined in the Credit Facility) of not less than 2.25 to 1.00.
Indebtedness under the Credit Facility is secured by a security interest in, among other things, all of the Partnership's present and future personal property and all of the present and future personal property of its guarantors, the capital stock of its material subsidiaries, and any intercompany debt. Upon the first achievement by the Partnership of an investment grade credit rating, all security interests securing the Credit Facility will be released.
As of December 31, 2023, the balance on the Credit Facility was $411 million, and $5 million in standby letters of credit were outstanding. The unused availability on the Credit Facility at
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, the Credit Facility is secured by a security interest in the Partnership's present and future personal property, the present and future personal property of its guarantors, the capital stock of its material subsidiaries, and any intercompany debt. The Credit Facility is a significant agreement for Aplus, as it provides a revolving line of credit that can be used for various business purposes.
As of December 31, 2023, the balance on the Credit Facility was $411 million, with $5 million in standby letters of credit outstanding. The unused availability on the Credit Facility at that time was $1.084 billion. The weighted average interest rate on the outstanding amount was 7.54%. The Partnership's net leverage ratio was 3.66 to 1.00 at the end of 2023, and it was in compliance with all financial covenants.
It's important to note that upon Aplus achieving an investment-grade credit rating, all security interests securing the Credit Facility will be released. This indicates that the security interests are in place to mitigate risk for the lenders until Aplus demonstrates a strong and stable financial position. The Credit Facility matures on April 7, 2027 and can be increased from time to time upon written request, subject to certain conditions, up to an additional $500 million.