What was the amount of the revolving credit facility for Aunt Millies Bakeries as of September 30, 2022?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
000 | | (Losses)/Gains recognized from sale of territories and delivery trucks | | (89,851) | | (170,920) | | Interest income from distributor notes receivable (reflected in | | | | | | other income on the consolidated income statements) | | 913,501 | | 485,497 | | Company repurchase obligation for territories previously sold | | 2,268,021 | | 440,000 | | Interest rate on notes receivable – distributor routes | 8.75 | 5% to 9.75% | 8.7 | 5% to 9.75% |
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NOTE 5 - DEBT ARRANGEMENTS
The Company had a Credit and Security Agreement ("Credit and Security Agreement") with a commercial lender. The Credit and Security Agreement provided a term loan of $8,000,000, advances in the form of a revolving loan up to $25,000,0000, and letters of credit up to $2,500,000. The term loan required monthly principal payments of $95,238 beginning June 1, 2021. The term loan, revolving loan, and letters of credit was set to mature November 30, 2023. All unpaid principal and interest was due upon maturity.
In May 2024, the Company amended their Credit and Security Agreement ("Amended Credit and Security Agreement") whereby the term loan, revolving loan, and letters of credit maturities were extended to April 2027. The term loan monthly principal payments of $95,238 continue and any remaining outstanding borrowings are due upon maturity.
The term loan, revolving loan, and letters of credit bear interest at a variable rate for varying amounts based on LIBOR or a rate not to exceed the prime rate, both rates adjusted by a factor tied to a quarterly financial performance ratio. Availability under the revolving loan is subject to a borrowing base calculation and other restrictions common in such agreements. Borrowings under the letters of credit reduce availability of the revolving loan.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries's 2025 Franchise Disclosure Document, the company had a Credit and Security Agreement with a commercial lender that provided advances in the form of a revolving loan. As of September 30, 2022, the outstanding balance on this revolving loan was $5,704,555. The agreement also included a term loan and letters of credit.
Additionally, Aunt Millies Bakeries had a subordinated revolving credit facility from stockholders. The borrowings on this facility were $2,452,450 as of September 30, 2022. This subordinated facility has a maximum of approximately $7,700,000 and does not have a maturity date.
For a prospective franchisee, it's important to understand the financial obligations and debt structure of the franchisor. The revolving credit facility and other debt arrangements can impact the financial stability of Aunt Millies Bakeries, which in turn could affect the support and resources available to franchisees. It is advisable to discuss these debt arrangements with the franchisor to fully understand their implications.