What was the amount of the revolving credit facility for Aunt Millies Bakeries as of September 30, 2023?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company also has a subordinated revolving credit facility from stockholders up to a maximum of approximately $7,700,000. The subordinated revolving credit facility does not have a maturity date and is therefore presented as current on the consolidated balance sheets. The subordinated revolving credit facility bears interest at 5.00% to 6.00%. Borrowings on the subordinated revolving credit facility were $2,740,852 and $2,452,450 as of September 30, 2023 and 2022, respectively.
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.
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. The effective interest rate of the term loan and revolving loan approximated 5.67% and 5.59% at September 30, 2023 and 2022, respectively. There was $0 and $5,704,555 outstanding on the revolving loan at September 30, 2023 and 2022, respectively. There were no outstanding borrowings on the letters of credit at September 30, 2023 and 2022.
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 two types of revolving credit facilities. The first was a subordinated revolving credit facility from stockholders up to a maximum of approximately $7,700,000. Borrowings on this facility were $2,740,852 as of September 30, 2023. This credit facility does not have a maturity date. The second was a Credit and Security Agreement with a commercial lender that provided advances in the form of a revolving loan up to $25,000,000. There was $0 outstanding on this revolving loan as of September 30, 2023.
For a prospective franchisee, this information is useful for assessing the financial health and debt obligations of Aunt Millies Bakeries. Understanding the nature of these credit facilities, such as the lender (stockholders versus commercial lender), the maximum amounts available, and the outstanding balances, provides insight into how the company manages its finances.
The interest rates on the subordinated revolving credit facility ranged from 5.00% to 6.00%. The effective interest rate on the revolving loan with the commercial lender was approximately 5.67% at September 30, 2023. The availability under the revolving loan with the commercial lender is subject to a borrowing base calculation and other restrictions common in such agreements, which could impact the company's access to these funds. The Credit and Security Agreement also included a term loan of $8,000,000 and letters of credit up to $2,500,000.
It is important to note that in May 2024, the Credit and Security Agreement was amended, extending the maturities of the term loan, revolving loan, and letters of credit to April 2027. This extension provides Aunt Millies Bakeries with continued access to these credit facilities, which can be crucial for ongoing operations and potential expansion. A prospective franchisee should consider these factors when evaluating the financial stability and future prospects of Aunt Millies Bakeries.