What is the maximum amount Beef O Bradys can draw from the Revolving Credit Facility?
Beef_O_Bradys Franchise · 2025 FDDAnswer from 2025 FDD Document
al amount due on the term loan maturity date. The Company's allocated portion of quarterly principal payments is $523,370. The interest rate at December 31, 2023 was 9.24%. The Company incurred $700,862 of debt issuance costs. Amortization of these costs during 2023 were $11,681 which is included in interest expense on the consolidated statements of operation for the year ended December 31, 2023.
Revolving Credit—Also on November 16, 2023, the Company and Newk's entered into a Revolving Credit Facility with the same bank that provides for a revolving line of credit of $5,500,000 up to $25,000,000 maturing on November 16, 2028. In addition, a Swingline loan is available in an aggregate principal amount at any time not to exceed $2,500,000. Borrowings under the agreements bear interest at the Base Rate, as defined by the agreement, ranging from 2.00% to 2.75% based on the Total Lease Adjusted Leverage Ratio. The agreement stipulates the Base Rate is equal to the highest of (i) the prime lending rate, (ii) the Federal Funds Rate plus 0.50% per annum, or (iii) Adjusted Term SOFR for an interest period of one month, plus 1.00%. The interest rate at December 31, 2023 was 9.21%. In addition, the lender is entitled to a commitment fee ranging from 0.35% to 0.50% per annum on the average daily unused revolving commitment. There were no borro
Source: Item 23 — RECEIPTS. (FDD pages 66–330)
What This Means (2025 FDD)
According to Beef O Bradys' 2025 Franchise Disclosure Document, Beef O Bradys and Newk's entered into a Revolving Credit Facility on November 16, 2023, which provides a revolving line of credit between $5,500,000 and $25,000,000, maturing on November 16, 2028. Additionally, a Swingline loan is available, with an aggregate principal amount not exceeding $2,500,000 at any time. However, the company's portion of the Revolver is the ability to draw up to $4,500,000.
Borrowings under these agreements bear interest at the Base Rate, as defined in the agreement, ranging from 2.00% to 2.75%, based on the Total Lease Adjusted Leverage Ratio. The Base Rate is stipulated as the highest of (i) the prime lending rate, (ii) the Federal Funds Rate plus 0.50% per annum, or (iii) Adjusted Term SOFR for an interest period of one month, plus 1.00%. As of December 31, 2023, the interest rate was 9.21%. The lender also receives a commitment fee ranging from 0.35% to 0.50% per annum on the average daily unused revolving commitment.
It's important to note that borrowings under the term loan and revolving credit agreements are secured by substantially all assets and a pledge of stock of the Borrowers and Guarantors. As of December 31, 2023, there were no borrowings on the revolving credit facility, and the company was in compliance with the financial covenants associated with the term loan and revolving credit facilities. This financial arrangement could be crucial for Beef O Bradys to manage its cash flow and invest in growth opportunities, but it also carries the responsibility of adhering to the covenants and managing interest rate fluctuations.