What was the amount of the pre-payment Benihana made on the loan in conjunction with the amended Credit Agreement?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
ent to the Credit Agreement, the amended Credit Agreement had several borrowing and interest rate options, including the following: (a) a LIBOR rate (or a comparable successor rate) subject to a 1.00% floor (b) a base rate equal t
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, in conjunction with the Third Amendment to the Credit Agreement, Benihana made a pre-payment on the loan of $22.2 million. Additionally, Benihana incurred $0.9 million in debt issuance costs. This amendment was accounted for as a debt modification with a partial extinguishment.
For the year ended December 31, 2021, Benihana recognized a loss on early debt extinguishment of $0.6 million and $0.1 million in transaction costs. This indicates that the amendment of the credit agreement and the associated pre-payment had financial implications that affected the company's reported earnings.
Prospective franchisees should be aware that Benihana's financial decisions, such as debt management and amendments to credit agreements, can impact the overall financial health of the company. While this specific pre-payment relates to Benihana's corporate debt, understanding the financial stability of the franchisor is crucial for franchisees, as it can affect the support and resources available to them.