What was the availability on Benihana's revolving credit facility as of December 31, 2021, and is it subject to any restrictions?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
ms are adequate to support our immediate business operations and plans. As of December 31,
2021, we had cash and cash equivalents of $23.6 million. We ha
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, as of December 31, 2021, Benihana had $10.6 million available in its revolving credit facility. This availability was subject to certain conditions, as detailed in Note 5 to the company's consolidated financial statements.
In August 2021, Benihana entered into the Third Amendment to its Credit Agreement, which extended the maturity date for both the term loan and revolving credit facility to August 2026. This amendment also eliminated all financial covenants except for a maximum net leverage ratio of 2.00 to 1.00 and removed restrictions on capital expenditures, the number of company-owned locations, and credit extensions under the revolving credit facility. The amended Credit Agreement provided for a secured revolving credit facility of $12.0 million and a $25.0 million term loan.
For a prospective franchisee, this indicates that Benihana has access to a revolving credit facility, which can be used to support its operations and expansion. However, the availability of this credit is subject to certain conditions, which could impact Benihana's ability to draw on the facility if those conditions are not met. It's important to note that the credit agreement also includes a term loan, which requires quarterly installments of $0.1 million, with the final payment due in August 2026. The interest rate on borrowings under the amended Credit Agreement is based on the SOFR rate plus an interest rate margin of 6.50%, subject to a 1.00% floor.
It is important for potential franchisees to review Note 5 to the consolidated financial statements to understand the specific restrictions on the revolving credit facility and how they might affect Benihana's financial flexibility. Additionally, understanding the terms of the credit agreement, including the interest rate and repayment schedule, can provide insights into Benihana's financial obligations and overall financial health.