What was the availability on Benihana's revolving credit facility as of December 31, 2022, and are there any restrictions?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
0 | | 50,000 | | Total long-term debt | | 73,500 | | 74,250 | | Less: current portion of long-term debt | | (1,500) | | (1,500) | | Less: debt issuance costs | | (1,590) | | (2,206) | | Total long-term debt, net of current portion | $ | 70,410 | $ | 70,544 |
| 2024 | $ 1,500 |
|---|---|
| 2025 | 1,500 |
| 2026 | 70,500 |
| Total | $ 73,500 |
Interest expense for the Company's debt arrangements, excluding the amortization of debt issuance costs and fees, was $7.4 million and $1.7 million for the years ended December 31, 2023 and 2022, respectively. Capitalized interest was $1.6 million and $0.3 million for the years ended December 31, 2023 and 2022, respectively.
As of both December 31, 2023 and 2022, the Company had $1.4 million in standby letters of credit outstanding for certain restaurants and $10.6 million available in its revolving credit facility, subject to certain conditions.
Credit and Guaranty Agreement
On October 4, 2019, in conjunction with the acquisition of Kona Grill, the Company entered into a Credit Agreement with Goldman Sachs Bank USA. On August 6, 2021, the Company entered into the Third Amendment to the Credit Agreement to extend the maturity date for both the term loan and revolving credit facility to August 2026, to eliminate all financial covenants except a maximum net leverage ratio of 2.00 to 1.00, and to eliminate restrictions on the maximum amount of capital expenditures, the maximum number of Company-owned new locations, and credit extensions under the revolving credit facility. As amended, the Credit Agreement provided for a secured revolving credit facility of $12.0 million and a $25.0 million term loan (reduced from $48.0 million). The term loan is payable in quarterly installments of $0.1 million, with the final payment due i
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, 2022, Benihana had $10.6 million available in its revolving credit facility. However, this availability was subject to certain conditions, which are not specified in detail in this excerpt.
In addition to the revolving credit facility, Benihana also had $1.4 million in standby letters of credit outstanding for certain restaurants as of the same date. The company's debt arrangements incurred interest expenses of approximately $1.7 million for the year ended December 31, 2022.
On December 13, 2022, Benihana entered into the Fourth Amendment to its Credit Agreement, which introduced a new $50.0 million delayed draw term facility. This facility was available for twelve months and was subject to a 1.75x Net Leverage Ratio incurrence test for permitted acquisitions, stock repurchases, and new restaurant capital expenditures. The amendment also allowed Benihana to redeem or repurchase its own capital stock up to $50 million, also subject to a 1.75x Net Leverage Ratio incurrence test and the absence of any default or event of default. Furthermore, the interest rate was changed from LIBOR plus a margin to SOFR plus an applicable margin.
Prospective franchisees should be aware that while Benihana has access to credit facilities, the actual availability and terms can be subject to change and are dependent on the company's financial performance and compliance with the covenants of the credit agreement. It is important to review the full Credit Agreement and any amendments for a complete understanding of the terms and conditions.