What was the availability on Benihana's revolving credit facility as of December 31, 2023, and is it subject to any restrictions?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
sts of the following (in thousands):
| December 31, | December 31, | |||
|---|---|---|---|---|
| 2023 | 2022 | |||
| Term loan agreements | $ | 23,750 | $ | 24,250 |
| Revolving credit facility | — | — | ||
| Delayed draw term facility | 49,750 | 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, 2023, Benihana had $10.6 million available in its revolving credit facility. This availability is subject to certain conditions, although the specific nature of these conditions is not detailed in this section.
Benihana's credit agreement with Goldman Sachs Bank USA, initially established in conjunction with the acquisition of Kona Grill, has been amended multiple times. The Third Amendment, dated August 6, 2021, extended the maturity date for both the term loan and revolving credit facility to August 2026. It 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 credit agreement provides for a secured revolving credit facility of $12.0 million and a $25.0 million term loan, which was reduced from an initial $48.0 million. The term loan is payable in quarterly installments of $0.1 million, with the final payment due in August 2026. A Fourth Amendment to the Credit Agreement, dated December 13, 2022, introduced a new $50.0 million delayed draw term facility, available for twelve months and subject to a 1.75x Net Leverage Ratio incurrence test for acquisitions, stock repurchases, and new restaurant capital expenditures. It also allows Benihana to repurchase its own capital stock up to $50 million, subject to the same leverage ratio test and the absence of any default or event of default. Additionally, 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 this revolving credit facility, its availability is contingent upon certain conditions. Understanding these conditions and the overall financial health of Benihana is crucial for assessing the stability and potential risks associated with investing in a Benihana franchise. Further details regarding these conditions may be found in Note 5 to the consolidated financial statements, as referenced in the FDD.