What was the loss on early debt extinguishment for Benihana in 2021?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
llas, Kona Grill Columbus, Kona Grill Phoenix and Kona Grill Riverton.
Write-off of trademark costs and other. Other expenses were $0.6 million for 2022 composed primarily of trademark defense and litigation expenses.
Interest expense, net of interest income. Interest exp
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the company recognized a loss on early debt extinguishment of $0.6 million in 2021. This loss occurred when Benihana entered into the Third Amendment to the Credit Agreement with Goldman Sachs Bank USA and made a $22.2 million pre-payment on the term loan in August 2021.
In simpler terms, Benihana incurred a $600,000 loss as a result of paying off a portion of its debt early. This often happens because of fees, penalties, or the difference between the book value and the fair value of the debt at the time of extinguishment. The early debt extinguishment and associated loss are non-recurring events tied to specific financial transactions.
For a prospective Benihana franchisee, this information provides insight into the company's financial management and debt restructuring activities. While a one-time loss on debt extinguishment is not necessarily alarming, it's a good idea to understand the context behind it. Franchisees may want to inquire about the reasons for the debt restructuring and the expected benefits of the new credit agreement.