What is the maximum amount Benihana can draw from the new delayed draw term facility?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
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 in August 2026.
On December 13, 2022, the Company entered into the Fourth Ame
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the company entered into the Fourth Amendment to the Credit Agreement on December 13, 2022, which allows for a new $50.0 million delayed draw term facility. This facility was available to draw for twelve months. However, drawing from this facility is subject to a 1.75x Net Leverage Ratio incurrence test, as defined in the Credit Agreement, for permitted acquisitions, stock repurchases, and new restaurant capital expenditures.
Benihana borrowed $50.0 million on the delayed draw term facility on December 28, 2022. The delayed draw term loan is payable in quarterly installments of $0.25 million beginning December 31, 2023, with the final payment due in August 2026.
This means that Benihana had access to a $50 million credit line for a limited time, but its ability to use those funds was contingent on meeting specific financial conditions. For a prospective franchisee, this indicates that Benihana has access to significant capital, but also faces financial constraints and oversight from its lenders. Understanding these financial arrangements can provide insight into Benihana's financial health and its capacity to support its franchisees.