What was the total amount of Benihana's delayed draw term facility?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
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. The Third Amendment to 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 Amendment to the Credit Agreement that:
- Allows for a new $50.0 million delayed draw term facility, available to draw for twelve months and 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;
- Allows the Company to redeem, repurchase or otherwise acquire its own capital stock in an aggregate amount of up to $50 million subject to a 1.75x Net Leverage Ratio incurrence test and no default or event of default;
- Changes the interest rate from London Interbank Offered Rate ("LIBOR") plus a margin to Secured Overnight Financing Rate ("SOFR") plus an applicable margin; and
- Requires the Company to pay interest on an undrawn portion of the delayed draw term loan up to $35.0 million, beginning 90 days following the effective date until December 13, 2023.
The Company borrowed $50.0 million on the delayed draw term facility on December 28, 2022.
Loans under the amended Credit Agreement bear interest at a rate per annum using the SOFR rate subject to a 1.00% floor plus an interest rate margin of 6.50%. Prior to the Fourth Amend
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the company had a $50.0 million delayed draw term facility. This facility was established through the Fourth Amendment to the Credit Agreement on December 13, 2022, and the company borrowed the full amount on December 28, 2022.
The delayed draw term loan is structured to be paid back through quarterly installments of $0.25 million, starting on December 31, 2023, with the final payment scheduled for August 2026. This repayment schedule indicates a structured approach to managing the debt over time.
The availability of this delayed draw term facility is subject to a 1.75x Net Leverage Ratio incurrence test, as defined in the Credit Agreement, for specific uses such as acquisitions, stock repurchases, and capital expenditures for new restaurants. Benihana is also required to pay interest on any undrawn portion of the loan up to $35.0 million, which began 90 days after the effective date and continued until December 13, 2023. This suggests that Benihana aimed to efficiently utilize the credit facility while managing interest expenses.