What index is used to determine the variable interest rate for Bojangles' floating rate debt?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
------------------|--------------| | 2026 | 563 | | 2027 | 553 | | 2028 | 554 | | 2029 | 531 | | Thereafter | 8,007 $ 10,783 |
(dollars in thousands)
10. Commitments and Contingencies
Guarantee of Affiliated Parties Indebtedness
In conjunction with the 2020-1 Securitization Transaction, Issuer issued an aggregate principal amount of $415,000 Series 2020-1 3.832% Class A-2 Senior Secured Notes with an anticipated repayment date of October 2025 and a legal final maturity date
Source: Item 22 — CONTRACTS (FDD page 82)
What This Means (2025 FDD)
According to Bojangles's 2025 Franchise Disclosure Document, the variable interest rate for the company's floating rate debt is based on an index called SOFR, which stands for Secured Overnight Financing Rate. Specifically, the 2024-1 Variable Funding Notes bear interest at a rate of 2.55% plus the SOFR rate.
This means that the interest Bojangles pays on these notes can fluctuate depending on changes in the SOFR rate. For a prospective franchisee, this detail might not directly impact their day-to-day operations. However, it is an indicator of the financial strategies and potential risks Bojangles faces as a company. If SOFR rates increase, Bojangles' borrowing costs will also increase, which could affect the company's overall profitability and potentially its ability to support franchisees.
It's worth noting that the FDD also mentions a commitment fee of 0.50% per annum for unused commitments and letter of credit fees of 2.55% per annum on any outstanding noncash collateralized letters of credit associated with the 2024-1 Variable Funding Notes. These fees add to the overall cost of borrowing for Bojangles. While SOFR is the primary index for the variable interest rate, other factors like these fees can also influence the total expense of the company's debt.
Understanding these financial details can give a franchisee a more comprehensive view of the financial health and strategies of Bojangles. While franchisees are not directly responsible for these debts, the financial stability of the franchisor is crucial for long-term support and brand growth.