What is the maturity date of the Senior Credit Facility for Management Recruiters?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
----------|--------------|--------------| | | December 31, | December 31, | | | 2023 | 2022 | | Franchisee royalties | $ 9,577 | $ 8,676 |
Note 4 – Line of Credit and Term Loans
Revolving Credit Agreement with Bank of America, N.A.
On February 28, 2023 the Company and all of its subsidiaries as borrowers entered into a Revolving Credit Agreement with Bank of America, N.A. for a $50,000,000 revolving facility (the "Senior Credit Facility"), which includes a $20,000,000 sublimit for the issuance of standby letters of credit. The Company also has a one-time right, upon at least ten Business Days' prior written notice to the Bank to increase the maximum amount of the Senior Credit Facility to $60 million. As of December 31, 2023 this has not been exercised. The Senior Credit Facility replaced the Company's prior $60 million credit agreement with Truist Bank. The Senior Credit Facility provides for certain financial covenants including maintaining an Asset Coverage Ratio of at least 1.0:1.0 at all times; maintaining a Total Funded Debt to Adjusted EBITDA Ratio not exceeding 3.0:1.0; and maintaining, on a consolidated basis, a Fixed Charge Coverage Ratio of at least 1.25:1.0. As of December 31, 2023 we were in compliance with all covenants.
Interest will accrue on the outstanding balance of the Line of Credit at a variable rate equal to (a) the BSBY Daily Floating Rate plus a margin between 1.00% and 1.75% per annum. In each case, the applicable margin is determined by the Company's Total Funded Debt to Adjusted EBITDA, as defined in the Credit Agreement. At December 31, 2023 the effective interest rate was approximately 6.7%. The Senior Credit Facility will mature
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 65–66)
What This Means (2024 FDD)
According to Management Recruiters's 2024 Franchise Disclosure Document, the Senior Credit Facility will mature on February 28, 2028. This credit agreement was established on February 28, 2023, with Bank of America, N.A., providing a $50 million revolving facility. This facility includes a $20 million sublimit for standby letters of credit.
Management Recruiters has the option to increase the Senior Credit Facility to a maximum of $60 million with a ten-day prior written notice to the Bank. The Senior Credit Facility replaced a previous $60 million credit agreement with Truist Bank. The interest on the outstanding balance accrues at a variable rate, determined by the BSBY Daily Floating Rate plus a margin between 1.00% and 1.75% per annum, with the specific margin based on the company's Total Funded Debt to Adjusted EBITDA.
As of December 31, 2023, the effective interest rate was approximately 6.7%. As part of the refinancing, Management Recruiters recorded a loss on debt extinguishment of approximately $310 thousand, which is reflected in the consolidated statement of income for the year ended December 31, 2023.