Quarterly report pursuant to Section 13 or 15(d)

Debt

v3.23.1
Debt
 3 Months Ended
Apr. 03, 2023
Debt Disclosure [Abstract]  
Debt Debt
(in thousands) April 3, 2023 January 2, 2023
Term loan $ 53,694  $ 54,507 
Related party note payable 15,100  10,000 
Revolving line of credit —  4,000 
Other notes payable 759  780 
Finance lease liability 894  933 
Total Debt $ 70,447  $ 70,220 
Less: Unamortized debt discount to related party note (726) (765)
Less: Unamortized debt issuance costs (1,334) (1,441)
Total Debt, net 68,387  68,014 
Less: Short-term borrowings, including finance leases (3,490) (4,985)
Total Long-term borrowings, including finance leases and related party note payable $ 64,897  $ 63,029 

The Company is party to a credit agreement with a syndicate of commercial banks (as amended, the “Credit Agreement”). which, provides the Company with lender financing structured as a $53.7 million term loan and a $4.0 million available under the line of credit as of April 3, 2023, with a maturity date of September 30, 2025.

On February 1, 2023, the Credit Agreement was amended through the Fourteenth Amendment and subsequently on February 24, 2023 further amended through the Fifteenth Amendment resulting in the Company and its subsidiaries entering into a Secured Promissory Note (the “Note”) with CP7 Warming Bag L.P., an affiliate of L. Catterton Fund L.P., as lender (the “Junior Lender”), pursuant to which the Junior Lender continued, amended and restated that certain delayed draw term loan (the “Delayed Draw Term Loan”) of $10.0 million, under the Credit Agreement, which is junior subordinated secured indebtedness, and also provided $5.1 million of new junior subordinated secured indebtedness, to the Company (collectively (the “Junior Indebtedness”), for a total of $15.1 million in junior subordinated secured debt on terms reasonably acceptable to the Required Lenders (as defined in the Credit Agreement), including, without limitation, that (1) such indebtedness shall not mature until at least two (2) years after the maturity date of the credit facility of September 30, 2025; (2) no payments of cash interest shall be made on such indebtedness until after the repayment in full of the obligations under the Credit Agreement; and (3) no scheduled or voluntary payments of principal shall be made until after the repayment in full of the obligations under the Credit Agreement.

The terms of the amended Credit Agreement require the Company to repay the principal of the term loan in quarterly installments with the balance due at the maturity date, as follows:

in thousands
2023 $ 3,254 
2024 $ 3,254 
2025 $ 47,186 
Total $ 53,694 

The term loan and revolving line of credit are secured by substantially all of the Company’s assets and incur interest on outstanding amounts at the following rates per annum through maturity:
Time Period Interest Rate
Through December 31, 2022 6.75%
From January 1, 2023 through June 15 2023 6.75%
From June 16, 2023 through December 31, 2023 6.75%
From January 1, 2024 through June 15, 2024 7.25%
From June 16, 2024 through maturity 7.75%

The Delayed Draw Term Loan is a non-interest bearing loan and accordingly was recorded at fair value as part of the Anthony’s acquisition which resulted in a debt discount of approximately $1.3 million and is being amortized over the period of the Delayed Draw Term Loan. For the quarters ended April 3, 2023 and March 31, 2022, the Company recorded $0.1 million for each period as amortization of the debt discount which is included within interest expense in the accompanying consolidated statements of operations.

The Junior Indebtedness, which accrues interest at 4% per annum (i) is secured by a second lien on substantially all of the assets of the the Company and the subsidiary guarantors (the “Guarantors”) pursuant to the terms and that certain Guaranty and Security Agreement, dated February 24, 2023, by and among the Guarantors and the junior lender, (ii) is subject to the terms of that certain Intercreditor and Subordination Agreement dated February 24, 2023, by and between the Administrative Agent and the junior lender and acknowledged by the borrowers and the guarantors, and (iii) matures on the date that is the second anniversary of the maturity date under the Credit Agreement (the “Junior Maturity Date”) (September 30, 2027, based on the maturity date under the Credit Agreement of September 30, 2025).

Under the terms of the Junior Indebtedness, no payments of cash interest or payments of principal shall be due until the Junior Maturity Date, and no voluntary prepayments may be made on the Junior Indebtedness prior to the Junior Maturity Date until after the repayment in full of the obligations under the Credit Agreement.

The Company had $14.4 million and $9.2 million recorded, net of unamortized discount of $0.7 million and $0.8 million under the Junior Indebtedness as of April 3, 2023 and January 2, 2023, respectively, included in related party note payable in the accompanying consolidated balance sheets.

The amendments to the Credit Agreement and the Delayed Draw Term Loan were accounted for as modifications of debt in the Company’s accompanying consolidated financial statements.

For the quarters ended April 3, 2023 and March 31, 2022, interest expense consisted of:

(in thousands) Quarter Ended
 April 3, 2023		 Quarter Ended
 March 31, 2022
Interest on credit agreement $ 1,051  $ 806 
Amortization of debt issuance costs 106  181 
Amortization of related party note discount 39  128 
Non-cash interest on redeemable preferred stock 1,022  945 
Other interest expense (income) (140) 11 
$ 2,078  $ 2,071