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Debt
 12 Months Ended
Dec. 31, 2023
Debt Disclosure [Abstract]  
Debt
12.
Debt

 

 

Debt balances, net of debt issuance costs, are as follows:

 

 

 

As of

 

(in thousands)

 

December 31, 2023

 

 

January 1, 2023

 

Senior Secured Notes, interest at 8.1764% for the Initial Notes and 8.5% for the Additional Notes, maturing March 2027

 

$

615,718

 

 

$

570,712

 

Soho Works Limited loans, unsecured, 7% interest bearing, maturing September 2025 (see additional description below)

 

 

27,715

 

 

$

24,612

 

Other loans (see additional description below)

 

 

21,433

 

 

 

10,197

 

 

 

664,866

 

 

 

605,521

 

Less: Current portion of long-term debt

 

 

(29,290

)

 

 

(25,617

)

Total long-term debt, net of current portion

 

$

635,576

 

 

$

579,904

 

 

Property mortgage loans, net of debt issuance costs, are as follows:

 

 

 

As of

 

(in thousands)

 

December 31, 2023

 

 

January 1, 2023

 

Term loan, interest at 6.99%, maturing June 1, 2033

 

$

137,099

 

 

$

—

 

Term loan, interest at 5.34%, maturing February 6, 2024

 

 

—

 

 

 

54,614

 

Mezzanine loan, interest at 7.25%, maturing February 6, 2024

 

 

—

 

 

 

61,573

 

Total property mortgage loans

 

$

137,099

 

 

$

116,187

 

 

The weighted-average interest rate on fixed rate borrowings was 8% as of December 31, 2023 and as of January 1, 2023. The were no outstanding floating rate borrowings as of December 31, 2023 or January 1, 2023.

Debt

The descriptions below show the financial instrument amounts in the currency of denomination with USD equivalent in parentheses, where applicable, translated using the exchange rates in effect at the time of the respective transaction.

On November 10, 2022, Soho House Bond Limited, a wholly-owned subsidiary of the Company entered into the Third Amended and Restated Revolving Facility Agreement (the "Third Amendment") which further amends and restates the Revolving Credit Facility, originally entered into by the Company on December 5, 2019 (the original and amended facility refer to as the “Revolving Credit Facility”). The Third Amendment amends the Revolving Credit Facility to extend the maturity date from January 25, 2024 to July 25, 2026. In addition, the Third Amendment provides that from March 2023 we are required to maintain certain leverage covenants (as defined in the Revolving Credit Facility) which are applicable when 40% or more of the facility is drawn. As of December 31, 2023, the facility remains undrawn with £71 million ($90 million) available to draw under this facility and £4 million ($5 million) utilized as a letter of guarantee in respect of one of the Company’s lease agreements. The facility is secured on a fixed and floating charge basis over certain assets of the Company. The Company incurred interest expense of $1 million, $3 million and $3 million in respect of the Revolving Credit Facility during the fiscal years ended December 31, 2023, January 1, 2023 and January 2, 2022, respectively.

In 2017, Soho Works Limited entered into a term loan facility agreement. The SWL loan bears interest at 7% and matures, following the extensions described below, at the earliest of: (a) September 29, 2025; (b) the date of disposal of the whole or substantial part of the Soho Works Limited; (c) the date of sale by the shareholders of the entire issued share capital of Soho Works Limited to a third party; (d) the date of the admission of Soho Works Limited to any recognized investment exchange or multi-lateral trading facility; and (e) any later date that the lenders may determine in their sole discretion. The carrying amount of the term loan was £22 million ($28 million) and £20 million ($25 million) as of December 31, 2023 and January 1, 2023, respectively. The Company incurred interest expense of $2 million, $3 million and $2 million on this facility during the fiscal years ended December 31, 2023, January 1, 2023 and January 2, 2022, respectively. In March 2024, this loan was subsequently extended by a further 12 months. The Company has determined a current classification of this loan is appropriate as it best reflects the substance of the agreement with the lenders given that the loan extension period is short-term in nature (12 months).

On March 31, 2021, Soho House Bond Limited issued pursuant to a Notes Purchase Agreement senior secured notes, which were subscribed for by certain funds managed, sponsored or advised by Goldman Sachs & Co. LLC or its affiliates, in aggregate amounts equal to $295 million, €62 million ($73 million) and £53 million ($73 million) (the “Initial Notes”). The Notes Purchase Agreement included an option to issue, and a commitment on the part of the purchasers to subscribe for an aggregate amount of up to $100 million which were issued for the full amount on March 9, 2022 (the “Additional Notes” and, together with the Initial Notes, the “Senior Secured Notes”). The Senior Secured Notes mature on March 31, 2027 and bear interest at a fixed rate equal to a cash margin of 2.0192% per annum for the Initial Notes or 2.125% per annum for any Additional Notes, plus a payment-in-kind (capitalized)

margin of 6.1572% per annum for the Initial Notes or 6.375% per annum for any Additional Notes. The Senior Secured Notes issued pursuant to the Notes Purchase Agreement may be redeemed and prepaid for cash, in whole or in part, at any time in accordance with the terms thereof, subject to payment of redemption fees. The Senior Secured Notes are guaranteed and secured on substantially the same basis as our Revolving Credit Facility. The Company incurred interest expense of $52 million, $47 million and $30 million during the fiscal years ended December 31, 2023, January 1, 2023 and January 2, 2022, respectively.

 

The other loans consist of the following:

 

 

 

Currency

 

Maturity date

 

Principal
balance as of
December 31, 2023

 

 

Applicable
interest rate
as of December 31, 2023

 

Dean Street loan

 

Great Britain pound sterling

 

March 2040

 

$

9,740

 

 

 

6.0

%

Copenhagen loan

 

Danish krone

 

November 2033

 

 

2,182

 

 

 

8.0

%

Greek Street loan

 

Great Britain pound sterling

 

January 2028

 

 

2,970

 

 

 

7.5

%

Compagnie de Phalsbourg credit facility

 

Euro

 

January 2025

 

 

5,716

 

 

 

7.0

%

Greek government loan

 

Euro

 

July 2025

 

 

828

 

 

 

3.1

%

 

Property Mortgage Loans

 

In March 2014, the Company completed a freehold property acquisition of the Soho Beach House Miami Property. In May 2023, the Company refinanced the existing term loan of $55 million, interest at 5.34%, and mezzanine loan of $62 million, interest at 7.25% with a new $140 million loan agreement with JP Morgan Chase Bank, National Association and Citi Real Estate Funding Inc. As a result of the debt extinguishment of the existing term loan and mezzanine loan, the Company recognized a loss on extinguishment of debt of $3 million which is reported in interest expense, net on the condensed consolidated statements of operations for the fiscal year ended December 31, 2023. The new term loan is secured with a recorded and insured first priority mortgage on Soho Beach House Miami Property as well as first priority security interests in all collateral related to the property. The new term loan matures in June 2033 and bears interest at 6.99%.

The Company incurred interest expense of $5 million on the new term loan during the fiscal year ended December 31, 2023. The Company incurred interest expense of $13 million, $8 million and $8 million during the fiscal years ended December 31, 2023, January 1, 2023 and January 2, 2022, respectively.

 

Debt Issuance Costs

 

Property mortgage loans due after more than one year are net of unamortized debt issuance costs of $3 million and $1 million as of December 31, 2023 and January 1, 2023, respectively. Other loans are net of unamortized debt issuance costs of less than $1 million and less than $1 million as of December 31, 2023 and January 1, 2023, respectively. For the revolving credit facility as of December 31, 2023, $1 million of unamortized debt issuance costs have been included within prepaid expenses and other current assets on the consolidated balance sheet, following repayment in full of the outstanding balance of the facility. The Senior Secured Notes are net of unamortized debt issuance costs of $7 million as of December 31, 2023.

 

Future Principal Payments

 

The following table presents future principal payments for the Company’s debt and property mortgage loans as of December 31, 2023:

 

(in thousands)

 

 

 

2024

 

$

29,290

 

2025

 

 

10,255

 

2026

 

 

1,293

 

2027

 

 

616,925

 

2028

 

 

7,473

 

Thereafter

 

 

146,571

 

Total future principal payments

 

 

811,807

 

Less: Unamortized debt issuance costs

 

 

(9,842

)

Total debt

 

$

801,965

 

 

Financial Covenants

 

Some of the Company’s debt instruments contain a number of covenants that restrict the Company’s ability to incur debt in excess of calculated amounts, ability to make distributions under certain circumstances and generally require the Company to maintain certain financial metrics, such as leverage and minimum working capital levels. Failure by the Company to comply with the financial covenants contained in the debt instruments could result from, among other things, changes in its statement of operations, the incurrence of additional debt or changes in general economic conditions.

 

If the Company breaches the financial covenants contained in the debt instruments, the Company may attempt to negotiate waivers of the breaches or amend the terms of the applicable instruments, however, the Company can make no assurance that it would be successful in any such negotiations or that, if successful in obtaining waivers or amendments, such amendments or waivers would be on terms attractive to the Company.

 

As of December 31, 2023, the Company was in compliance with all debt covenants, current on all payments and not otherwise in default under any of the Company’s debt instruments.