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DEBT
 12 Months Ended
Dec. 28, 2024
DEBT  
DEBT

6. DEBT

 

On June 16, 2023, the Company entered into a credit agreement with TD Bank, N.A., Wells Fargo Bank, Bank of America, and M&T Bank as lenders (the “Credit Agreement”), that included a $60 million term portion and a $30 million revolving commitment portion. The proceeds of the term loan were used to repay the Company’s remaining outstanding term loan and to terminate its existing credit facility with Santander Bank, N.A. (approximately $59 million). The term loan portion of the credit facility requires quarterly principal payments of (i) $750,000 beginning on September 30, 2023 through June 30, 2025, (ii) $1,125,000 beginning on September 30, 2025 through June 30, 2027, and (iii) $1,500,000 beginning on September 30, 2027 through March 31, 2028, with the balance of the term loan payable on the maturity date of June 16, 2028. Amounts outstanding under the revolving portion of the credit facility are generally due and payable on the expiration date of the Credit Agreement (June 16, 2028).  The Company can elect to prepay some or all the outstanding balance from time to time without penalty. A commitment fee is payable on the unused portion of the revolving credit facility based on the Company’s consolidated ratio of net debt to adjusted EBITDA from time to time. Currently, the commitment fee is 0.25%. As of December 28, 2024 and December 30, 2023, the Company has borrowed $1,250,000 and $0, respectively, on the revolving commitment portion of the credit facility.

 

The term loan bears interest at a variable rate based on the term secured overnight financing rate (“SOFR”), plus an adjustment of ten basis points, plus an applicable margin of 1.875% to 2.625%, depending on the Company’s senior net leverage ratio. Borrowings under the revolving portion bear interest at a variable rate based on, at the Company’s election, a base rate plus an applicable margin of 0.875% to 1.625% or term SOFR, plus an adjustment of ten basis points, plus an applicable margin of 1.875% to 2.625%, with such margins determined based on the Company’s senior net leverage ratio. The Company’s obligations under the Credit Agreement are secured by a lien on certain of the Company’s and its subsidiaries’ assets pursuant to a Pledge and Security Agreement, dated as of June 16, 2023, with TD Bank, N.A., as administrative agent.

 

The Company’s loan covenants under the Credit Agreement require the Company to maintain a senior net leverage ratio not to exceed 3.5 to 1. In addition, the Company is required to maintain a fixed charge coverage ratio to be not less than 1.25 to 1.

 

Debt consists of:

 

 

 

2024

 

 

2023

 

Term loans

 

$40,944,511

 

 

$43,935,735

 

Revolving credit loan

 

 

1,250,000

 

 

 

—

 

 

 

 

42,244,511

 

 

 

43,935,735

 

Less current portion

 

 

3,603,935

 

 

 

2,871,870

 

 

 

$38,640,576

 

 

$41,063,865

 

 

Amounts are net of unamortized discounts and debt issuance costs of $74,500 as of December 28, 2024 and $564,265 as of December 30, 2023.

 

The Company paid interest of $3,224,798 in 2024 and $3,388,347 in 2023.

 

The Company’s loan covenants under the Credit Agreement require the Company to maintain a consolidated fixed charge coverage ratio of at least 1.25 to 1, which is to be tested quarterly on a twelve-month trailing basis. In addition, the Company is required to show a senior net leverage ratio not to exceed 3.5 to 1. Additionally, the Company has restrictions on, among other things, new capital leases, purchases or redemptions of its capital stock, mergers and divestitures, and new borrowings. The Company was in compliance with all covenants as of December 28, 2024 and December 30, 2023.

As of December 28, 2024, scheduled annual principal maturities of long-term debt, net of deferred financing fees, for each of the next five years follow:

 

2025

 

$3,603,935

 

2026

 

 

4,353,935

 

2027

 

 

5,103,935

 

2028

 

 

27,882,706

 

Thereafter

 

 

—

 

 

 

$40,944,511