The ONE Group closed a new credit facility consisting of a $10 million term loan and a new $10 million revolving credit facility. Bank of America acted as the sole lender on the facility.
The proceeds from the new credit facility will be used to retire the company’s existing debt, to pay transaction costs associated with refinancing, and for general corporate purposes. Upon the completion of the refinancing, the company will have approximately $11.7 million of total debt outstanding.
Based on current market conditions, the refinancing represents a 240 to 290 basis point reduction in the company’s borrowing costs and is expected to reduce annual interest expense by approximately $0.4 to $0.5 million per year. The company expects the reduction in annual loan repayments to be in excess of $2 million annually. The reduction in loan repayments is based on a 7.5% annual amortization of the term loan over a five-year period with the remainder to be paid at the end of the fifth year.
The new credit facility bears an interest rate of LIBOR plus a margin that can fluctuate between 2.75% and 3.50% (based on a consolidated rent-adjusted leverage ratio).
Emanuel “Manny” Hilario, president and CEO of The ONE Group, commented, “As a result of our strong financial performance, we are thrilled to have a new credit facility which allows us to strengthen our capital structure. This refinancing will help to reduce our interest expense and provides us with greater flexibility to execute on the whitespace opportunity ahead.”
The ONE Group is a global hospitality company that develops and operates upscale, high-energy restaurants and lounges and provides hospitality management services for hotels, casinos and other high-end venues both nationally and internationally.
