Meritage Hospitality Group, a franchise operator, closed on a $302.8 million senior secured credit facility syndication led by City National Bank. Meritage Hospitality Group closed on the facility in advisory with Auspex Capital.
The senior credit facility replaces Meritage Hospitality Group’s previously existing credit facility due to mature in February 2022. The $302.8 million credit facility includes term debt of $181.8 million, a development line of credit of $86 million and a revolving line of credit of $35 million. As required by the new credit agreement, which matures in 2027, the company entered into a SWAP for a minimum of 50% of its current term debt outstanding. Specifically, the company closed on a SWAP in the amount of $120 million at a rate of 0.998% with the same term as the new facility. The new credit facility provides cash flow benefits to the company, including, but not limited to, a decrease in base pricing of 40 basis points, increased amortization to 12 years and a decrease in the effective SWAP rate of approximately 1.25%.
The expanded credit facility, along with improved terms and conditions, support the company’s management’s ability to meet its five-year plan of 600 restaurants by 2026, which includes 400 Wendy’s, in-house brands and other QSR brands.