Business Context and Reporting Period
Company: Build-A-Bear Workshop, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: December 31, 2025
Event: Entry into a Material Definitive Agreement (Third Amendment to Revolving Credit and Security Agreement).
Key Financial Metrics and Debt Structure
This filing details a restructuring of the Company's credit facility rather than reporting operational financial results (revenue, profit, or cash flow) for a specific period. Key debt metrics include:
- Revolving Credit Facility: Increased from $25.0 million to $40.0 million.
- Accordion Feature: Allows for an additional increase of up to $10.0 million (total potential capacity of $50.0 million) subject to lender consent.
- Outstanding Borrowings: $0 at the closing date of the amendment.
- Interest Rates: Reduced under the new terms (specific basis points not disclosed in this summary).
- Facility Fee: Reduced from 0.25% to 0.20% on undrawn commitments.
- Maturity Date: Extended to December 31, 2030.
- Collateral: First priority lien on substantially all personal property of the Company and U.S./Canadian subsidiaries.
Material Changes Versus Prior Period
The Third Amendment represents significant changes to the Original Credit Agreement (dated August 25, 2020) and prior amendments:
- Capacity Expansion: Base borrowing limit increased by $15.0 million (60% increase).
- Cost Reduction: Lower interest rates and reduced facility fees improve cost of capital.
- Term Extension: Maturity extended by approximately 5 years from the previous term.
- Covenant Adjustment: The "Loan Cap" definition was updated to reflect the new $40.0 million limit. The financial covenant requires maintaining availability equal to the greater of 10.0% of the Loan Cap or $1,875,000.
Outlook, Risks, and Management Commentary
Management Commentary: The Company is currently in compliance with all Credit Agreement covenants. The amendment includes updates to sanctions and anti-money laundering compliance provisions.
Risks and Contingencies:
- Events of Default: Standard triggers include payment defaults, covenant breaches, material inaccuracies in representations, insolvency, and change in control.
- Penalty Rates: An event of default may increase applicable interest rates and fees by 2% until cured.
- Negative Covenants: Restrictions on incurring additional indebtedness, making investments, declaring dividends, repurchasing stock, or merging outside the ordinary course of business.
Investor Verification Checklist
- Verify the specific interest rate margins (SOFR/Base Rate + margin) in the full text of Exhibit 10.1.
- Confirm the current utilization of the borrowing base formula (Eligible Receivables and Inventory) to assess actual available liquidity.
- Review the "Increase Option" conditions to understand the likelihood of accessing the full $50.0 million capacity.
- Monitor compliance with the minimum availability covenant ($1,875,000 or 10% of Loan Cap).