Business Context and Reporting Period
Company: The Boston Beer Company, Inc. (NYSE: SAM)
Filing Type: Form 8-K (Current Report)
Date of Report: December 16, 2022
Event: Entry into a Material Definitive Agreement (Third Amended and Restated Credit Agreement).
Key Financial Metrics and Facility Details
This filing details the restructuring of the company's credit facility rather than reporting operational financial results (revenue, profit, or cash flow) for a specific period.
- New Credit Facility Amount: Up to $150,000,000 revolving credit facility.
- Letters of Credit Sublimit: Up to $5,000,000.
- Maturity Date: December 16, 2027.
- Security Status: Unsecured.
- Interest Rate Structure: Term SOFR + 1.10% or Base Rate + 0.10%.
- Outstanding Balance on Prior Facility: $0 as of the Closing Date.
- Prepayment Penalties: None incurred.
Material Changes Versus Prior Period
The company replaced its "Prior Credit Agreement" (originally dated July 1, 2002) with the new "2022 Credit Agreement."
- Facility Continuity: The aggregate principal amount remains $150,000,000, but the maturity was extended to 2027.
- Interest Benchmark: The new agreement utilizes Term SOFR or Base Rate, updating the interest calculation methodology from the prior agreement.
- Guaranty Structure: American Craft Brewery LLC is identified as the only Material Subsidiary and Guarantor under the new agreement.
Covenants, Risks, and Management Commentary
The 2022 Credit Agreement imposes specific financial covenants and standard events of default.
Financial Covenants
- Interest Coverage Ratio: Consolidated EBITDA to Consolidated Interest Expense must not be less than 2.00 to 1.00.
- Leverage Ratio: Consolidated Funded Debt to Consolidated EBITDA must not be greater than 2.50 to 1.00.
Events of Default
Standard events include non-payment, covenant breaches, bankruptcy, insolvency, change of control, and cross-defaults to other indebtedness. Upon default, lenders may terminate commitments and declare all obligations immediately due.
Related Party Transactions
Bank of America, N.A. serves as the Administrative Agent and a lender. The company acknowledges that Bank of America and its affiliates have performed and may continue to perform various banking and advisory services for which they receive customary fees.
Investor Verification Checklist
- Verify the company's current Consolidated EBITDA and Interest Expense to ensure compliance with the 2.00x interest coverage covenant.
- Confirm the current Consolidated Funded Debt balance to ensure compliance with the 2.50x leverage covenant.
- Review the full text of Exhibit 10.1 (Third Amended and Restated Credit Agreement) for specific definitions of "Consolidated EBITDA" and "Consolidated Funded Debt."
- Monitor future filings for any utilization of the $150 million revolving facility.