Debt

6 Months Ended

Jul. 03, 2022

Debt Disclosure [Abstract]

Debt

11.Debt

Debt balances, net of debt issuance costs, are as follows:

	As of
(in thousands)	July 3, 2022			January 2, 2022
Senior Secured Notes, interest at 8.1764% for the Initial Notes and 8.5% for the Additional Notes, maturing March 2027	$	550,094		$	447,719
Other loans (see additional description below)		20,670			18,547
		570,764			466,266
Less: Current portion of long-term debt		(11,133	)		(6,923	)
Total long-term debt, net of current portion	$	559,631		$	459,343

Property mortgage loans, net of debt issuance costs, are as follows:

	As of
(in thousands)	July 3, 2022		January 2, 2022
Term loan, interest at 5.34%, maturing February 2024	$	54,457	$	54,293
Mezzanine loan, interest at 7.25%, maturing February 2024		61,388		60,829
Total property mortgage loans	$	115,845	$	115,122

Related party loans, net of current portion and imputed interest, are as follows:

	As of
(in thousands)	July 3, 2022			January 2, 2022
Related party loans, unsecured, 7% interest bearing, maturing September 2023 (see additional description below)	$	23,060		$	21,092
Related party loans, unsecured, 4% interest bearing, maturing December 2022		423			569
		23,483			21,661
Less: Current portion of related party loans		(423	)		(21,661	)
Total related party loans, net of current portion	$	23,060		$	-

The weighted-average interest rate on fixed rate borrowings was 8% as of July 3, 2022 and 8% as of January 2, 2022. There were no outstanding floating rate borrowings as of July 3, 2022 or as of January 2, 2022.

Debt

The descriptions below show the financial instrument amounts in the currency of denomination with the United States dollar (“USD”) equivalent in parentheses, where applicable, translated using the exchange rates in effect at the time of the respective transaction.

On December 5, 2019, the Company entered into a £55 million ($72 million) floating rate revolving credit facility (the “Revolving Credit Facility”) with a maturity date of January 25, 2022. In April 2020, the Company secured an additional £20 million ($25 million) of liquidity under this facility and extended the maturity until January 2023. On November 15, 2021, the Company amended the Revolving Credit Facility which, among other things,

changed the reference rate under the Revolving Credit Facility for borrowings denominated in British pound sterling (“GBP”) from a LIBOR-based rate to a SONIA-based rate and to transition reporting from accounting principles generally accepted in the United Kingdom to US GAAP. On February 11, 2022, the Company amended the Revolving Credit Facility to extend the maturity date to January 25, 2024. During the fiscal year ended January 2, 2022, the Company repaid the entire outstanding balance of the facility with proceeds from the IPO. As of July 3, 2022 and January 2, 2022, £71 million ($86 million) and £71 million ($96 million), respectively, is available to draw under this facility, with £4 million ($5 million) and £4 million ($6 million), respectively, utilized as a letter of guarantee in respect of one of the Company’s lease agreements. The facility is secured on a fixed and floating charge basis over certain assets of the Company. The Company incurred interest expense of $1 million and $1 million on this facility during the 13 weeks ended July 3, 2022 and July 4, 2021, respectively, and $2 million and $2 million during the 26 weeks ended July 3, 2022 and July 4, 2021, respectively.

In April 2017, the Company entered into the Permira Senior Facility, which consisted of a £275 million ($345 million) senior secured loan with an interest rate of LIBOR (subject to a floor of 1%) + 8%. A portion of the interest on the Permira Senior Facility was in the form of payment-in-kind interest, with the accrued interest being converted to capital outstanding on the loan at each interest payment date. The Permira Senior Facility was secured on a fixed and floating charge basis over the assets of the Company. In March 2021, the Company repaid in full the balance outstanding under the Permira Senior Facility, consisting of a GBP tranche with an outstanding principal balance, including accrued payment-in-kind interest, of £368 million ($505 million); a USD tranche with an outstanding principal balance, including accrued payment-in-kind interest, of $8 million, and an EUR tranche with an outstanding principal balance, including accrued payment-in-kind interest, of €45 million ($53 million). As a result of the repayment, the Company recognized a loss on extinguishment of debt of $9 million, consisting of prepayment penalties of $4 million and write-offs of unamortized debt issuance costs of $5 million. The loss on extinguishment of debt is reflected in interest expense, net on the unaudited condensed consolidated statements of operations for the 26 weeks ended July 4, 2021. Upon repayment of the facility, the Company also settled accrued payment-in-kind interest totaling $79 million. The Company incurred interest expense of $13 million on the Permira Senior Facility during the 26 weeks ended July 4, 2021.

On April 24, 2020, the Company entered into an unsecured promissory note under the Paycheck Protection Program (the “PPP”), with a principal amount of $22 million. The loan had a January 2023 maturity date and was subject to a 1% interest rate. The PPP was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and was administered by the US Small Business Administration (the “SBA”). The Company repaid all amounts outstanding under the US government-backed bank loan in March 2021. The Company incurred interest expense of less than $1 million on this loan during the 26 weeks ended July 4, 2021.

On March 31, 2021, Soho House Bond Limited, a wholly-owned subsidiary of the Company, issued senior secured notes pursuant to a Notes Purchase Agreement, which were subscribed for by certain funds managed, sponsored or advised by Goldman Sachs & Co. LLC or its affiliates, in aggregate amounts equal to $295 million, €62 million ($73 million) and £53 million ($73 million) (the “Initial Notes”). The Notes Purchase Agreement included an option to issue, and a commitment on the part of the purchasers to subscribe for, further notes in one or several issuances on or prior to March 31, 2022 in an aggregate amount of up to $100 million (the “Additional Notes” and, together with the Initial Notes, the “Senior Secured Notes”). The Company exercised this option on March 9, 2022 for a total of $100 million of Additional Notes and received net proceeds of $99 million. The Senior Secured Notes mature on March 31, 2027 and bear interest at a fixed rate equal to a cash margin of 2.0192% per annum for the Initial Notes and 2.125% per annum for the Additional Notes, plus a payment-in-kind (capitalized) margin of 6.1572% per annum for the Initial Notes and 6.375% per annum for the Additional Notes. The Senior Secured Notes issued pursuant to the Notes Purchase Agreement may be redeemed and prepaid for cash, in whole or in part, at any time in accordance with the terms thereof, subject to payment of redemption fees. The Senior Secured Notes are guaranteed and secured on substantially the same basis as the Revolving Credit Facility. The Company incurred transaction costs of $13 million ($12 million for the year ended January 2, 2021, plus the additional $1 million incurred for the 26 weeks ended July 3, 2022) related to the Senior Secured Notes. The Company incurred interest expense of $12 million and $10 million on the Senior Secured Notes during the 13 weeks ended July 3, 2022 and July 4, 2021, respectively, and of $22 million and $10 million during the 26 weeks ended July 3, 2022 and July 4, 2021, respectively.

The remaining loans consist of the following:

	Currency	Maturity date	Principal balance as of July 3, 2022		Applicable interest rate as of July 3, 2022
Greek Street loan	£	January 2028	$	3,757		7.5	%
Farmhouse loan	£	July 2022		10,151		7.9	%
Compagnie de Phalsbourg credit facility	€	January 2025		5,400		7	%
Greek government loan	€	July 2025		1,369		3.1	%

Property Mortgage Loans

In February 2019, the Company refinanced an existing term loan and mezzanine loan associated with a March 2014 corporate acquisition of Soho Beach House Miami with a new term loan and mezzanine loan. The new term loan of $55 million and mezzanine loan of $62 million are secured on the underlying property and operations of Soho Beach House Miami and are due in February 2024. The loans bear interest at 5.34% and 7.25%, respectively. The Company incurred interest expense of $2 million and $2 million on these facilities during the 13 weeks ended July 3, 2022 and July 4, 2021, respectively, and $4 million and $4 million during the 26 weeks ended July 3, 2022 and July 4, 2021, respectively.

Related Party Loans

In 2017, SWL entered into a £40 million term loan facility agreement with two individuals who are related parties of the Company. The SWL loan bears interest at 7% and was initially scheduled to mature at the earliest of: (a) September 29, 2022; (b) the date of disposal of the whole or substantial part of the SWL; (c) the date of sale by the shareholders of the entire issued share capital of SWL to a third party; (d) the date of the admission of SWL to any recognized investment exchange or multi-lateral trading facility; and (e) any later date that the two individuals may determine in their sole discretion. On March 11, 2022, this loan was extended and the maturity date is now September 29, 2023. The carrying amount of the term loan was £19 million ($23 million) and £16 million ($21 million) as of July 3, 2022 and January 2, 2022, respectively. The Company incurred interest expense of $1 million and less than $1 million during the 13 weeks ended July 3, 2022 and July 4, 2021, respectively, and $1 million and less than $1 million during the 26 weeks ended July 3, 2022 and July 4, 2021, respectively.

In August 2020, the Company entered into a non-interest bearing loan agreement with a noncontrolling interest shareholder of certain of its subsidiaries in Greece for a principal amount of less than €1 million ($1 million). The shareholder loan has an effective interest rate of 4%, matures in December 2022, and is presented within current portion of related party loans on the unaudited condensed consolidated balance sheets.

Future Principal Payments

The following table presents future principal payments for the Company’s debt, property mortgage loans, and related party loans as of July 3, 2022:

(in thousands)
Remainder of 2022	$	11,195
2023		23,706
2024		117,699
2025		7,511
2026		786
Thereafter		559,691
	$	720,588