What are the interest rate options for the Series 2018-1 Variable Funding Notes for Carls?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
future subject to certain conditions.
The Series 2018-1 Class A-2 Notes were issued in three tranches: (i) $400,000 of Series 2018-1 4.250% Fixed Rate Senior Secured Notes, Class A-2-I, with an anticipated repayment date of June 2022; (ii) $350,000 of Series 2018-1 4.959% Fixed Rate Senior Secured Notes, Class A-2-II, with an anticipated repayment date of June 2025; and (iii) $250,000 of Series 2018-1 5.710% Fixed Rate Senior Secured Notes, Class A-2-III, with an anticipated repayment date of June 2028. The Series 2018-1 Class A-2 Notes have a legal final maturity date of June 2048. The Series 2018-1 Class A-2 Notes require scheduled quarterly principal payments of $2,500 with the first principal payment due December 20, 2018. The interest payments for the Series 2018-1 Class A-2 Notes are due quarterly in arrears on the 20th day of each March, June, September and December.
The Series 2018-1 Variable Funding Notes provide for senior secured revolving facility loans, and subfacilities for swingline loans and letters of credit, in an aggregate amount of $70,000. On October 26, 2022, the Series 2018-1 Variable Funding Notes were amended to extend the maturity date to September 2027, including options for renewal for two additional twelve-month terms (subject to certain conditions, including a minimum debt service coverage ratio). The Series 2018-1 Variable Funding Notes bear interest at a variable interest rate equal to (a) a commercial paper rate plus 3.00%, (b) the term SOFR rate plus 3.0
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the Series 2018-1 Variable Funding Notes bear interest at a variable rate. The interest rate is determined by how participating investors fund the borrowings.
The interest rate will be equal to one of the following options: (a) a commercial paper rate plus 3.00%, (b) the term SOFR rate plus 3.00%, or (c) 2.00% plus the greater of (i) the Prime Rate, (ii) the Federal Funds rate plus 0.50%, or (iii) term SOFR plus 1.00%.
The Series 2018-1 Variable Funding Notes, which provide for senior secured revolving facility loans and subfacilities for swingline loans and letters of credit, have an aggregate amount of $70,000. The notes were amended on October 26, 2022, to extend the maturity date to September 2027, with options to renew for two additional twelve-month terms, subject to certain conditions, including a minimum debt service coverage ratio. Carls must also pay a commitment fee of 0.50% per annum for unused commitments and letter of credit fees of 3.00% per annum on outstanding non-cash collateralized letters of credit. Interest and other fees are due quarterly in arrears on the 20th day of each March, June, September, and December.