What was the reported amount of Series 2020-1 Class A-2 Notes for Carls in 2023?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
ive dividend payments when declared. As discussed more fully in Note 8, the Indenture governing the Senior Notes includes certain covenants and restrictions that may limit CKE Restaurants' ability to declare and pay dividends. No dividends were declared and paid in fiscal 2024 and 2023.
During fiscal 2023, CKE Inc. merged with CKE Restaurants which survives the merger. As a result of the merger, all assets, liabilities and debts of CKE, Inc. transferred to CKE Restaurants. The intercompany note agreements between the entities were cancelled, and the CKE Restaurants note receivable from CKE Inc. in the amount of $441,866 was reclassified to accumulated deficit. In addition, $316 of cash held by CKE Inc. was consolidated into CKE Restaurants.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the carrying amount for the Series 2020-1 Class A-2 Notes in 2023 was reported as $385,688, with an estimated fair value of $346,802. This indicates the book value of these notes on Carls's balance sheet at that time.
For a prospective franchisee, this information provides insight into the financial obligations and debt structure of Carls. Understanding the different series of notes and their respective values can help in assessing the overall financial health and stability of the company. It's important to note that these notes are secured by the assets of CKE Securitization Entities, which are subsidiaries of Carls.
The distinction between carrying amount and estimated fair value is also relevant. The carrying amount reflects the historical cost of the debt, while the estimated fair value represents the current market assessment of the debt's worth. A significant difference between these values could signal potential risks or opportunities related to Carls's debt management.
Franchisees should consider these figures in conjunction with other financial data provided in the FDD to gain a comprehensive understanding of Carls's financial position. It is also advisable to seek professional financial advice to interpret these figures in the context of the franchise agreement and the overall investment.