What fees are the Class A-1 Notes subject to in relation to the Carvel franchise?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
ass A-1 Notes and the 2022-1 Class A-1 Notes allow for the drawing of up to $200,000 on a revolving basis, for a combined total of up to $400,000.
Interest and principal payments on the Class A-2 Notes are due on a quarterly basis. The requirement to make such quarterly principal payments on the Class A-2 Notes is subject to certain financial conditions set forth in the indenture governing the Senior Notes (the "Indenture"). The legal final maturity dates of the Class A-2 Notes range from 2047 through 2054. If the Co-Issuers have not repaid or refinanced the Class A-2 Notes prior to their anticipated repayment dates, which range from 2027 through 2031, additional interest will accrue pursuant to the Indenture.
Advances under the Class A-1 Notes bear interest at a variable rate based on (i) the prime rate, (ii) the federal funds rate, (iii) the secured overnight financing rate, or (iv) with respect to advances made by conduit investors through the issuance of commercial paper, the commercial paper rate applicable to such conduit investor, plus, in each case, any applicable margin, as specified in the note purchase agreements. The Class A-1 Notes are subject to (i) certain commitment fees in respect of the unutilized port
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, the Class A-1 Notes are subject to specific fees. These notes bear interest at a variable rate that is based on the prime rate, the federal funds rate, the secured overnight financing rate, or the commercial paper rate applicable to conduit investors. The rate used depends on the specific advances made. In each case, an applicable margin is added as specified in the note purchase agreements.
In addition to interest, the Class A-1 Notes are subject to commitment fees on the unutilized portion of the investors' commitments. They also incur fees for any letters of credit issued under the notes. As of December 29, 2024, the outstanding letters of credit under the 2022-1 Class A-1 Notes totaled $24,248, primarily related to interest reserves required under the Indenture.
As of December 29, 2024, Carvel had outstanding amounts of $148,000 and $138,000 under the 2022-1 Class A-1 Notes and the 2023-1 Class A-1 Notes, respectively. The company does not anticipate any material losses from these letters of credit, as they do not expect any amounts to be drawn by the beneficiaries. Interest payments on the Class A-1 Notes are due quarterly.