What was the maturity date of the Restatement Date Term Loans (RDTL) after the conversion by Checkers' Holdings?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
financial institutions party thereto. Holdings also entered into an amendment to the Second Lien Credit Agreement (the "Second Lien Restated Credit Agreement") with Wilmington Trust, National Association (as successor to Jefferies Finance LLC), as administrative agent and collateral agent for the lenders party thereto.
Holdings Restated Credit Agreement converted $19.9 million in aggregate principal amount of Revolver into Restatement Date Term Loans ("RDTL") maturing April 25, 2022 leaving $5.1 million of Revolver. Within fiscal 2021, the maturity date of the RDTL and Revolver was extended to April 25, 2023.
Holdings Restated Credit Agreement amended the terms in that any interest on the loans accrued on or prior to June 14, 2021, shall be payable "in kind", which interest shall be capitalized and added to the outstanding principal balance of the loans
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, Holdings Restated Credit Agreement converted $19.9 million in aggregate principal amount of Revolver into Restatement Date Term Loans (RDTL). These RDTL were initially set to mature on April 25, 2022. However, within fiscal year 2021, the maturity date of the RDTL was extended to April 25, 2023.
This extension of the maturity date to April 25, 2023, means that Checkers Holdings had additional time to repay the $19.9 million converted from the Revolver into RDTL. For a prospective franchisee, this indicates the financial restructuring and debt management strategies employed by the parent company. Understanding the terms and maturity dates of these loans can provide insight into the financial stability and obligations of Checkers's parent entity.
The extension of the maturity date also had implications for the interest on these loans. The terms were amended such that any interest accrued on the loans on or prior to June 14, 2021, would be payable "in kind." This meant that the interest would be capitalized and added to the outstanding principal balance of the loans on the applicable interest payment dates. This capitalized interest was then deemed to be principal on the loan, and interest accrued on it until June 14, 2021. This treatment of interest as payable "in kind" was extended beyond June 14, 2021, through the maturity date of the Second Lien within fiscal year 2021.
For a potential Checkers franchisee, understanding these details of the loan agreements is crucial for assessing the financial health of the franchisor. The restructuring and amendments to the credit agreements, including the capitalization of interest, can affect the overall financial risk and stability of the company, which indirectly impacts the franchisees. Therefore, it is important to consider these factors when evaluating the franchise opportunity.