How much aggregate principal amount of Revolver did Checkers' Holdings Restated Credit Agreement convert into Restatement Date Term Loans (RDTL)?
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, the Holdings Restated Credit Agreement converted $19.9 million in aggregate principal amount of Revolver into Restatement Date Term Loans (RDTL). These loans were initially set to mature on April 25, 2022, but the maturity date was later extended to April 25, 2023, within fiscal year 2021. The remaining Revolver amount after this conversion was $5.1 million.
This conversion and extension of the maturity date are significant for prospective franchisees as they reflect Checkers's financial management and debt restructuring activities. Understanding the terms and modifications of these credit agreements can provide insights into the company's financial stability and its ability to manage its debt obligations. The conversion of Revolver into term loans suggests a strategic decision to restructure debt, potentially to secure more favorable terms or manage cash flow.
Furthermore, the amendment to the Holdings Restated Credit Agreement included a provision that any interest on the loans accrued on or prior to June 14, 2021, would be payable "in kind." This means that the interest was capitalized and added to the outstanding principal balance of the loans on the applicable interest payment dates. This capitalized interest was then treated as principal on the loan, and interest accrued on it until June 14, 2021. The 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. This type of interest capitalization can impact the overall debt burden and should be carefully considered when assessing the financial health of Checkers.