For Checkers' New Money Loans, what interest rate can be paid in kind rather than in cash?

According to Checkers's 2025 Franchise Disclosure Document, the New Money Loans accrue interest at a floating rate, which Checkers can choose to be either an alternative base rate plus 6% per annum, or the Adjusted Term Secured Overnight Financing Rate plus 7% per annum, along with a credit adjustment spread. Checkers has the option to pay interest on these New Money Loans at a rate of 4% per annum in kind, rather than in cash. These loans mature on June 16, 2027.

In simpler terms, Checkers has some flexibility in how it manages the interest payments on its New Money Loans. Instead of paying the full interest amount in cash, Checkers can choose to pay a portion of it 'in kind,' which means using something other than cash, at a rate of 4% per annum. The specific base interest rate applied to the loan will depend on the company's choice between an alternative base rate plus 6% or the Adjusted Term Secured Overnight Financing Rate plus 7%, in addition to a credit adjustment spread.

This option to pay interest in kind can be beneficial for Checkers, especially if the company is managing its cash flow. However, it's important to note that while this provides short-term relief on cash outflow, the unpaid interest will likely accrue and increase the overall debt. The New Money Loans mature on June 16, 2027, so Checkers will need to manage these obligations carefully. Additionally, the company is required to make recurring quarterly principal payments on the New Money Loans in the amount equivalent to 0.25% of the original principal amount which may increase upon additional borrowings.