What was the purpose of the proceeds from the Term Loans obtained by Checkers' Holdings?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
gin was 10.00% per annum for LIBOR loans under the Additional Second Lien Term Loans and 9.00% per annum for alternative base rate loans. The Additional Second Lien Term Loans incurred interest payable in-kind through maturity.
(Tabular Dollars in Thousands, Except Share and per Share Data)
The proceeds of the Additional Second Lien Term Loans, net of original issue discount, were presented within "long-term debt, less current maturities and deferred financing costs" on the co
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the proceeds from the Additional Second Lien Term Loans were available for Checkers to use for capital expenditures and general business expenses. Debt issuance costs of $5.0 million were incurred and were being amortized over the remaining term of the Additional Second Lien Term Loans through April 25, 2025.
These loans are part of Checkers' overall capital structure and financial management. The company's ability to use these funds for capital expenditures suggests a focus on growth, maintenance, or improvement of existing assets. The fact that the funds can also be used for general business expenses indicates flexibility in managing day-to-day operational costs and unexpected financial needs.
The amortization of debt issuance costs over the term of the loans is a standard accounting practice. However, the $5.0 million in debt issuance costs is a significant figure that franchisees should consider, as it reflects the expenses associated with obtaining the financing. The loans themselves are part of a larger restructuring effort, which franchisees should understand to assess the financial stability and strategic direction of Checkers.