What is the 'Related Party Restatement Date Term Loan' for Checkers?
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 on the applicable interest payment dates. The capitalized interest was deemed to be principal on the loan and interest accrued on the capitalized interest until June 14, 2021. Within fiscal 2021, the treatment of interest as payable "in kind" was extended beyond June 14, 2021 through the maturity date of the Second Lien.
Borrowings under the Term Loans incurred interest at a floating rate which was, at Holdings' option, (i) the London Interbank Offer Rate ("LIBOR") for a specified interest period plus an applicable margin, or (ii) an alternative base rate, plus an applicable margin.
Second Amendment to Related Party Credit Facility
On December 31, 2020, (i) the Company entered into the Second Amendment to the Amended and Restated First Lien Credit Agreement ("Second Amendment to First Lien") and (ii) the Company and BossCo Holdings entered into the Exchange Agreement and Second Amendment and Joinder to Amended and Restated Second Lien Credit Agreement ("Second Amendment to Second Lien").
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, the Related Party Restatement Date Term Loan (RDTL) is a component of the company's debt structure. In 2019, Holdings' Restated Credit Agreement converted $19.9 million of Revolver into Restatement Date Term Loans, which were initially set to mature on April 25, 2022. However, in fiscal year 2021, the maturity date was extended to April 25, 2023.
The terms of the Holdings Restated Credit Agreement were amended such that any interest on the loans accrued on or before June 14, 2021, was payable "in kind." This meant the interest was capitalized and added to the outstanding principal balance of the loans on the applicable interest payment dates. The capitalized interest was then treated as principal on the loan, and interest accrued on this capitalized amount 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.
According to the January 1, 2024 (Successor) and January 2, 2023 (Predecessor) tabular data, the Related Party Restatement Date Term Loan matured on April 25, 2023, bearing interest at LIBOR plus an applicable margin or an alternative base rate plus an applicable margin, with interest paid quarterly. The outstanding balance for this loan was $19,244 as of January 2, 2023, and $2 as of January 1, 2024.
For a prospective Checkers franchisee, understanding the details of these loans and their amendments is crucial because they reflect the financial obligations and strategies of the parent company. The franchisee should consider how these financial arrangements might impact the franchisor's ability to support the franchise system and invest in its growth. It is important to note the loan amounts are presented in thousands.