What was the amount of second lien debt relieved for Checkersrallys on December 31, 2020?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
ed issuing costs of $1.6 million. In addition, the Company incurred $0.3 million of third-party costs that were expensed within "general and administrative expenses" within the Consolidated Statements of Operations for the year ended January 3, 2022. There was no gain or loss recorded as part of the Second Amendment to First Lien.
Under the Second Amendment to Second Lien, on December 31, 2020, 50% of the aggregate principal amount of Related Party Second Lien Term Loans outstanding (including all accrued and unpaid interest thereon) were exchanged for Series C-1 Preferred Stock of BossCo Holdings. The aggregate principal amount of Related Party Second Lien Term Loans and accrued interest exchanged for Series C-1 Preferred Stock was $52.4 million. Burger BossCo I
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, on December 31, 2020, the company underwent a Second Amendment to its Second Lien Credit Agreement. As a result, 50% of the total principal amount of Related Party Second Lien Term Loans outstanding, which included all accrued and unpaid interest, was exchanged for Series C-1 Preferred Stock of BossCo Holdings. The aggregate principal amount of Related Party Second Lien Term Loans and accrued interest exchanged for Series C-1 Preferred Stock totaled $52.4 million.
Burger BossCo Intermediate, Inc. received a capital contribution of $52.9 million from Parent, which was then paid to the Second Lien lenders. This contribution is reflected in "Additional paid-in capital." The proceeds from this transaction were presented within "Long-term debt, less current maturities and deferred financing costs" on the Consolidated Balance Sheets.
For a prospective Checkersrallys franchisee, this indicates a significant restructuring of the company's debt. The conversion of a substantial portion of second lien debt into preferred stock could suggest an effort to improve the company's financial stability and reduce its debt burden. This type of financial maneuvering is not uncommon in franchise systems, as franchisors often seek to optimize their capital structure to support growth and operations.