How were the financing costs allocated by Checkersrallys between the funded and unfunded components of the New Money Loans?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
the Company's option, either an alternative base rate plus 8% per annum or the Adjusted Term Secured Overnight Financing Rate plus 9% per annum plus a credit adjustment spread with the option to pay interest at a rate equal to 6% per annum in kind rather than in cash.
(Tabular Dollars in Thousands, Except Share and per Share Data)
As part of issuing the New Money Loans, the Company funded $10 million out of the total $25 million commitment. Additionally, the Company was required to pay lenders' costs of $1.3 million. Accordingly, the Company allocated financing costs proportionally to the funded component and the unfunded component. The portion allocated to the funded balance is recorded as a reduction to long-term debt and the portion allocated to the unfunded balance is recorded as deferred financing cost asset. As of the date of the Out-of-Court Restructuring, the Company recognized $0.5 million and $0.8 million as a redu
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, when issuing New Money Loans, the company funded $10 million out of a total $25 million commitment and incurred lender's costs of $1.3 million. Checkersrallys allocated these financing costs proportionally between the funded and unfunded portions of the loan.
The portion of the financing costs allocated to the funded balance was recorded as a reduction to long-term debt. The portion allocated to the unfunded balance was recorded as a deferred financing cost asset.
As of the date of the Out-of-Court Restructuring, Checkersrallys recognized $0.5 million as a reduction to long-term debt and $0.8 million as a deferred financing cost asset. As of January 1, 2024, the company had $0.4 million recorded as a reduction to long-term debt and $0.6 million as a deferred financing cost asset. The deferred financing cost asset is recognized in Other Current Assets on the balance sheet.