What is the non-current portion of Checkersrallys' debt obligations as of December 30, 2024?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
ugh January 1, 2024 (Successor) and from January 3, 2023, through June 16, 2023 (Predecessor), respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 10 - DEBT
Debt consisted of the following as of December 30, 2024 (Successor) and January 1, 2024 (Successor):
| Successor | ||||
|---|---|---|---|---|
| December 30, 2024 | January 1, 2024 | |||
| Obligations under premium financing arrangements, with short | $ | 976 | $ | 1,028 |
| term maturities. | ||||
| Last-Out Term Loans, maturing June 16, 2028, bearing interest at | 80,988 | 76,952 | ||
| an alternative base rate plus 8% or the Adjusted Term SOFR | ||||
| plus 9% plus a credit adjustment spread. Company has option | ||||
| to pay interest in kind at a rate equal to 6% rather than in cash. | ||||
| As of December 30, 2024 and January 1, 2024 the effective | ||||
| interest rates were 15.16% and 15.18%, respectively. | ||||
| New Money Loans, maturing June 16, 2027, bearing interest at an | 10,436 | 10,081 | ||
| alternative base rate plus 6% or the Adjusted Term SOFR plus | ||||
| 7% plus a credit adjustment spread. Company has option to pay | ||||
| interest in kind at a rate equal to 4% rather than in cash. As of | ||||
| December 30, 2024 and January 1, 2024 the |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys' 2025 Franchise Disclosure Document, the total debt less current maturities as of December 30, 2024, was $90,271. This figure represents the non-current portion of Checkersrallys' debt obligations, meaning the amount of debt not due within the next year. This is derived by subtracting the current maturities of $1,788 from the total debt of $92,059.
Specifically, the debt includes obligations under premium financing arrangements, Last-Out Term Loans, and New Money Loans. The Last-Out Term Loans, maturing on June 16, 2028, amounted to $80,988 and bore interest at an alternative base rate plus 8% or the Adjusted Term SOFR plus 9%, with an option for Checkersrallys to pay interest in kind at a rate of 6%. The New Money Loans, maturing on June 16, 2027, totaled $10,436 and bore interest at an alternative base rate plus 6% or the Adjusted Term SOFR plus 7%, with an option to pay interest in kind at a rate of 4%.
Prospective franchisees should note the interest rates on these loans, which were approximately 15% at the end of 2024. Understanding the terms and conditions of Checkersrallys' debt is crucial for assessing the financial stability of the franchisor. A high level of debt could indicate financial risk, potentially affecting the franchisor's ability to support its franchisees. Therefore, it is advisable for potential franchisees to consult with a financial advisor to evaluate the implications of Checkersrallys' debt obligations.