What is the 'Second Lien Credit Agreement' for Checkersrallys?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
On April 25, 2017, Holdings entered into a first lien credit agreement (the "First Lien Credit Agreement") and second lien credit agreement (the "Second Lien Credit Agreement") with Jefferies Finance LLC as administrative agent, joint lead arranger and joint bookrunner, and the financial institutions party thereto. The First Lien Credit Agreement consisted of (i) a $192.5 million First Lien Term Loan maturing on April 25, 2024 and (ii) a $25.0 million Revolver maturing on April 25, 2022. The Second Lien Credit Agreement consisted of an $87.5 million Second Lien Term Loan maturing on April 25, 2025. The First Lien Term Loan and Second Lien Term Loan are collectively referred to as the "Term Loans" or the "2017 Senior Credit Facility". The proceeds from the Term Loans were used to fund the Merger.
On August 21, 2019, Holdings entered into an amendment to the First Lien Credit Agreement (the "First Lien Restated Credit Agreement") with Jefferies Finance LLC continuing as administrative agent, joint lead arranger and joint bookrunner, and the 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.
On December 31, 2020, the Company entered into an agreement to amend the Amended and Restated Second Lien Credit Agreement whereby $52.4 million of second lien debt was relieved for $52.9 million of non-cash consideration that was contributed to the Company by its parent, BossCo Holdings.
On June 5, 2023, Burger BossCo, Holdings, CDI, and certain of their affiliates commenced solicitation of consents to an out-of-court restructuring of the capital structure of Burger BossCo (the "Out-of-Court Restructuring") from holders of (a) loans under that certain Amended and Restated First Lien Credit Agreement, dated as of August 21, 2019 (as amended, restated, supplemented or otherwise modified from time to time, the "First Lien Credit Agreement" and such loans, the "First Lien Loans"), by and among Holdings, Burger BossCo, the lenders from time to time party to the First Lien Credit Agreement (the "First Lien Lenders"), and Jefferies Finance LLC, as administrative agent and collateral agent for the First Lien Lenders, and (b) loans under that certain Amended and Restated Second Lien Credit Agreement, dated as of August 21, 2019 (as amended, restated, supplemented or otherwise modified from time to time, the "Second Lien Credit Agreement" and such loans, the "Second Lien Loans"), by and among Holdings, Burger BossCo, the lenders from time to time party to the Second Lien Credit Agreement (the "Second Lien Lenders"), and Wilmington Trust, National Association, as administrative agent and collateral agent for the Second Lien Lenders. Checkers obtained consents to the Out-of-Court Restructuring from all of the First Lien Lenders and all of the Second Lien Lenders and consummated the Out-of-Court Restructuring on June 16, 2023, whereby Burger BossCo and its subsidiaries were deconsolidated from BossCo Holdings, newly issued equity of Burger BossCo was issued to Checkers Topco,
Additionally, the restructuring resulted in the complete cancellation of the Second Lien Loan in exchange for the issuance of 5% equity in Topco.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the Second Lien Credit Agreement is referenced in the context of debt agreements and restructuring activities involving Holdings, Burger BossCo, and related entities. On April 25, 2017, Holdings entered into a Second Lien Credit Agreement, which consisted of an $87.5 million Second Lien Term Loan maturing on April 25, 2025. This agreement was part of a broader financial arrangement that included a First Lien Credit Agreement.
The Second Lien Credit Agreement was later amended on August 21, 2019, and again on December 31, 2020. These amendments involved changes to the terms of the agreement, including the treatment of interest and the exchange of debt for equity. Specifically, on December 31, 2020, $52.4 million of second lien debt was relieved for $52.9 million of non-cash consideration.
In 2023, Checkersrallys underwent an Out-of-Court Restructuring, which involved soliciting consents from holders of loans under both the First and Second Lien Credit Agreements. As a result of this restructuring, the Second Lien Loan was completely exchanged for the issuance of 5% equity in Topco, and the secured creditors of Holdings acquired all of the equity of Topco. This restructuring significantly altered the debt structure and ownership of Checkersrallys.