Does the text specify any information about the company's equity disclosed in the Checkersrallys financial statements?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
s prior to the first anniversary (ii) 7% on or after the first anniversary, but prior to the second anniversary, (iii) 5% on or after the second anniversary, but prior to the third anniversary, and (iv) 3% on or after the third anniversary.
Pursuant to the Out-of-Court Restructuring, each First Lien Lender exchanged all of its First Lien Loans for (i) if such First Lien Lender did not elect to provide New Money Commitments, its pro rata share of (a) 55% of the equity of Topco and (b) $75 million in "Last-Out Term Loans" under the New Credit Agreement (the "Second Out Loans"), or (ii) if such First Lien Lender did elect to provide New Money Commitments, (a) its pro rata share of 55% of the equity of Topco, (b) its pro rata share of Second Out Loans, (c) its adjusted pro rata share (based on the amount of New Money Commitments provided by such First Lien Lender) of 40% of the equity of Topco and (d) the amount of New Money Loans funded by such First Lien Lender on the effective date of the Out-of-Court Restructuring pursuant to its New Money Commitments. The Second
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Out Loans accrue interest at a floating rate, which can be, at the Company's option, (x) an alternative base rate plus 8.00% per annum or (y) the Adjusted Term Secured Overnight Financing Rate plus 9.00% per annum plus a credit adjustment spread. The Company has the option to pay interest on the Second Out Loans that has accrued at a rate equal to 6.00% per annum in kind, rather than in cash. The Second Out Loans mature on June 16, 2028. Additionally, the Company is required to make recurring quarterly principal payments on the Second Out Loans in the amount equivalent to 0.25% of the original principal amount. The remainder of the principal amount is due upon maturity. Upon each principal repayment, the Company is required to pay a contractual premium, equal to (i) prior to the first anniversary, a make-whole provision calculated as a discounted amount of remaining interest payments prior to the first anniversary (ii) 8% on
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to the 2025 Checkersrallys FDD, the company's financial statements include consolidated statements of stockholder's equity (deficit). The FDD mentions that as a result of an Out-of-Court Restructuring, First Lien Lenders exchanged their loans for equity in Topco. Specifically, those who didn't provide New Money Commitments received a pro rata share of 55% of Topco's equity, while those who did provide commitments received a pro rata share of 55% of the equity, plus an adjusted pro rata share of 40% of the equity.
Additionally, Second Lien Lenders exchanged their loans for a pro rata share of 5% of the equity of Topco. These exchanges are part of the Out-of-Court Restructuring that impacted the company's financial structure. The financial statements attached as Exhibit H include audited consolidated balance sheets, statements of operations, and cash flows, providing a comprehensive view of Checkersrallys' financial performance and position.
The inclusion of stockholder's equity statements and related details in the FDD's financial exhibits is standard practice, allowing prospective franchisees to assess the financial stability and structure of Checkersrallys. Reviewing these statements can help franchisees understand the ownership structure and the impact of restructuring events on the company's equity. This information is crucial for making an informed investment decision.