What assets secure the Senior Notes for Hardees?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
The Senior Notes are secured by substantially all assets of the CKE Securitization Entities, but are not guaranteed by or secured with the assets of CKE or its other subsidiaries, including CKE Restaurants. The Indenture requires the CKE Securitization Entities to report and remit weekly cash flows of the CKE Securitization Entities to the trustee of the Senior Notes. The weekly cash flows are subject to a priority of payments that provides for the payment of funds to specific trust accounts for debt service and other specified purposes set forth in the Indenture. The amount of weekly cash flow, if any, that exceeds the amounts required by the priorities of payment is remitted to CKE Restaurants in the form of an equity distribution.
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, the Senior Notes are secured by substantially all assets of the CKE Securitization Entities. These entities include Carl's Jr. Funding LLC and Hardee's Funding LLC, along with their subsidiaries and immediate holding companies. However, the Senior Notes are not guaranteed by or secured with the assets of CKE or its other subsidiaries, including CKE Restaurants.
The indenture governing the Senior Notes requires the CKE Securitization Entities to report and remit their weekly cash flows to the trustee. These cash flows are then subject to a priority of payments, which allocates funds to specific trust accounts for debt service and other purposes outlined in the indenture. Any remaining cash flow exceeding these requirements is remitted to CKE Restaurants as an equity distribution.
This arrangement ensures that the Senior Notes are backed by a dedicated pool of assets and cash flows from the CKE Securitization Entities, providing a level of security for the noteholders. However, it's important to note that the assets of the parent company, CKE, and its other subsidiaries are not part of this security, which could be a consideration for potential investors or franchisees assessing the financial structure of Hardees.