What was the estimated fair value of the Series 2018-1 Class A-2-III Notes for Hardees in 2024?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
277,497 |
NOTE 12 — EQUITY
As of January 31, 2024 and 2023, a total of 100 shares of $0.01 par value common stock of CKE Restaurants are issued and outstanding. Each share of common stock entitles the shareholder to one vote per share and is eligible to receive dividend payments when declared. As discussed more fully in Note 8, the Indenture governing the Senior Notes includes certain covenants and restrictions that may limit CKE Restaurants' ability to declare and pay dividends. No dividends were declared and paid in fiscal 2024 and 2023.
During fiscal 2023, CKE Inc. merged with CKE Restaurants which survives the merger. As a r
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, the estimated fair value of the Series 2018-1 Class A-2-III Notes in 2024 was $222,070. These notes are part of Hardees's financial liabilities. Fair value represents the exchange price for transferring a liability in an orderly transaction between market participants on the measurement date.
Hardees determines the fair values of its borrowings, including these notes, by obtaining estimated market prices from an investment banking firm as of the balance sheet dates. This valuation method reflects market conditions and the perceived risk associated with the debt. The Series 2018-1 Class A-2 Notes were issued in three tranches, with the Class A-2-III tranche having an initial principal amount of $250,000 and a fixed interest rate of 5.710%. The anticipated repayment date for these specific notes is June 2028.
The fair value hierarchy used by Hardees prioritizes observable inputs and minimizes unobservable inputs. Level 1 inputs are quoted prices in active markets, Level 2 includes observable inputs other than Level 1 prices, and Level 3 involves unobservable inputs supported by limited market activity. This hierarchy ensures that fair value measurements are based on the most reliable data available.
For a prospective Hardees franchisee, understanding the company's debt structure and how it manages its financial liabilities can provide insights into the financial stability of the brand. While the notes themselves do not directly impact day-to-day franchise operations, they are indicative of the overall financial health of Hardees's parent company. Monitoring these financial indicators can help franchisees assess the long-term viability of their investment.