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DEBT
 6 Months Ended
Jun. 26, 2022
Debt Disclosure [Abstract]  
Debt DEBT
Long-term debt consisted of the following (in millions):
June 26, 2022December 26, 2021
Final MaturityAnticipated Call DateRateFace ValueBook ValueBook Value
Senior Debt
2021 FB Royalty Securitization4/25/20517/25/20234.75 %$97.1 $95.6 $95.4 
2021 GFG Royalty Securitization7/25/20517/25/20236.00 %209.0 205.9 205.6 
2021 Twin Peaks Securitization7/25/20517/25/20237.00 %150.0 147.2 146.8 
2021 Fazoli's/Native Securitization7/25/20517/25/20236.00 %128.8 123.8 122.8 
Senior Subordinated Debt
2021 FB Royalty Securitization4/25/20517/25/20238.00 %32.4 31.9 31.8 
2021 GFG Royalty Securitization7/25/20517/25/20237.00 %84.0 81.8 81.5 
2021 Twin Peaks Securitization7/25/20517/25/20239.00 %50.0 47.0 46.6 
2021 Fazoli's/Native Securitization7/25/20517/25/20237.00 %25.0 23.1 22.7 
Subordinated Debt
2021 FB Royalty Securitization4/25/20517/25/20239.00 %15.0 14.2 14.1 
2021 GFG Royalty Securitization7/25/20517/25/20239.50 %57.0 53.1 52.6 
2021 Twin Peaks Securitization7/25/20517/25/202310.00 %50.0 44.9 44.2 
2021 Fazoli's/Native Securitization7/25/20517/25/20239.00 %40.0 36.0 35.1 
Total Securitized Debt938.3 904.5 899.3 
Elevation Note 7/19/2026N/A6.00 %6.5 4.3 5.6 
Equipment Notes
5/5/2027 to 3/7/2029
N/A
7.99% to 8.49%
0.7 0.7 — 
Total debt945.5 909.5 904.9 
Current portion of long-term debt— (0.9)(0.6)
Long-term debt$945.5 $908.6 $904.3 
Terms of Outstanding Debt
2021 FAT Royalty Securitization
On April 26, 2021, FAT Brands Royalty I, LLC (“FB Royalty”), a special purpose, wholly-owned subsidiary of FAT Brands Inc., completed the issuance and sale of three tranches of fixed rate secured notes (the “2021 FAT Royalty Securitization
Notes”) with a total aggregate principal amount of $144.5 million. The 2021 FB Royalty Securitization Notes are generally secured by a security interest in substantially all the assets of FB Royalty and its subsidiaries.
On July 6, 2022, FB Royalty issued an additional $76.5 million aggregate principal amount of three tranches of fixed rate senior secured notes as follows:
Closing DateClassSeniorityPrincipal BalanceCouponFinal Legal Maturity Date
7/6/2022A-2Senior$42.74.75%7/25/2051
7/6/2022B-2Senior Subordinated$14.28.00%7/25/2051
7/6/2022M-2Subordinated$19.69.00%7/25/2051
Of the $76.5 million aggregate principal amount, $61.5 million was issued to FAT Brands Inc. and will be eliminated in consolidation. The remainder of the notes were sold privately, resulting in net proceeds of $13.5 million (net of debt offering costs of $0.6 million and original issue discount of $0.9 million).
2021 GFG Royalty Securitization
In connection with the acquisition of GFG, on July 22, 2021, FAT Brands GFG Royalty I, LLC ("GFG Royalty"), a special purpose, wholly-owned subsidiary of FAT Brands, completed the issuance and sale of three tranches of fixed rate secured notes (the "2021 GFG Royalty Securitization Notes") with a total aggregate principal amount of $350.0 million. Immediately following the closing of the acquisition of GFG, the Company contributed the franchising subsidiaries of GFG to GFG Royalty, pursuant to a Contribution Agreement. The GFG Securitization Notes are generally secured by a security interest in substantially all the assets of GFG Royalty and its subsidiaries.
2021 Twin Peaks Securitization
In connection with the acquisition of Twin Peaks, on October 1, 2021, the Company completed the issuance and sale in a private offering through its special purpose, wholly-owned subsidiary, FAT Brands Twin Peaks I, LLC, of three tranches of fixed rate secured notes (the "Twin Peaks Securitization Notes") with a total aggregate principal amount of $250.0 million. Immediately following the closing of the acquisition of Twin Peaks, the Company contributed the franchising subsidiaries of Twin Peaks to FAT Brands Twin Peaks I, LLC,, pursuant to a Contribution Agreement. The Twin Peaks Securitization Notes are generally secured by a security interest in substantially all the assets of FAT Brands Twin Peaks I, LLC, and its subsidiaries.
2021 Fazoli's / Native Securitization
In connection with the acquisition of Fazoli's and Native Grill & Wings, on December 15, 2021, the Company completed the issuance and sale in a private offering through its special purpose, wholly-owned subsidiary, FAT Brands Fazoli's Native I, LLC, of three tranches of fixed rate secured notes (the "Fazoli's/Native Securitization Notes") with a total aggregate principal amount of $193.8 million. Immediately following the closing of the acquisition of Fazoli's and Native, the Company contributed the franchising subsidiaries of these entities to FAT Brands Fazoli's Native I, LLC, pursuant to a Contribution Agreement. The Fazoli's/Native Securitization Notes are generally secured by a security interest in substantially all the assets of FAT Brands Fazoli's Native I, LLC and its subsidiaries.
Terms and Debt Covenant Compliance
The 2021 FAT Royalty Securitization Notes, the 2021 GFG Royalty Securitization Notes, the 2021 Twin Peaks Securitization Notes and the 2021 Fazoli's/Native Securitization Notes (collectively, the "Securitization Notes") require that the principal (if any) and interest obligations be segregated to ensure appropriate funds are reserved to pay the quarterly principal and interest amounts due. The amount of monthly cash flow that exceeds the required monthly interest reserve is generally remitted to the
Company. Interest payments are required to be made on a quarterly basis and, unless repaid on or before July 25, 2023, additional interest equal to 1.0% per annum will accrue on the then outstanding principal balance of each tranche.
The material terms of the Securitization Notes contain covenants which are standard and customary for these types of agreements, including the following financial covenants: (i) debt service coverage ratio, (ii) leverage ratio and (iii) senior leverage ratio. As of June 26, 2022, the Company was in compliance with these covenants.
Elevation Note
On June 19, 2019, the Company completed the acquisition of Elevation Burger. A portion of the purchase price included the issuance to the Seller of a convertible subordinated promissory note (the “Elevation Note”) with a principal amount of $7.5 million, bearing interest at 6.0% per year and maturing in July 2026. The Elevation Note is convertible under certain circumstances into shares of the Company’s common stock at $12.00 per share. The annualized effective interest rate for the Elevation Note during the twenty-six weeks ended June 26, 2022 was 11.2%. In June 2022, pursuant to the claw-back provision of the purchase agreement, the balance of the Elevation Note was reduced by $1.0 million to $6.5 million.
The Elevation Note is a general unsecured obligation of Company and is subordinated in right of payment to all senior indebtedness of the Company.
Equipment Financing (Twin Peaks)
During fiscal 2022, an indirect subsidiary of the Company entered into certain equipment financing arrangements to borrow up to $1.0 million, the proceeds of which will be used to purchase certain equipment for a new Twin Peaks restaurant and to retrofit existing restaurants with equipment (the "Equipment Financing"). The Equipment Financing has maturity dates between May 5, 2027 and March 7, 2029 and bear interest at fixed rates between 7.99% and 8.49% per annum. The Equipment Financing is secured by certain equipment of the Twin Peaks restaurant.