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DEBT
 12 Months Ended
Dec. 29, 2024
Debt Disclosure [Abstract]  
DEBT DEBT
Long-term debt consisted of the following (in millions):
December 29, 2024December 31, 2023
Final MaturityAnticipated Call DateRateFace ValueBook ValueBook Value
Senior Debt
FB Royalty Securitization4/25/20517/25/20264.75%$136.3 $134.4 $135.9 
GFG Royalty Securitization7/25/20517/25/20266.00%269.8 265.2 267.7 
Twin Peaks Securitization10/25/205410/25/20277.00%281.4 277.5 193.7 
Fazoli's/Native Securitization7/25/20511/25/20256.00%125.5 125.4 126.0 
FB Resid Securitization7/25/202710.00%53.9 53.8 52.7 
Senior Subordinated Debt
FB Royalty Securitization4/25/20517/25/20268.00%45.4 42.7 42.1 
GFG Royalty Securitization7/25/20517/25/20267.00%101.7 98.9 95.9 
Twin Peaks Securitization10/25/205410/25/20279.00%57.6 53.7 48.6 
Fazoli's/Native Securitization7/25/20511/25/20257.00%24.4 24.2 17.4 
FB Resid Securitization7/25/202710.00%56.0 55.9 52.7 
Subordinated Debt
FB Royalty Securitization4/25/20517/25/20269.00%15.7 15.5 18.6 
GFG Royalty Securitization7/25/20517/25/20269.50%55.6 49.2 43.4 
Twin Peaks Securitization10/25/205410/25/202710.00%46.9 45.6 29.4 
Fazoli's/Native Securitization7/25/20511/25/20259.00%— — 20.7 
Total Securitized Debt1,270.2 1,242.0 1,144.8 
Elevation Note7/19/2026N/A6.00%2.0 2.0 3.0 
Twin Peaks Equipment Notes
5/5/2027 to 7/31/2028
N/A
7.99% to 11.50%
4.7 4.7 1.9 
Twin Peaks Construction Loan III
12/28/2024
N/A
 Prime + 1%
— — 2.2 
Twin Peaks Construction Loan IV10/1/2025N/A12.50 %3.2 3.2 — 
Twin Peaks Promissory Note10/4/2024N/A5.30 %— — 1.0 
FAT Brands GFG Royalty I, LLC Promissory Note7/25/2026N/A
 16.90% to 18.65%
6.4 6.3 — 
Total debt$1,286.5 1,258.2 1,152.9 
Current portion of long-term debt(49.2)(42.6)
Long-term debt$1,209.0 $1,110.3 
Terms of Outstanding Debt
FB Royalty Securitization
On April 26, 2021, FAT Brands Royalty I, LLC (“FB Royalty”), a special purpose, wholly-owned subsidiary of FAT Brands, completed the Offering of three tranches of fixed rate senior secured notes. Net proceeds totaled $140.8 million, which consisted of the combined face amount of $144.5 million, net of debt offering costs of $3.0 million and original issue discount of $0.7 million. A portion of the proceeds was used to repay and retire notes issued in 2022 under the Base Indenture (the "2020 Securitization Notes"). The payoff amount totaled $83.7 million, which included principal of $80.0 million, accrued interest of $2.2 million and prepayment premiums of $1.5 million. The Company recognized a loss on extinguishment of debt of $7.8
million in connection with the refinance as well as interest expense on the 2020 Securitization Notes in the amount of $2.6 million for the year ended December 26, 2021.
On July 6, 2022, FB Royalty issued an additional $76.5 million aggregate principal amount of three tranches of fixed rate senior secured notes (in millions):
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, $30.0 million was sold privately during the third quarter of 2022, resulting in net proceeds of $27.1 million (net of debt offering costs of $0.6 million and original issue discount of $2.3 million). The remaining $46.5 million in aggregate principal was sold privately on October 21, 2022, when the Company entered into an Exchange Agreement with the Twin Peaks sellers and redeemed 1,821,831 shares of the Company’s 8.25% Series B Cumulative Preferred Stock at a price of $23.69 per share, plus accrued and unpaid dividends to the date of redemption, in exchange for $46.5 million aggregate principal amount of secured debt ($43.2 million net of debt offering costs and original issue discount).
Prior to the redemption, the Twin Peaks sellers held 2,847,393 shares of Series B Cumulative Preferred Stock, which shares were issued to it on October 1, 2021 as partial consideration for the Company’s acquisition of Twin Peaks.
Pursuant to the Exchange Agreement, (i) at any time prior to July 25, 2023, the Company may call from the Twin Peaks sellers all or a portion of the Class M-2 Notes at the outstanding principal balance multiplied by 0.86, plus any accrued plus unpaid interest thereon; (ii) at any time on or after the date of the Exchange Agreement, the Company may call from the Twin Peaks sellers, and at any time on or after July 25, 2023, the Twin Peaks sellers may put to the Company, all or a portion of the Class A-2 Notes and/or Class B-2 Notes at the outstanding principal balance multiplied by 0.94, plus any accrued plus unpaid interest thereon; and (iii) at any time on or after July 25, 2023, the Company may call from the Twin Peaks sellers, and the Twin Peaks sellers may put to the Company, all or a portion of the Class M-2 Notes at the outstanding principal balance multiplied by 0.91, plus any accrued plus unpaid interest thereon. If the Company does not remit the applicable call price or put price upon a duly exercised call or put, as applicable, the amount owed by the Company will accrue interest at 10% per annum, which interest is due and payable in cash monthly by the Company. On July 13, 2023, pursuant to the Exchange Agreement, the Twin Peaks sellers exercised their put option. During the first quarter of 2024, the Company paid $1.0 million to settle the 10% per annum interest in perpetuity and to settle the put option. As a result, as of December 29, 2024, the outstanding principal balance owned by the Twin Peaks sellers is no longer subject to the put option.
As of December 29, 2024, the carrying value of the FB Royalty Securitization Notes was $211.8 million (net of debt offering costs of $2.5 million and original issue discount of $5.8 million). The Company recognized interest expense on the FB Royalty Securitization Notes of $15.4 million for the year ended December 29, 2024, respectively, which includes $1.7 million for amortization of debt offering costs, and $0.7 million for amortization of the original issue discount. The average annualized effective interest rate of the FB Royalty Securitization Notes, including the amortization of debt offering costs and original issue discount, was 8.4% for the time the debt was outstanding during the year ended December 29, 2024.
The FB Royalty Securitization Notes are generally secured by a security interest in substantially all the assets of FB Royalty and its subsidiaries.
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 the Company, completed the issuance and sale in a private offering (the “GFG Offering”) of three tranches of fixed rate senior secured notes. Net proceeds totaled $338.9 million, which consisted of the combined face amount of $350.0 million, net of debt offering costs of $6.0 million and original issue discount of $5.1 million. Substantially all
of the proceeds were used to acquire GFG. 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.
On December 15, 2022, GFG Royalty issued an additional $113.5 million aggregate principal amount of three tranches of fixed rate senior secured notes as follows (in millions):
Closing DateClassSeniorityPrincipal BalanceCouponFinal Legal Maturity Date
12/13/2022A-2Senior$67.86.00%7/25/2051
12/13/2022B-2Senior Subordinated$20.27.00%7/25/2051
12/13/2022M-2Subordinated$25.59.50%7/25/2051
Of the $113.5 million aggregate principal amount, $25.0 million was sold privately during the fourth quarter of 2022, resulting in net proceeds of $22.3 million (net of debt offering costs of $0.4 million and original issue discount of $2.3 million). The remaining $88.5 million in aggregate principal was issued to FAT Brands Inc. and has been eliminated in consolidation. In January 2023, an additional $40.0 million aggregate principal amount was sold privately, resulting in net proceeds of $34.8 million. On September 20, 2023, an additional $2.8 million aggregate principal amount was sold privately resulting in net proceeds of $2.5 million. In October 2023, $20.2 million aggregate principal amount previously issued to FAT Brands Inc. was sold privately resulting in net proceeds of $18.1 million. The remaining $25.3 million in aggregate principal amount remains issued to FAT Brands, Inc., pending sale to third party investors.
As of December 29, 2024, the carrying value of the GFG Securitization Notes was $443.6 million (net of debt offering costs of $4.7 million and original issue discount of $5.9 million). The Company recognized interest expense on the GFG Securitization Notes of $35.8 million for fiscal year ended December 29, 2024, which includes $1.3 million for amortization of debt offering costs and $4.1 million for amortization of the original issue discount. The average annualized effective interest rate of the GFG Securitization Notes, including the amortization of debt offering costs and original issue discount, was 9.6% during the fiscal year ended December 29, 2024.
The GFG Securitization Notes are generally secured by a security interest in substantially all the assets of GFG Royalty and its subsidiaries.
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, Twin Hospitality I, LLC (formerly Fat Brands Twin Peaks I, LLC), three tranches of fixed rate notes for an aggregate principal amount of $250.0 million, collectively the "Prior Securitization notes". The net proceeds from the sale of the Notes were used by the Company to finance the cash portion of the purchase price for the acquisition of Twin Peaks Buyer, LLC and its direct and indirect subsidiaries. Net proceeds totaled $236.9 million, which consisted of the combined face amount of $250.0 million, net of debt offering costs of $5.6 million and original issue discount of $7.5 million. Substantially all of the proceeds were used to acquire Twin Peaks. Immediately following the closing of the acquisition of Twin Peaks, the Company contributed the franchising subsidiaries of Twin Peaks to Twin Hospitality I, LLC, pursuant to a Contribution Agreement.
On September 8, 2023, Twin Hospitality I, LLC issued an additional $98.0 million aggregate principal amount of two tranches of fixed rate secured notes to FAT Brands Inc., pending sale to third party investors. Of the $98.0 million aggregate principal amount, $48.0 million was sold privately during the third quarter of 2023 resulting in net proceeds of $45.2 million. A portion of the proceeds was used to purchase $14.9 million aggregate principal amount of outstanding Securitization Notes, which will be held pending re-sale to third party investors. In connection with the bonds repurchased, the Company recognized a $2.7 million net loss on extinguishment of debt. The remaining $50.0 million in aggregate principal of notes issued by Twin Hospitality I, LLC was issued to a wholly-owned subsidiary of FAT Brands, Inc., pending sale to third party investors.
On March 20, 2024, Twin Hospitality I, LLC issued an additional $50.0 million aggregate principal amount of one tranche of fixed rate secured notes to FAT Brands Inc., pending sale to third party investors. Of the $50.0 million aggregate principal amount, $38.8 million was sold privately during the first quarter of 2024 resulting in net proceeds of $36.4 million. A portion of the proceeds was used to purchase $7.4 million aggregate principal amount of outstanding Securitization Notes, which will be held pending re-sale to third party investors. In connection with the bonds repurchased, the Company recognized a $0.4 million
net gain on extinguishment of debt. During the second quarter of 2024, the remaining $11.2 million in aggregate principal of notes was sold privately to a third party investor resulting in net proceeds of $10.7 million.
On November 21, 2024, Twin Hospitality I, LLC completed the issuance and sale in a private offering the following four tranches of fixed rate secured notes: (i) $12.0 million aggregate principal amount of 9.00% Fixed Rate Super Senior Notes, Class A-2-I, (ii) $269.3 million aggregate principal amount of 9.00% Fixed Rate Senior Notes, Class A-2-II, (iii) $57.6 million aggregate principal amount of 10.00% Fixed Rate Senior Subordinated Secured Notes, Class B-2 and (iv) $77.7 million aggregate principal amount of 11.00% Fixed Rate Subordinated Secured Notes, Class M-2, collectively the "Twin Securitization Notes."
Net Proceeds from the issuance and sale of the Twin Securitization notes were $407.5 million, which consisted of the aggregate principal amount of $416.7 million, net of aggregate original issue discounts $3.2 million and debt offering costs of $6.0 million. The net proceeds from the sale of the Twin Securitization Notes was used to redeem all of the Prior Securitization Notes, which included principal of $388.8 million and accrued interest of $2.3 million, with the remainder to be used for working capital and general corporate purposes. The Company recognized a loss on extinguishment of debt of $2.4 million.
As of December 29, 2024, the carrying value of the Twin Peaks Securitization Notes was $407.5 million (net of debt offering costs of $6.0 million and original issue discount of $3.2 million). The Company recognized interest expense on the Twin Peaks Securitization Notes of $33.7 million for year ended December 29, 2024, which includes $9.5 million for amortization of debt offering costs and $2.3 million for amortization of the original issue discount. The effective interest rate of the Twin Peaks Securitization Notes, including the amortization of debt offering costs and original issue discount, was 12.2% during the year ended December 29, 2024.
The Prior Twin Peaks Securitization Notes and the Twin Peaks Securitization Notes are generally secured by a security interest in substantially all the assets of Twin Hospitality I, LLC and its subsidiaries.
Terms and Debt Covenant Compliance
The Twin 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. The legal final maturity date of the Twin Securitization Notes is October 26, 2054; however, it is currently anticipated that, unless earlier prepaid to the extent permitted under the Base Indenture, the Twin Securitization Notes will be repaid on October 25, 2027 (which we refer to as the "Anticipated Repayment Date"). If the Twin Securitization Notes are not repaid or refinanced by the Anticipated Repayment Date, additional interest will accrue on the then outstanding balance of each class of the Twin Securitization Notes at a rate of 5.0% per annum. Each class of the Twin Securitization Notes may be prepaid in whole or in part on any business day; provided that optional prepayment made after the Anticipated Repayment Date must be applied first to Class A-2-I, second to Class A-2-II, third to Class B-2 and fourth to Class M-2 of the Twin Securitization Notes.
Additionally, pursuant to the Base Indenture, upon each "Qualified Equity Offering" (as defined in the Base Indenture), which is a public or private offering by Twin Hospitality Group Inc. of our common equity securities for cash, subject to certain limited exceptions, Twin Hospitality Group Inc. is required to deposit 75% of the net proceeds from such offering into a segregated, non-interest bearing trust account to be used towards the repayment of the Twin Securitization Notes, until an aggregate of $75.0 million has been repaid in that manner. If the amount of net proceeds from our Qualified Equity Offerings used for repayment of the Twin Securitization Notes is not at least $25.0 million on or prior to each of April 25, 2025, July 25, 2025 and October 27, 2025, or is not at least $75.0 million on or prior to January 26, 2026, then under any such circumstance, a Cash Flow Sweeping Event (as defined in the Base Indenture) would occur, whereupon certain excess cash flows from our operations will be used to make additional principal payments, on a pro rata basis, on the three most senior classes of the Twin Securitization Notes.
The material terms of the Twin 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) interest-only debt service coverage ratio and (iii) senior leverage ratio. As of December 29, 2024, the Company was in compliance with these covenants.
In connection with the issuance and sale of the Twin Securitization Notes, we entered into a letter agreement, pursuant to which our subsidiary Twin Hospitality Group Inc. agreed to issue to the investors in the Twin Securitization Notes warrants (which we refer to as the "Noteholders' Warrants") exercisable for the aggregate number of shares of the subsidiary's Class A Common Stock equal to 5.0% of the number of issued and outstanding shares of the subsidiary's Class A Common Stock at the time of the Spin-Off, which occurred on January 29, 2025 (See Note 19, Subsequent Events). The Noteholders' Warrants will be exercisable during the period commencing on October 25, 2025 and ending on the five-year anniversary of the date of issuance,
at an exercise price of $0.01 per share. Under the letter agreement, we also agreed not to pay a dividend on our common stock until at least $25,000,000 in proceeds from Qualified Equity Offerings (as defined in the Base Indenture) have been used to prepay the Twin Securitization Notes.
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 an aggregate principal amount of $193.8 million. Net proceeds totaled $180.6 million, which consisted of the combined face amount of $193.8 million, net of debt offering costs of $3.8 million and original issue discount of $9.4 million. The proceeds were used to close the acquisitions of Fazoli's and Native, and to provide working capital for the Company. 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.
As of December 29, 2024, the carrying value of the Fazoli's-Native Securitization Notes was $188.6 million (net of debt offering costs of $2.5 million and original issue discount of $6.0 million). The Company recognized interest expense on the Fazoli's-Native Securitization Notes of $14.8 million for the fiscal year ended December 29, 2024, which includes $1.2 million for amortization of debt offering costs and $3.0 million for amortization of the original issue discount. The effective interest rate of the Fazoli's-Native Securitization Notes, including the amortization of debt offering costs and original issue discount, was 10.1% during the year ended December 29, 2024.
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.
FB Resid Holdings I, LLC
On July 8, 2023, FB Resid Holdings I, LLC (“FB Resid”), a special purpose, wholly-owned subsidiary of FAT Brands, completed the issuance of two tranches of fixed rate secured notes with a total aggregate principal amount of $150.0 million. Of the $150.0 million aggregate principal amount, $105.8 million was sold privately, resulting in net proceeds of $105.3 million. A portion of the proceeds was used to purchase $64.6 million of outstanding Securitization Notes, which will be held pending re-sale to third party investors. The remaining $44.2 million in aggregate principal of notes issued by FB Resid was issued to a wholly-owned subsidiary of FAT Brands, Inc., pending sale to third party investors.
On November 21, 2024, the Company modified the terms of the outstanding notes issued by FB Resid pursuant to an Omnibus Amendment executed with the noteholders as well as with the Company’s other whole business securitization subsidiaries, FAT Brands Royalty I, LLC, FAT Brands GFG Royalty I, LLC, Twin Hospitality I, LLC (f/k/a FAT Brands Twin Peaks I, LLC) and FAT Brands Fazoli’s Native I, LLC (the “Existing Issuers”). The Omnibus Amendment amended the treatment of “Excess Amounts” under the Company’s current securitization transactions, other than Twin Hospitality I, LLC, upon (i) the occurrence of an Event of Default under the FB Resid Indenture or (ii) if the Controlling Class Representative (currently 3|5|2 Capital ABS Master Fund LP) has notified the FB Resid Trustee that certain Excess Amounts are required to satisfy clauses (i) through (xiii) of the Priority of Payments on the next applicable Monthly Allocation Date under the FB Resid Indenture. In such event, all such Excess Amounts must be deposited into a segregated account to be included in Retained Collections and deposited in the Collection Account under the FB Resid Indenture for application in accordance with the waterfall of payments under Section 5.10 of the FB Resid Indenture. The Omnibus Amendment also amended the FB Resid Indenture to provide that with respect to (i) any Mandatory Prepayment Amount and/or (ii) from and after the occurrence of any Event of Default (as such terms are defined in the FB Resid Indenture), payments of interest and principal with respect to the Class A-1 Notes and the Class A-2 Notes shall be made in accordance with the Applicable Class A Payment Priority (defined in the Omnibus Amendment), and no amounts may be paid on the Class A-1B Notes or Class A-2B Notes until amounts then due and owing to the Class A-1A Notes and the Class A-2A Notes shall have been paid in full in cash.
In addition, under the Omnibus Amendment, the Company and FB Resid agreed not to permit (i) any equity interests of any Existing Issuer to be sold, transferred or disposed, other than the transactions contemplated by the Twin Peaks Listing Event, or (ii) any Specified Additional Issuance (as defined in the FB Resid Indenture). In addition, the Omnibus Amendment added a new Event of Default under the FB Resid Indenture if the Issuer should fail, by July 31, 2026, to have prepaid or purchased at least $20,000,000 of Class A-1A Notes and Class A-2A Notes held by the Controlling Class Representative or its managed funds. Also under the Omnibus Amendment, the Company agreed not to sell or otherwise dispose of any of its equity interests of Twin Hospitality until Twin Hospitality has used at least $75,000,000 of aggregate Qualified Equity Offering Proceeds or other proceeds to prepay the new Notes issued under the TWNP Indenture. The Company also agreed not to declare or pay any dividend or distribution in the form of equity interests in Twin Hospitality (i) until the third anniversary of the Closing Date (ii)
or if any Potential Rapid Amortization Event, Rapid Amortization Event, Default or Event of Default has occurred or would result therefrom under the indentures of any Existing Issuer.
On November 21, 2024, the Company also entered into a Pledge and Security Agreement (the “Pledge Agreement”) and Securities Account Control Agreement (the “Control Agreement”) with UMB Bank, N.A., as trustee under the FB Resid Indenture and as securities intermediary (in such capacities, the “Pledge Trustee”). Under the Pledge Agreement, the Company pledged all of its shares of Class A Common Stock of Twin Hospitality (other than shares distributed to its shareholders at the time of the Twin Peaks Listing Event) (the “Pledged Shares”) along with all proceeds of the Pledged Shares for the payment and performance of all obligations of FB Resid under the FB Resid Indenture. The Company agreed that the “Applicable Percentage” (a formula that is defined in the Pledge Agreement) of any (i) proceeds of the sale or other disposal of Pledged Shares, (ii) dividend, distribution, rights, warrants or other consideration with respect to the Pledged Shares, and (iii) proceeds of any loan secured by the Pledged Shares (collectively, the “Proceeds”), will be applied to purchase first the Class A-2A Notes, and then the Class A-1A Notes, issued under the FB Resid Indenture at par plus any accrued and unpaid interest thereon and interest paid in kind. The Company also agreed that, if Twin Hospitality has not raised at least $25,000,000 in Qualified Equity Proceeds and is sold, then so long as either (i) the Issuer has repaid its debt in full under the TWNP Indenture or (ii) the Issuer’s noteholders have otherwise waived such payment and approved the sale in writing, then 50% of the Proceeds from the sale of Twin Hospitality will be applied to purchase first the Class A-2A Notes, and then the Class A-1A Notes, issued under the FB Resid Indenture at par plus any accrued and unpaid interest thereon and interest paid in kind. Also under the Pledge Agreement, upon the occurrence and during the continuance of an Event of Default and following the Grace Period, if applicable, under the FB Resid Indenture, all rights of the Company to vote or give consent with respect to the Pledged Shares shall be vested in the Pledge Trustee. Under the Control Agreement, the Company agreed to deposit all of the Pledged Shares at the time of the Twin Peaks Listing Event into a controlled account maintained by the Pledge Trustee, and the Pledge Trustee will distribute Proceeds of the Pledged Shares held in such account according to the Pledge Agreement. The Company will be entitled to enter any market order to sell Pledged Shares in a brokers’ transaction on an approved trading market, and may enter orders to sell Pledged Shares other than on a permitted trading market (i) with the prior written consent of the Pledge Trustee or (ii) in a trade to be executed within 5% of the 5-trading day volume weighted average price and with a value of at least $15,000,000. Upon an Event of Default under the FB Resid Indenture, the Controlling Class Representative will be entitled to exercise sole control of the Pledged Shares and direct sales or other dispositions of the Pledged Shares held in the controlled account.
Retained Notes
During 2024, the Company repurchased certain of its securitized notes to be held for resale to third party investors and sold certain of its securitized notes previously repurchased or issued and not sold (collectively, the "Retained Notes"). During 2024, cash proceeds from the sale of Retained Notes and cash used to repurchase Retained Notes was $108.2 million and $36.4 million including accrued interest, respectively. The $108.2 million includes the sale of $30.9 million aggregate principal Twin Peaks Securitization notes issued in 2024 in addition to securitization notes previously held in wholly-owned subsidiaries of Fat Brands Inc. As of December 29, 2024, the Company held $164.8 million of Retained Notes, which have been eliminated in consolidation.
Terms and Debt Covenant Compliance
The FAT Royalty securitization notes, the GFG Royalty securitization notes, the Twin Peaks securitization notes, the Fazoli's/Native securitization notes and the FB Resid 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. Beginning July 26, 2023, additional interest equal to 1.0% per annum and principal payments equal to 2.0% per annum of the initial principal amount on the FAT Royalty securitization notes, the GFG Royalty securitization notes, the Twin Peaks securitization notes and the Fazoli's/Native securitization notes will be made on the scheduled quarterly payment dates.
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 December 29, 2024, 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 31, 2026. The Elevation Note is convertible under certain circumstances into shares of the Company’s common stock at $12.00 per share. In connection with the valuation of the acquisition of Elevation Burger, the Elevation Note was recorded on the financial statements of the Company at $6.1 million, net of a loan discount of $1.3 million and debt offering costs of $0.1 million.
As of December 29, 2024, the carrying value of the Elevation Note was $2.0 million which is net of the loan discount of $0.4 million and debt offering costs of $35,329. 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 Company recognized interest expense relating to the Elevation Note during the fiscal year ended December 29, 2024 in the amount of $0.2 million, which included amortization of the loan discount of $10,191 and amortization of $132,949 in debt offering costs. The Company recognized interest expense relating to the Elevation Note during the year ended December 31, 2023 in the amount of $0.2 million, which included amortization of the loan discount of $0.2 million and amortization of $10,191 in debt offering costs. The effective interest rate for the Elevation Note during the year ended December 29, 2024 was 12.4%.
The Elevation Note is a general unsecured obligation of Company and is subordinated in right of payment to all indebtedness of the Company arising under any agreement or instrument to which Company or any of its Affiliates is a party that evidences indebtedness for borrowed money that is senior in right of payment.
Equipment Financing (Twin Peaks)
During 2022, one of our wholly-owned subsidiaries entered into certain equipment financing arrangements to borrow up to $1.4 million, the proceeds of which were used to purchase certain equipment for a company-owned restaurant that opened in 2022 and to retrofit certain existing company-owned restaurants with equipment (which we refer to as the "2022 Equipment Financings"). The 2022 Equipment Financings have maturity dates between May 5, 2027 and March 7, 2028 and bear interest at fixed rates between 7.99% and 8.49% per annum.

During 2023, one of our wholly-owned subsidiaries entered into certain equipment financing arrangements to borrow up to $1.4 million, the proceeds of which will be used to purchase certain equipment for a new company-owned restaurant (which we refer to as the "2023 Equipment Financing"). The 2023 Equipment Financing has maturity dates that are 48 months from the date of each draw, and bears interest at 11.5% per annum.

During 2024, one of our wholly-owned subsidiaries entered into certain equipment financing arrangements to borrow up to $4.2 million, the proceeds of which will be used to purchase certain equipment for three new company-owned Twin Peaks restaurants (which we refer to as the "2024 Equipment Financing"). The 2024 Equipment Financing has maturity dates that are 48 months from the date of each draw, and bears interest at 11.5% per annum.

The 2022 Equipment Financings, the 2023 Equipment Financing, and the 2024 Equipment Financing are secured by certain equipment of such respective company-owned restaurants. As of December 29, 2024, the total outstanding principal amount under them on a collective basis was $4.7 million, and as of December 31, 2023, the total outstanding principal amount was $1.9 million.
Construction Loan Agreement (Twin Peaks)
On December 28, 2023, an indirect subsidiary of the Company entered into a construction loan agreement to borrow up to $4.75 million, the proceeds of which will be used for a new corporate Twin Peaks in McKinney, TX (the "Construction Loan III"). The Construction Loan III has an initial maturity of December 28, 2024, with an optional 12-month extension, bearing interest at Wall Street Journal Prime plus 100 basis per year and is secured by land and building. The Construction Loan III was paid in full on its maturity date on December 28, 2024.
On September 20, 2024, an indirect subsidiary of the Company entered into a loan agreement to borrow $3.2 million with an initial maturity of October 1, 2025, bearing interest at 12.5% per annum and is secured by land and building of a new corporate restaurant. As of December 29, 2024, the total amount outstanding on this loan was $3.2 million.

Promissory Note (Twin Peaks)

On December 4, 2023, an indirect subsidiary of the Company purchased all member interest units of a joint venture entity for $1.3 million in the form of a $0.3 million cash payment and 10 equal monthly payments of $0.1 million beginning in January
2024. The $1.0 million promissory note bears interest of 5.3% and has a maturity of October 4, 2024. As of December 29, 2024, the total outstanding amount on the promissory note was $0. This promissory note was paid in full on its maturity date.

FAT Brands GFG Royalty I, LLC Promissory Note

During 2024, one of our wholly-owned subsidiaries entered into a financing arrangement to borrow money, where the proceeds would be used for general corporate purposes. The total outstanding amount on the promissory note was $6.3 million. The FAT GFG LLC Promissory Note has a maturity date of July 25, 2026 and bears interest at fixed rates between 16.90% and 18.65% per annum.

Scheduled Principal Maturities

Scheduled principal maturities of long-term debt and redemptions of redeemable preferred stock (Note 12) for the next five fiscal years are as follows (in millions):

Fiscal YearLong-Term DebtRedeemable Preferred Stock (Note 12)
2025$49.2 $91.8 
2026$34.0 $— 
2027$136.8 $— 
2028$26.0 $— 
2029$25.4 $—