CARPINTERIA Calif. CKE Restaurants Inc., the parent to the Carl’s Jr. and Hardee’s brands, entered into fixed interest rate swap agreements with various bankers in order to stabilize future interest payments on $200 million of the company’s $270 million floating-rate term loan, the company said this month.
The agreements with Union Bank of California, BNP Paribas, Rabobank and JP Morgan, call for an interest rate on $200 million of CKE’s term loan debt to be fixed at 6.2159 percent, the restaurant operator and franchisor reported. The remaining balance of CKE’s loan will continue to bear variable interest rates.
“These agreements will limit future interest rate exposure on a significant portion of our debt and offer greater stability as we continue to implement our capital plan,” Ted Abajian, CKE’s executive vice president and chief financial officer, said in a statement.
According to a company presentation earlier this month, CKE said capital expenditures would total $650 million through fiscal year 2011, with a heavy focus on new unit development and the remodeling or repair of existing units. New unit development also would include the dual-branding of Carl’s Jr. with the Green Burrito concept and of Hardee’s with the Red Burrito brand.
According to company materials, new standalone units of Carl’s Jr. boast a 30.7-percent return on investment while new units dual-branded with Green Burrito reach a 32.3-percent return. Hardee’s units opened with Red Burritos reach an estimated return of 34.2 percent, the company reported. Standalone returns for Hardee’s were not given.
Carpinteria-based CKE and its licensees and franchisees operate 3,022 restaurants.