Yum! Brands, Inc. Prices $2.3 Billion Securitized Financing Facility
May 05 2016 - 4:15PM
Business Wire
Yum! Brands, Inc. (NYSE: YUM), the parent company of
KFC, Pizza Hut and Taco Bell, today announced that it and certain
affiliates have entered into a purchase agreement (the “Purchase
Agreement”) under which a special purpose subsidiary of Taco Bell
(the “Issuer”) has agreed to issue and sell $800 million of
the Issuer’s Series 2016-1 3.832% Fixed Rate Senior Secured
Notes, Class A-2-I (the “Class A-2-I Notes”),
$500 million of its Series 2016-1 4.377% Fixed Rate Senior
Secured Notes, Class A-2-II (the “Class A-2-II Notes”), and
$1 billion of its Series 2016-1 4.970% Fixed Rate Senior
Secured Notes, Class A-2-III (the “Class A-2-III Notes” and,
together with the Class A-2-I Notes and the Class A-2-II Notes, the
“Notes”). Interest will be payable on the Notes quarterly. The
legal final maturity date of the Notes will be in May of 2046, but
the anticipated repayment dates of the Class A-2-I Notes, the Class
A-2-II Notes and the Class A-2-III Notes will be 4, 7 and 10 years,
respectively. The Issuer also intends to enter into a purchase
agreement under which it will issue $100 million of Series
2016-1 Class A-1 Notes which will allow the Issuer to borrow
amounts from time to time on a revolving basis.
The Notes are expected to be issued by the Issuer in a privately
placed securitized transaction. The Issuer will own substantially
all of the U.S. franchising assets of Taco Bell and will use cash
flows generated from these assets to make interest and principal
payments on the Notes.
The Company expects to use the proceeds from the expected sale
of the Notes to pay down the entire outstanding balance of $2.0
billion of its unsecured term loan facility (the “Bridge
Facility”). The remaining proceeds will be primarily used for costs
associated with this transaction and general corporate purposes,
including return of capital to shareholders. Utilizing the
securitization market for the first time is a landmark event for
YUM, and the Company is pleased with both the $2.3 billion facility
size and the attractive blended interest rate of 4.445%. This
transaction is consistent with the Company’s previously announced
strategy to optimize its capital structure and return $6.2 billion
of capital to shareholders between October 2015 and the separation
of its China business, which is on track to be completed by the end
of 2016. The closing of the sale of the Notes is expected on
May 11, 2016, subject to the satisfaction of various closing
conditions.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy the Notes or any other security.
The Notes have not been, and will not be, registered under the
Securities Act of 1933, as amended (the “Securities Act”), or any
state securities laws, and may not be offered or sold in the United
States absent registration or an applicable exemption from the
registration requirements of the Securities Act and applicable
state securities laws.
Yum! Brands, Inc., based in Louisville, Kentucky, has nearly
43,000 restaurants in more than 130 countries and territories. Yum!
is ranked #228 on the Fortune 500 List with revenues of over $13
billion in 2015 and is one of the Aon Hewitt Top Companies for
Leaders in North America. The Company's restaurant brands - KFC,
Pizza Hut and Taco Bell - are the global leaders of the chicken,
pizza and Mexican-style food categories. Worldwide, the Yum! Brands
system opens over six new restaurants per day on average, making it
a leader in global retail development.
This announcement may contain “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. We intend all
forward-looking statements to be covered by the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements generally can be identified by the fact
that they do not relate strictly to historical or current facts and
by the use of forward-looking words such as “expect,”
“expectation,” “believe,” “anticipate,” “may,” “could,” “intend,”
“belief,” “plan,” “estimate,” “target,” “predict,” “likely,”
“will,” “should,” “forecast,” “outlook” or similar terminology.
These statements are based on current estimates and assumptions
made by us in light of our experience and perception of historical
trends, current conditions and expected future developments, as
well as other factors that we believe are appropriate and
reasonable under the circumstances, but there can be no assurance
that such estimates and assumptions will prove to be correct.
Forward-looking statements reflect our current expectations,
estimates or projections concerning future results or events,
including, without limitation, statements regarding the intended
capital return to shareholders as well as the related borrowing
required to fund such capital return, the planned separation of the
Yum! Brands and Yum! China businesses, the timing of any such
separation, the future earnings and performance as well as capital
structure of Yum! Brands, Inc. or any of its businesses, including
the Yum! Brands and Yum! China businesses on a standalone basis if
the separation is completed. Forward-looking statements are not
guarantees of performance and are inherently subject to known and
unknown risks, uncertainties and assumptions that are difficult to
predict and could cause our actual results to differ materially
from those indicated by those statements. We cannot assure you that
any of our expectations, estimates or projections will be achieved.
The forward-looking statements included in this announcement are
only made as of the date of this announcement and we disclaim any
obligation to publicly update any forward-looking statement to
reflect subsequent events or circumstances. Numerous factors could
cause our actual results and events to differ materially from those
expressed or implied by forward-looking statements, including,
without limitation: whether we are able to return capital to
shareholders at the times and in the amounts currently anticipated,
if at all, as well as the corresponding costs of borrowing to fund
such capital return as well as other costs; whether the separation
of the Yum! Brands and Yum! China businesses is completed, as
expected or at all, and the timing of any such separation; whether
the operational and strategic benefits of the separation can be
achieved; whether the costs and expenses of the separation can be
controlled within expectations, including potential tax costs; as
well as other risks. In addition, other risks and uncertainties not
presently known to us or that we currently believe to be immaterial
could affect the accuracy of any such forward-looking statements.
All forward-looking statements should be evaluated with the
understanding of their inherent uncertainty. You should consult our
filings with the Securities and Exchange Commission (including the
information set forth under the captions “Risk Factors” and
“Forward-Looking Statements” in our Annual Report or Form 10-K) for
additional detail about factors that could affect our financial and
other results.
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version on businesswire.com: http://www.businesswire.com/news/home/20160505006572/en/
Yum! Brands, Inc.Analysts:Steve Schmitt,
888-298-6986Vice President, Investor Relations & Corporate
StrategyorElizabeth Grenfell, 888-298-6986Director, Investor
RelationsorMedia:Virginia Ferguson, 502-874-8200Director, Public
Relations
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